EXHIBIT 10.2
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 Xxxxxxx X. Xxxxxx ("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:
All capitalized terms used but not defined herein shall have the meaning
ascribed to such term in the Agreement.
1. 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 the earlier of April 30, 2005 or 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.
2. Amendment to Section 2.1. Section 2.1 of the Agreement is amended by
deleting it in its entirety and replacing it with the following:
2.1 Term. The term of employment under this Agreement shall be for
the period commencing effective as of August 19, 2003 and
ending April 30, 2006. The period of Employee's employment
hereunder is referred to as the "Employment Term".
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.
Notwithstanding the foregoing, if Employee is terminated without Cause
at any time within twelve (12) months of the Company's appointment of a
New CEO ("CEO Termination Date"), Employee shall be entitled to
receive, in lieu of the severance payments described in (a) and (b)
above: (i) his then-current Base Salary, expense reimbursement,
vacation pay, benefits and bonuses, each to the extent earned, accrued
and unpaid through the CEO Termination Date, plus (ii) the Usual Salary
Amount (as defined in Exhibit A) for a period of six (6) months after
the CEO Termination Date, which amounts shall be payable in intervals
in accordance with the general payroll payment practice of the Company.
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 31, 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 earlier of April 30, 2005 or the date a New CEO is
appointed (the "Appointment Date"), Two Hundred Thousand Dollars
($200,000) per year; and (c) commencing on the earlier of April 30,
2005 or 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 31, 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. The Company shall review the Base Salary annually
in conjunction with the annual reviews conducted for corporate office
personnel.
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:
(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:
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ARLINGTON HOSPITALITY, INC. XXXXXXX X. XXXXXX
By:
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Its:
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By:
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Its:
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