EXHIBIT 10.31
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
This Third Amendment to Employment Agreement (the "Amendment") is made and
entered into as of the 2nd day of February 2005 by and between Arlington
Hospitality Inc. (the "Company") and Stephen K. Miller ("Employee").
RECITALS
WHEREAS, the Company and Employee entered into that certain Employment
Agreement dated July 25, 2003 by and between the Company and Employee, as
amended by the First Amendment dated September 10, 2003 and the Second Amendment
dated October 31, 2003 (collectively, the "Agreement");
WHEREAS, pursuant to the Agreement, Employee is currently employed by the
Company as its Senior Vice President - Real Estate and Business Development; and
WHEREAS, the Company and Employee have agreed to modify the Agreement as
provided herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements of the parties herein contained, the parties agree as follow:
1. All capitalized terms used but not defined herein shall have the meaning
ascribed to such term in the Agreement.
2. Amendment to Section 1.1. Section 1.1 of the Agreement is amended by
deleting it in its entirety and replacing it with the following:
1.1 Employment. The Company hereby employs, engages and hires Employee and
Employee hereby accepts employment with the Company for the Position, upon
the 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; provided, however, effective January 1,
2005, Employee shall serve as the Interim Chief Executive Officer of the
Company and shall serve in such capacity until a successor Chief Executive
Officer (a "New CEO") is duly appointed by the Company's Board of
Directors. During the period Employee serves as Interim Chief Executive
Officer (the "Interim Period"), Employee shall perform those
responsibilities as allocated from time to time by the Company's Board of
Directors. After expiration of the Interim Period, Employee shall serve as
the Company's Senior Vice President - Real Estate and Business Development.
3. Amendment to Section 2.4. Section 2.4 of the Agreement is amended by
deleting it in its entirety and replacing it with the following:
2.4 Severance Upon Termination Without Cause. If the Company terminates
Employee's employment without Cause and such termination is effective as of
a date
that is: (a) three (3) months or more prior to the end of the expiration of
the Employment Term, Employee shall be entitled to receive (i) his
then-current Base Salary, expense reimbursement, vacation pay, benefits and
bonuses, each to the extent earned, accrued and unpaid through the date of
termination, plus (ii) the Usual Salary Amount (as defined in Exhibit A)
for a period ending on the lesser of six (6) months after the termination
or the end of the Employment Term, which amounts shall be payable in
intervals in accordance with the general payroll payment practice of the
Company; or (b) less than three (3) months prior to the end of the
Employment Term, Employee shall be entitled to receive (i) his then-current
Base Salary, expense reimbursement, vacation pay, benefits and bonuses,
each to the extent earned, accrued and unpaid through the date of
termination, plus (ii) the Usual Salary Amount (as defined in Exhibit A)
for a period of three (3) months, which amounts shall be payable in
intervals in accordance with the general payroll payment practice of the
Company. As a supplement to, and not as an addition to, the severance
payments described in (a)(ii) and (b)(ii) above, if Employee is terminated
without Cause at any time within twelve (12) months of the Company's
appointment of a New CEO, Employee shall be entitled to receive a severance
payment in an amount equal to six (6) months of the Usual Salary Amount,
which amount shall be payable in intervals in accordance with the general
payroll payment practice of the Company or as otherwise agreed to by the
Company and Employee.
4. Amendment to Section 1 of Exhibit A. Section 1 of Exhibit A of the
Agreement is amended by deleting it in its entirety and replacing it with
the following:
1. Base Salary. The Company shall pay Employee a base salary ("Base
Salary") equal to: (a) for the period commencing on July 1, 2004 and
continuing through and including December 31, 2004, One Hundred Eighty-Five
Thousand Dollars ($185,000) per year (the "Usual Salary Amount"); (b) for
the period commencing on January 1, 2005 and continuing to the date a New
CEO is appointed (the "Appointment Date"), Two Hundred Thousand Dollars
($200,000) per year; and (c) commencing on the Appointment Date and
continuing for the remaining Employment Term, the Usual Salary Amount. In
each case, the Base Salary shall be payable in increments as is customarily
paid by the Company and shall be subject to increase from time to time as
determined in the sole discretion of the Company's Board of Directors. To
compensate Employee for the Usual Salary Amount which should have been paid
for the period from July 1, 2004 to the date of this Amendment (the "Past
Period"), the Company shall provide Employee a lump sum payment, subject to
applicable withholding and other taxes, in the amount necessary to
compensate Employee at the Usual Salary Amount for the Past Period.
5. Amendment to Section 2(h) of Exhibit A. Section 2(h) of Exhibit A is hereby
amended by deleting it in its entirety and replacing it with the following:
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(h) 2005 Incentive Bonus. Commencing on January 1, 2005 and continuing
through the Employment Term, Employee shall be eligible to participate in
those bonus and incentive plans and other programs as determined from time
to time in the sole discretion of the Company's Board of Directors.
6. Amendment to Section 2 of Exhibit A. The following Section shall be
inserted as subsection (j) of Section 2 of Exhibit A:
(j) Transition, Performance and Retention Bonus. In addition to the bonuses
otherwise provided herein, on December 31, 2005, so long as Employee is
employed by the Company on such date, or, if not employed by the Company on
such date the reason for such unemployment is a termination by the Company
without Cause, Employee shall receive a bonus equal to Twenty Thousand
Dollars ($20,000) if, on or before June 30, 2005, the Company successfully
secures, on behalf of itself or its Affiliate or venture partner, all debt
and equity funding necessary for the Company or its Affiliate or venture
partner to develop five (5) hotels, each hotel having at least seventy (70)
rooms. For purposes of this Section, the Company shall be deemed to have
"secured" the required funding, if the funding for at least four (4) hotels
has been completed and fully funded, and a firm commitment has been
obtained for the funding of the fifth hotel.
7. No Other Amendment. The Employment Agreement has not been amended in any
other way other than as set forth in this Amendment.
8. Counterparts. This Amendment may be executed in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year specified at the beginning hereof.
THE COMPANY: THE EMPLOYEE:
ARLINGTON HOSPITALITY, INC.
/s/ STEPHEN K. MILLER
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STEPHEN K. MILLER
By: /s/ James B. Dale
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By: /s/ Richard A. Gerhart
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