EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 25th day of July,
2003 by and between ARLINGTON HOSPITALITY, INC., a Delaware corporation (the
"Company"), and STEPHEN K. MILLER ("Employee").
RECITALS:
A. The Company is in the business of developing, owning and managing
economy hotels and limited service hotels. Each such hotel which during the term
of this Agreement is either owned or managed in whole or part by the Company or
one of its subsidiaries or other Affiliates (as defined below) is referred to
individually as a "Hotel" or collectively, as the "Hotels").
B. The Company desires to employ Employee and Employee desires to be
employed by the Company, subject to the terms, conditions and covenants
hereinafter set forth with the initial position of Employee set forth in Section
1.1 or such other title and responsibilities as the Company shall designate from
time to time (the "Position").
C. As a condition of the Company's employing Employee, Employee has agreed
not to compete with the Company and not to solicit the Company's key financing
sources, investors, vendors, customers or employees, all upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the agreements,
covenants and conditions set forth herein, Employee and the Company hereby agree
as follows:
ARTICLE I
EMPLOYMENT
1.1 Employment. The Company hereby employs, engages and hires Employee, and
Employee hereby accepts employment with the Company for the Position, upon the
terms and conditions set forth in this Agreement, and subject to such job
responsibilities as allocated from time to time by the Company's President, or
such other person(s) or entity directing the business affairs of the Company.
Employee's title shall be Senior Vice President - Real Estate and Business
Development.
1.2 Activities and Duties During Employment. Employee represents and
warrants to the Company that Employee is free to accept employment with the
Company and that Employee has no prior or other commitments or obligations of
any kind to anyone else which would hinder or interfere with the acceptance and
performance of his obligations under this Agreement.
Employee accepts the employment described in Article I of this Agreement
and agrees to devote his exclusive full time and efforts to the faithful and
diligent performance of the services described herein, including the performance
of such other services and responsibilities as the Company may, from time to
time, stipulate. Notwithstanding the foregoing, Employee may: (i)
serve on the board of directors of one company that is not publicly traded
(provided he does not serve as an officer or as chairman of the board of such
company), or serve as an officer (other than president) or on the board of
directors (provided he does not serve as chairman of the board) of one hobby,
avocation, civic, educational, professional or charitable organization, provided
that such service does not materially interfere or conflict with his duties
hereunder, and, provided further that Employee may serve as director of
additional non-public companies or as an officer or director of additional
hobby, avocation, civic, educational, professional or charitable organizations
with the Company's consent; and (ii) subject to Section 4.2, make and manage
personal investments of his choice.
ARTICLE II
TERM
2.1 Term. The term of employment under this Agreement shall be for the
period commencing effective as of August 19, 2003 and ending December 31, 2005.
The period of Employee's employment hereunder is referred to as the "Employment
Term."
2.2 Cessation of Rights and Obligations; Survival of Certain Provisions. On
the date of expiration or earlier termination of the Employment Term for any
reason, all of the respective rights, duties, obligation and covenants of the
parties, as set forth herein, shall, except as specifically provided herein to
the contrary, cease and become of no further force or effect as of the date of
said termination, and shall only survive as expressly provided for herein.
2.3 Termination by the Company for Cause. The Company has the right, at any
time by serving notice, to terminate Employee's employment under this Agreement
and to discharge Employee with or without "Cause" (as hereinafter defined). If
Company terminates Employee with "Cause," then Company's obligation to Employee
shall be limited to the payment and/or satisfaction of unpaid base salary and
expense reimbursements accrued up to the effective date specified in the
Company's termination notice. Employee shall also be permitted to maintain
health insurance benefits for himself and covered dependents pursuant to COBRA
commencing on the date Employee's employment is terminated. As used in this
Section 2.3, the term "Cause" shall mean and include:
(a) misappropriation of any money or other assets or properties of the
Company or any subsidiary of the Company other than an isolated,
insubstantial and unintentional misappropriation which is promptly remedied
by Employee after receipt of written notice thereof given by the Company;
(b) material breach by Employee of the terms of this Agreement after a
written demand for substantial performance is delivered to Employee by the
Company which specifically identifies the manner in which the Company
believes that Employee has not substantially performed his duties and such
breach is not remedied within fifteen (15) days after receipt of such
written notice; and
(c) illegal conduct or conduct which adversely impacts the reputation
or business of the Company.
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2.4 Severance Upon Termination Without Cause. If the Company terminates
Employee's employment without Cause (other than pursuant to Section 2.5)
effective as of a date three (3) months or more prior to the end of the
Employment Term, it shall continue to pay Employee the base salary specified in
Exhibit A for a period ending on the lesser of six (6) months after the
termination or the end of the Employment Term. If the Company terminates
Employee's employment without Cause (other than pursuant to Section 2.5)
effective as a date less than three (3) months prior to the end of the
Employment Term, it shall make a severance payment to Employee equal to three
(3) months of the base salary specified in Exhibit A.
2.5 Termination for Failure to Relocate. If Employee does not relocate to
the Chicago metropolitan area within six (6) months of the commencement of the
Employment Term, the Company has the right to terminate Employee without Cause,
provided, however, that if Employee has listed his current home for sale at a
competitive price with a recognized real estate broker doing business in
Employee's housing market and is unable to sell his home during such six (6)
month period, such six (6) month period shall be extended for an additional
three (3) months. If Company terminates Employee pursuant to this Section 2.5,
the Company's obligation to Employee shall be limited to: (i) the payment and/or
satisfaction of unpaid base salary and expense reimbursements accrued up to the
effective date specified in the Company's termination notice; and (ii) severance
compensation equal to three (3) months salary. Employee shall also be permitted
to maintain health insurance benefits for himself and covered dependents
pursuant to COBRA commencing on the date Employee's employment is terminated.
2.6 Voluntary Termination. If Employee voluntarily terminates his
employment, Employee agrees to provide the Company with at least sixty (60) days
written notice and he shall be entitled to no severance compensation.
2.7 Business Expenses.
(a) Reimbursement. The Company shall reimburse Employee for all
reasonable, ordinary, and necessary business expenses incurred by him in
connection with the performance of his duties hereunder including, but not
limited to, ordinary and necessary travel expenses and entertainment
expenses. The reimbursement of business expenses will be governed by the
Company's policies and the terms otherwise set forth herein or as modified
by the Company from time to time.
(b) Accounting. Employee shall provide the Company with an accounting
of his expenses, which accounting shall clearly reflect which expenses were
incurred for proper business purposes in accordance with the policies
adopted by the Company and as such are reimbursable by the Company.
Employee shall provide the Company with such other supporting documentation
and other substantiation of reimbursable expenses as will conform to
Internal Revenue Service or other requirements. All such reimbursements
shall be payable by the Company to Employee within a reasonable time after
receipt by the Company of appropriate documentation therefor.
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ARTICLE III
COMPENSATION AND BENEFITS
3.1 Compensation. During the Employment Term, the Company shall pay
Employee such base salary and bonus as set forth on Exhibit A, the terms of
which are incorporated by reference herein; however, the Company shall not be
obligated to pay any bonus to Employee pursuant to this Agreement unless
Employee remains in the employ of the Company for the full term of the period
over which the bonus is measured and the Company in its sole discretion (which
shall be binding upon Employee) determines that all the criteria for the bonus
are met (or in its sole discretion waives one or more criteria).
3.2 Relocation. The Company shall pay Employee's reasonable expenses of
relocating from Employee's current home to the Chicago, Illinois, metropolitan
area, up to a maximum of Twenty-Five Thousand Dollars ($25,000), provided that
the Company shall have no obligation to pay such expenses unless Employee has
relocated to the Chicago metropolitan area within six (6) months of the
commencement of the Employment Term (or nine (9) months if the six (6) month
period described in Section 2.5 is extended as described therein). Such expenses
shall include moving, travel, temporary residence (such as a hotel or apartment)
and similar expenses, but shall not include any expenses relating to the sale of
any residence. All claims for reimbursement of expenses under this Section 3.2
shall be supported by receipts or other appropriate documentation.
3.3 Stock Option. Employee shall have the right to purchase up to 25,000
shares of common stock of Company (the "Purchase Right Shares") for a period of
thirty (30) days from August 19, 2003, at a purchase price per share equal to
the greater of: (i) $3.18 per Share; (ii) the closing price of Company's common
stock as quoted in The Wall Street Journal for August 18, 2003 or, if no stock
transfer occurred on such date, the closing price as quoted aforesaid on the
next prior day in which Company's common stock traded on the public markets; or
(iii) if a Company press release is issued announcing Employee's hiring, the
closing price of Company's common stock as quoted in The Wall Street Journal on
the last trading day immediately preceding the Company's issuance of such
release. In order to exercise the purchase rights contained in this Section 3.3,
Employee must tender to the Company written notice of exercise specifying the
number of shares he wishes to purchase together with good funds (in the form of
cashier's or certified check, wire transfer or other form of payment acceptable
to the Board) within the applicable thirty (30) day period, which notice must be
delivered at least four (4) business days prior to the scheduled stock purchase.
The Company shall issue and deliver the certificates for all shares purchased
per this Section 3.3 promptly following such purchase and such certificates
shall contain the Company's customary restrictive legend for privately issued
shares.
3.4 Payment. All compensation shall be payable in intervals in accordance
with the general payroll payment practice of the Company. The compensation shall
be subject to such withholdings and deductions by the Company as are required by
law.
3.5 Leave. Employee shall be entitled to up to two (2) weeks paid leave
(for illness and/or vacation) during calendar year 2003 (prorated over the four
and one-half (4 1/2) months of
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2003), and three (3) weeks of paid leave (for illness and vacation) during each
calendar year thereafter (prorated for partial years). In addition Employee
shall, during the Employment Term, be entitled to standard sick leave and
personal days as are provided for the in the Company's employee manual. Any
leave not taken during a particular year shall lapse. Employee shall not be
entitled to cash for vacation time not taken.
3.6 Other Benefits.
(a) On the first (1st) day of the first (1st) calendar month following
the sixtieth (60th) day of Employee's employment, Employee will be eligible
to enroll in the Company's health plan. On the first (1st) day of the first
(1st) calendar month following the thirtieth (30th) day of Employee's
employment, Employee will be eligible to enroll in the Company's dental
plan. The costs of enrollment in the health and dental plans shall depend
on the level of coverage chosen by Employee, in accordance with the
Company's standard cost-sharing allocations;
(b) On the first day of the first calendar month following the
commencement of Employee's employment, Employee will be eligible for
coverage under the Company's life insurance and disability plans, with
additional term life insurance provided on a basis commensurate with that
of other senior executives of the Company; and
(c) Employee will become eligible to enroll in the Company's 401(k)
Retirement and Savings Plan upon completion of one (1) year's continuous
employment with the Company, upon the terms and conditions set forth in
such plan.
Notwithstanding the forgoing, the Company shall be under no obligation to
institute or continue the existence of any such benefit plan.
ARTICLE IV
NON-SOLICITATION AND NON-COMPETE
4.1 Confidentiality Covenant. Employee hereby acknowledges and agrees that
the duties and services to be performed by Employee under this Agreement are
special and unique and that as of a result of the employment hereunder, Employee
will acquire, develop and use information of a special and unique nature and
value that is not generally known to the public or to the Company's industry,
including, but not limited to, sources of financing, identity of investors,
joint venture partners and Hotel purchasers, terms and conditions of financing
contracts and investments of the Company and its Affiliates, cost and pay
structures for Company employees, operations and Hotels, Hotel designs, Hotel
construction methods, records, phone locations, e-mail addresses, documentation,
software programs, price lists, customer lists, prospect lists, contractual
relationships, contract prices for the Company's services, business plans and
prospects of the Company, equipment configurations, ledgers and general
information, employee records, mailing lists, accounts receivable and payable
ledgers, financial and other records of the Company or its Affiliates, and other
similar matters (all such information being hereinafter referred to as
"Confidential Information"). "Confidential Information" shall not include
information that Employee can prove (a) was known to him prior to his receipt of
such information from Company; (b) became generally publicly known other than by
Employee's
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direct or indirect act; (c) was rightfully disclosed to Employee by a third
party without restriction; or (d) was independently developed by Employee (and
is supported by written evidence) without use of or access to the Confidential
Information. Employee further acknowledges and agrees that the Confidential
Information is of great value to the Company and its affiliates and that the
restrictions and agreements contained in this Agreement are reasonably necessary
to protect the Confidential Information and the goodwill of the Company.
Accordingly, Employee hereby agrees that:
(a) Employee will not, while employed by the Company or for thirty
(30) months thereafter, directly or indirectly, except in connection with
Employee's performance of the duties under this Agreement, or as otherwise
authorized in writing by the Company for the benefit of the Company or its
"Affiliates" (as hereinafter defined), divulge to any person, firm,
corporation, limited liability company, or organization, other than the
Company or its Affiliates (hereinafter referred to as "Third Parties"), or
use or cause or authorize any Third Parties to use, the Confidential
Information, except as required by law; and
(b) Upon the termination of Employee's employment for any reason
whatsoever, Employee shall deliver or cause to be delivered to the Company
any and all Confidential Information, including all computers, drawings,
notebooks, notes, records, keys, disks data and other documents and
materials belonging to the Company or its Affiliates and all copies thereof
and all abstracts thereof which are in his possession or under his control
relating to the Company or its Affiliates, regardless of the medium upon
which it is stored, and will deliver to the Company upon such termination
of employment any other property of the Company or its Affiliates which is
in his possession or control.
4.2 Non-Solicitation Covenants. During Employee's employment with Company
or any of its Affiliates and for one year thereafter, Employee shall not,
directly or indirectly without Company's prior written consent:
(a) solicit, divert or take away, any Customer for purposes of, or
with respect to, selling a product or service which competes with the
Business of Company and its related entities and Affiliates or which is
otherwise unrelated to furthering of the Business of the Company; or
(b) take any affirmative action in regard to establishing or
continuing a relationship with a Customer for purposes of making, or which
directly or indirectly results in, a sale of a product or service which
competes with the Business of Company and its related entities and
affiliates.
For purposes of this Agreement, a "Customer" shall be deemed to include any
person or entity who has done business with the Company or any of its Affiliates
within the twelve (12) month period immediately preceding:
(i) the action by Employee while in the employ of the Company or its
Affiliates; or
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(ii) the date of termination of Employee's employment if he is no
longer in the employ of the Company or its Affiliates.
"Business of Company" shall include any business activities related to the
development, ownership and/or management of economy hotels, mid-scale hotels
without food and beverage and limited service hotels.
4.3 Non-Solicitation of Employees; Financing Sources. During the Term, and
for a period of one (1) year following termination of Employee's employment with
Company or any of its Affiliates, Employee shall not, directly or indirectly:
(a) recruit or hire, or attempt to recruit or hire (as an employee,
independent contractor, consultant or otherwise), any employee of Company
or its related entities and Affiliates who was employed by Company or its
related entities and affiliates during the Term and who is actively
employed at the time of solicitation or attempted solicitation; or
(b) except on behalf of Company or its Affiliates, solicit equity
funding with respect to any hotel project involving any of the "Brands" (as
that term is enumerated in Exhibit A) from a source (other than an entity
listed on Exhibit B) which directly or indirectly through itself or an
affiliate:
(i) has provided $5,000,000 or more of equity funding to or for
the benefit of Company or any of its related entities or affiliates
(but only if such amount constitutes greater than fifty percent (50%)
of the equity funding provided by such source to the Brands at the
time of such solicitation); or
(ii) has purchased or sold a hotel property from or to (as the
case may be) Company or any of its related entities or affiliates (but
only if the purchasing and selling of the Brands comprises greater
than fifty percent (50%) of such source's business at the time of such
solicitation).
4.4 Non-Competition. Employee agrees that, during the Term and for a
period of one (1) year following the termination of Employee's employment by
Company (subject to the provisos contained at the end of this Section 4.4) for
whatever reason, with or without "cause" or otherwise, Employee will not,
directly or indirectly, expressly or tacitly, for himself or on behalf of any
entity anywhere within the United States:
(a) act as an officer, director, manager, advisor, executive,
controlling shareholder, or consultant to any business in which his duties
at or for such business include oversight of or actual involvement in
providing (A) services which are competitive with the Business of the
Company (including any of its related entities or affiliates), or (B)
services or products being provided or which are being produced or
developed by Company or its related entities and affiliates, or are under
active investigation by Company or its related entities and affiliates at
the time of termination of his employment, provided that such services or
products relate directly to the Business of the Company; or
(b) become employed by such an entity in any capacity which would
require Employee to carry out, in whole or in part, the duties Employee has
performed for
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Company or its related entities and affiliates which are competitive with
the Business of the Company (including any of its related entities or
affiliates) or services or products being provided or which are being
produced or developed by Company its related entities and affiliates, or
are under active investigation by Company or its related entities and
affiliates at the termination of his employment, provided that such
services or products relate directly to the Business of the Company.
Notwithstanding anything to the contrary contained herein, the restrictive
covenants contained in this Section 4.4 shall not apply in the event of
discharge of Employee without Cause, unless in such event Company continues to
pay Employee the amounts set forth in Section 2.4. Notwithstanding anything to
the contrary contained herein, any employment of Employee or provision of
services by Employee following termination of employment by Company, its related
entities or affiliates to any hotel franchisor, hotel owner or hotel operator
other than to:
(i) any division of a franchisor of hotel Brands listed on
Exhibit A solely devoted to one or more of such Brands;
(ii) any hotel owner or operator of more than five (5) AmeriHost
Inn hotels; or
(iii) any hotel owner or operator whose portfolio of hotels is
comprised of more than fifty percent (50%) of the hotel Brands listed
on Exhibit A (such a position described in (1), (2) and (3) above
sometimes referred to as a "Competitive Position"),
shall not be deemed to constitute a violation of the restrictive covenants
contained in this Section 4.4. For purposes of clarification, the Company
acknowledges that the preceding sentence permits Employee, following termination
of his employment with the Company, its related entities or affiliates, to
provide services to a division of a franchisor of a Brand listed on Exhibit A so
long as such division is not solely devoted to one or more Brands listed on
Exhibit A. For example, this sentence would permit Employee to perform services
for a division of Marriot International, Inc. (the franchisor of Fairfield Inn)
not affiliated with the Fairfield Inn Brand and not solely devoted to one or
more of the other Brands listed on Exhibit A.
4.5 Remedies.
(a) Injunctive Relief. Employee expressly acknowledges and agrees that
the Business of the Company is highly competitive and that a violation of
any of the provisions of Sections 4.1, 4.2, 4.3 or 4.4 would cause
immediate and irreparable harm, loss and damage to the Company not
adequately compensable by a monetary award. Employee further acknowledges
and agrees that the time periods and territorial areas provided for herein
are the minimum necessary to adequately protect the Business of the Company
and the goodwill of the Company. Without limiting any of the other remedies
available to the Company at law or in equity, or the Company's right or
ability to collect money damages, Employee agrees that any actual or
threatened violation of any of the provisions of Sections 4.1, 4.2, 4.3 or
4.4 may be immediately restrained or enjoined by any court of competent
jurisdiction, and that a temporary restraining order or emergency,
preliminary or final injunction may be issued in any court of competent
jurisdiction, without notice and without bond. Notwithstanding anything to
the contrary contained in
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this Agreement, the provisions of this Article IV shall survive the
termination of Employee's employment.
(b) Enforcement. It is the desire of the parties that the provisions
of Sections 4.1, 4.2, 4.3 or 4.4 be enforced to the fullest extent
permissible under the laws and public policies in each jurisdiction in
which enforcement might be sought. Accordingly, if any particular portion
of Sections 4.1, 4.2, 4.3 or 4.4 shall ever be adjudicated as invalid or
unenforceable, or if the application thereof to any party or circumstance
shall be adjudicated to be prohibited by or invalidated by such laws or
public policies, such section or sections shall be (i) deemed amended to
delete therefrom such portions so adjudicated or (ii) modified as
determined appropriate by such a court, such deletions or modifications to
apply only with respect to the operation of such section or sections in the
particular jurisdictions so adjudicating on the parties and under the
circumstances as to which so adjudicated.
(c) Legal Fees. In any action to enforce the terms of this Agreement,
each party shall be responsible for his, her or its own legal fees and
costs.
4.6 Definition of Affiliates. As used in this Agreement, "Affiliates"
shall have the same meaning as under Rule 405 of the Securities Act of 1933, as
amended.
4.7 Quit Claims. By execution of this Agreement, Employee: (i) assigns and
quit claims to the Company all right, title and interest as relates to the
Business of the Company in any patentable or potentially patentable invention or
design within the meaning of Title 35 of the United States Code, and any utility
or design created or discovered by Employee during the course of his employment
with the Company; and (ii) agrees that if during the course of his employment by
the Company, he discovers, invents or produces, without limitation, any
information, formulae, product, device, software, system, technique, drawing,
program or process, which is a "trade secret" within applicable law or deemed to
be such in the opinion of the Company's managers, such information, formulae,
product, device, system, technique, drawing, program or process shall be
assigned to the Company. Employee agrees to fully cooperate with the Company in
protecting the value and secrecy of any such trade secrets, and further agrees
to execute any and all documents the Company deems necessary to document any
such assignment to the Company. Employee designates the Company his
attorney-in-fact to execute any documents the Company may deem necessary that
relates to any such trade secret or assignment thereof to the Company.
Notwithstanding anything to the contrary herein, this Agreement does not
apply to any invention for which no equipment, supplies, facility or trade
secret information of the Company was used and which was developed entirely on
Employee's own time, unless: (a) the invention relates: (i) to the Business of
the Company; or (ii) to the Company's actual demonstrably anticipated research
or development; or (b) the invention results from any work performed by Employee
for the Company.
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ARTICLE V
MISCELLANEOUS
5.1 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered and received:
(a) when delivered, if delivered personally; (b) four (4) days after mailing,
when sent by registered or certified mail, return receipt requested and postage
prepaid; (c) one (1) business day after delivery to a private courier service,
when delivered to a private courier service providing documented overnight
service; and (d) on the date of delivery if delivered by telecopy, receipt
confirmed, provided that a confirmation copy is sent on the next business day by
first class mail, postage prepaid, in each case addressed as follows:
TO EMPLOYEE, AT: His home address as reflected on the Company's records.
TO COMPANY, AT: Arlington Hospitality, Inc.
2355 South Arlington Heights Road - Suite 400
Arlington Heights, IL 60005
Attention: President
Facsimile: 847-228-5422
WITH A COPY TO:
Shefsky & Froelich Ltd.
444 North Michigan Avenue - Suite 2500
Chicago, IL 60611
Attention: Mitchell D. Goldsmith, Esq.
Facsimile: 312-527-3194
E-Mail: mgoldsmith@shefskylaw.com
AND A COPY TO:
The Company c/o its general counsel.
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
5.2 Entire Agreement; Amendments, Etc. This Agreement contains the entire
agreement and understanding of the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof. Except as
provided in Sections 4.3(b) or 5.5 above, no modification, amendment, waiver or
alteration of this Agreement or any provision or term hereof shall in any event
be effective unless the same shall be in writing, executed by both parties
hereto, and any waiver so given shall be effective only in the specific instance
and for the specific purpose for which given.
5.3 Benefit. This Agreement shall be binding upon, and inure to the
benefit of, and shall be enforceable by, the heirs, successors, legal
representatives and permitted assignees of Employee and the successors,
assignees and transferees of the Company. This Agreement or any
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right or interest hereunder may not be assigned by Employee without the prior
written consent of the Company. This Agreement is assignable by the Company to
any entity which acquires all or substantially all of the assets of the Company.
5.4 No Waiver. No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder or pursuant hereto shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder or pursuant thereto.
5.5 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but, if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. If any part of any
covenant or other provision in this Agreement is determined by a court of law to
be overly broad thereby making the covenant unenforceable, the parties hereto
agree, and it is their desire, that the court shall substitute a judicially
enforceable limitation in its place, and that as so modified the covenant shall
be binding upon the parties as if originally set forth herein.
5.6 Compliance and Headings. Time is of the essence of this Agreement. The
headings in this Agreement are intended to be for convenience and reference
only, and shall not define or limit the scope, extent or intent or otherwise
affect the meaning of any portion hereof.
5.7 Governing Law. The parties agree that this Agreement shall be governed
by, interpreted and construed in accordance with the laws of the State of
Illinois. All parties hereto waive their right to trial by jury with respect to
the adjudication of any dispute hereunder.
5.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
5.9 Recitals. The Recitals set forth above are hereby incorporated in and
made a part of this Agreement by this reference.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be effective as of the day and year first above written.
COMPANY: EMPLOYEE:
ARLINGTON HOSPITALITY, INC. /s/ Stephen K. Miller
--------------------------------------
STEPHEN K. MILLER
By: /s/ Jerry H. Herman Address: 1360 French Creek Drive
------------------------------ Wayzata, MN 55391
Its: President
------------------------------
Date of Execution: 7-25-03 Date of Execution: 7-26-03
---------------- -------------------
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EXHIBIT A
EMPLOYMENT AGREEMENT - ARLINGTON HOSPITALITY, INC.
AND STEPHEN K. MILLER
COMPENSATION
1. Base Salary. During the Employment Term, the Company shall pay Employee
a base salary ("Base Salary") of One Hundred and Seventy-Five Thousand Dollars
($175,000) per year, payable in increments as is customarily paid by the
Company. The Company shall review the Base Salary annually.
2. Bonus. Employee shall be eligible and entitled to earn a bonus
comprised of a "Cash Bonus" and an "Equity Performance Bonus," as follows:
(a) In the 2004 calendar year, Employee shall be paid a total bonus
sliding on a scale range (the "2004 Bonus") such that if the objectives set
forth in Section 2(c)(i) are achieved, equal to approximately 50% of Base
Salary, with the precise amount of the 2004 Bonus to be determined by the
Company's Chief Executive Officer ("CEO") in his discretion (subject to
mandates, if any, from the Board of Directors or its Compensation
Committee). Employee shall also be eligible to receive, in addition to the
2004 Bonus, a Supplemental 2004 Bonus as set forth in Section 2(d).
(b) Allocation of 2004 Bonus. If the 2004 Bonus is earned pursuant to
the terms of this Section 2, forty percent (40%) of such 2004 Bonus shall
be in the form of a cash payment and sixty percent (60%) in the form an
Equity Performance Bonus (as defined below).
(c) Bonus Components. The payment of the 2004 Bonus shall depend upon
achievement of the following objectives:
(i) Up to twenty percent (20%) of the 2004 Year Bonus shall be
earned upon the Company's selling the number of Hotels at the prices
in the aggregate established by the Company as part of Operation Sell
(as that program is in existence and modified from time to time as
determined by the CEO, subject to mandates, if any, from the Board of
Directors or its Compensation Committee);
(ii) Up to forty percent (40%) of the 2004 Year Bonus shall be
earned upon the Company's and/or Affiliates' acquiring land and/or
existing hotels, and commencing construction on any new developments,
pursuant to the Company's budget goals and its underwriting criteria
for 2004 (as those goals and criteria are modified from time to time
as determined by the CEO, subject to mandates, if any, from the Board
of Directors or its Compensation Committee); and
(iii) Up to forty percent (40%) of the 2004 Year Bonus shall be
earned upon project specific (i.e., entities formed to acquire or
develop Hotels) subsidiaries or Affiliates of the Company
(collectively, "New Ventures") raising capital in the form of equity
from new partners, members or other sources ("New Equity"), pursuant
to the Company's budget goals for 2004.
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It is further understood that a portion of such Bonus Components shall
be subject to overall Company and/or development segment EBITDA budget
goals for 2004.
(d) Supplemental 2004 Bonus.
If in the CEO's reasonable discretion, Employee plays a significant
leadership role in the oversight and execution of New Ventures raising New
Equity in an amount greater than Four Million Dollars ($4,000,000) in the
2004 calendar year, a "Supplemental 2004 Bonus" will be payable as follows:
(i) 0.40% of each dollar received during 2004 between $4 million
to $6 million;
(ii) 0.50% of each dollar received during 2004 between $6 million
to $7 million;
(iii) 0.65% of each dollar received during 2004 between $7
million to $8 million; and
(iv) 0.80% of each dollar received during 2004 in excess of $8
million.
Any Supplemental 2004 Bonus will be paid in accordance with the
percentage allocation between a Cash Payment and Equity Performance Bonus
set forth in Section 2(b).
(e) Equity Performance Bonus. "Equity Performance Bonus" shall be an
award to Employee in form of restricted shares of the Company's common
stock, $.005 par value (the "Restricted Stock"). The terms of such
Restricted Stock shall be pursuant to a "Restricted Stock Grant Program" to
be developed by Company prior to January 1, 2004, provided, that if such
Restricted Stock Grant Program is not adopted by the Company or not
approved by the Company's shareholders, the Company shall have the right to
make a payment or grant to Employee with substantially similar economic
benefits, which may be in the form of equity, options, cash or such other
method as the CEO determines in good faith. Each stock certificate issued
pursuant to the terms of this Section 2(e) shall contain Employer's
customary restrictive legend utilized in connection with the private
placement of its shares.
Any Restricted Stock earned in the 2004 calendar year shall be subject
to vesting according to the following schedule: one-third when earned,
one-third one year after earned, and one-third two years after earned, as
long as Employee is employed with the Company on the vesting date, and has
been continuously employed since the date first set forth above, at each
anniversary.
(f) Discretionary Standards. All determinations by the CEO with
respect to Employee's compensation per the terms of this Exhibit A shall be
final absent bad faith or manifest error.
(g) 2003 Stub Period. The Company in its sole discretion may elect
whether or not to provide Employee a bonus with respect to employment
performance in calendar year 2003.
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(h) 2005 Bonus. The parameters for any bonus for Employee for 2005
shall be established by the CEO in his discretion (subject to mandates, if
any, from the Board of Directors or its Compensation Committee).
(i) Timing of Bonus Compensation. It is contemplated that Employee's
2004 Bonus, the Supplemental 2004 Bonus and any 2005 bonus will include
both annual and quarterly components.
3. Brands. The "Brands" for purposes of Article IV of this Agreement are
the following:
AmeriHost Inn Motel 6 Best Western
Holiday Inn Express Comfort Inn Econolodge
Ramada Inn Howard Johnson Microtel
Days Inn Knights Inn Sleep Inn
Baymont Inns Travelodge Fairfield Inns
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EXHIBIT B
Oxford Capital Partners, Inc.
AEW Capital Management, L.P.
Olympus Real Estate Partners
Crow Family Holdings
Charlesbank Capital Partners LLC
GE Capital Real Estate
BCL Hospitality Advisors, LLC
Highgate Hotels
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