EXHIBIT 10.16

SEPARATION AGREEMENT AND GENERAL RELEASE

     John Emery for himself, his spouse and anyone acting on his behalf, and
MeriStar Hospitality Corporation (including MeriStar Hospitality Operating
Partnership, L.P.) and any and all respective predecessors, successors,
franchisors, lessors, owners, assigns, present or past affiliates (but NOT
MeriStar Management Company, LLC or Interstate Hotels & Resorts, Inc.) present
or past wholly or partially owned, direct or indirect subsidiaries, any persons
or entities which all present or in the past directly or indirectly owns or
owned all or any part of their equity interest (either as a member, shareholder
or otherwise) and any and all of any of the foregoing present or past officers,
directors, employees, agents, attorneys or consultants (“MeriStar”) enter into
this Separation Agreement and General Release (the “Agreement”);

     WHEREAS, Mr. Emery and MeriStar entered into an Employment Agreement dated
April 1, 2000, and amended on March 26, 2002 (“Employment Agreement”);

     WHEREAS, it is the mutual desire of Mr. Emery and MeriStar to terminate Mr.
Emery’s employment with MeriStar without cause to be effective on November 1,
2002, and that the parties intend to terminate such Employment Agreement in
accordance with the terms of this Agreement;

     WHEREAS, Mr. Emery and MeriStar desire fully and finally to resolve and
settle all claims between them arising out of Mr. Emery’s employment and
separation from employment with MeriStar, and all other actions and claims Mr.
Emery has or may have arising from or in any way related to the employment
relationship and separation from employment with MeriStar;

     NOW THEREFORE, in consideration for the mutual promises contained herein,
the parties agree to the following terms:

     Mr. Emery waives and releases MeriStar, and any of its past, present or
future agents, parents, subsidiaries, principals, franchisors, owners, lessors,
officers, directors, employees, affiliates (but NOT MeriStar Management Company,
LLC or Interstate Hotels & Resorts, Inc.), successors and assigns from any and
all legal claims of any type to date arising from his employment or separation
of employment from MeriStar and covenants not to institute any legal proceeding
based on any claim or cause of action of any type he may have against MeriStar,
and any of its past, present or future agents, parents, subsidiaries,
principals, franchisors, owners, lessors, officers, directors, employees,
affiliates, successors and assigns, directors managers or employees. This
includes but is not limited to any and all claims which could be brought under
the common law (such as defamation, breach of contract including the Employment
Agreement, emotional distress or wrongful termination) or pursuant to federal,
state or local equal employment statutes including Title VII of the Civil Rights
Act of 1964, as amended; the Employee Retirement Income Security Act; and the
Age Discrimination in Employment Act. Excluded from this release is any right or
claim that cannot be waived by law. Mr. Emery is waiving, however, any right to
monetary recovery should any local, state or federal agency pursue any claims on
his behalf. Nothing in this paragraph shall be construed to waive any party’s
right to enforce any provision of this Agreement. Notwithstanding this
paragraph,

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Sections 3(h) and 10(f) of Mr. Emery’s Employment Agreement shall remain in full
force and effect following the termination of the Employment Agreement and
execution of this Agreement.

     2. MeriStar hereby forever releases and discharges Mr. Emery, his heirs,
representatives, agents, successors and assigns from all manner of actions or
causes of action, suits, debts, sums of money, accounts, contracts including the
Employment Agreement, controversies, promises, damages, judgments, executions,
liabilities, claims or demands of any kind or nature whatsoever, whether in law
or in equity, or both, which it had, now has, or which it may have had against
Mr. Emery, by reason of any matter or cause whatsoever prior to the date of this
Agreement; provided, however, that nothing in this paragraph shall be construed
to waive any party’s right to enforce any provision of this Agreement.

     3. Mr. Emery agrees that he has been paid for all hours worked, not
suffered any on-the-job injury for which he has not already filed a claim, and
has received all of the vacation pay he was owed.

     4. MeriStar agrees to pay Mr. Emery a lump sum payment of two (2) times Mr.
Emery’s base salary ($230,000) and bonus for year 2001 ($0), totaling Four
hundred and sixty thousand dollars ($460,000), less applicable taxes and
withholdings. This payment shall be paid according to the following schedule:
One hundred fifty-three thousand and three hundred thirty-three dollars
($153,333), less applicable taxes and withholdings, shall be made on January 20,
2003; three hundred and six thousand six hundred sixty-six dollars ($306,666),
less applicable taxes and withholdings, shall be made on April 4, 2003.

     5. MeriStar agrees to pay Mr. Emery a lump sum payment of two hundred and
fifty thousand dollars ($250,000), less applicable taxes and withholdings.
$83,333 of this payment shall be made January 20, 2003 and $166,666 of this
payment shall be made on April 4, 2003. Mr. Emery acknowledges that this payment
constitutes consideration to which he is not otherwise entitled and, in and of
itself, constitutes valid consideration for the promises made by him in this
Agreement.

     6. MeriStar agrees that (a) all 35,168 unvested restricted shares of
MeriStar Hospitality Corporation common stock held by Mr. Emery shall vest
immediately and (b) Mr. Emery holds 237,500 Profits-Only Operating Partnership
Units (“POPs”) all of which have either vested prior to the date of this
agreement or vest in connection with the execution of this agreement. MeriStar
acknowledges that no further contractual restrictions exist on any common stock
or POPs held by Mr. Emery.

     On November 18, 2002, subject to federal and state tax withholding
requirements, the Company agrees to acquire from Mr. Emery 187,500 POPs in
exchange for (a) 50,000 common shares issued under the Company’s Incentive Plan
which will immediately fully vest

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and (b) 137,500 common shares of the Company (the “Restricted Shares”) which may
not be sold by Mr. Emery prior to November 19, 2003 unless the Company is first
given the right to purchase (the “Right of First Refusal”) such shares at the
price of $0.01 per share. The certificate for the Restricted Shares issued on
November  18, 2002, will contain the legend listed on Exhibit A to this
Agreement. The Right of First Refusal will terminate at 12:01 am on November 19,
2003, and the Company shall make all reasonable efforts to deliver an unlegended
certificate representing the Restricted Shares to Mr. Emery on or before
November 20, 2003.

      On January 6, 2003, subject to federal and state tax withholding
requirements, the Company agrees to acquire from Mr. Emery 50,000 POPs in
exchange for (a) 50,000 common shares issued under the Company’s Incentive Plan
which will immediately fully vest.

      MeriStar also agrees that Mr.  Emery’s options to purchase 269,064 shares
of MeriStar Hospitality are hereby fully vested and are exercisable through the
tenth (10th) anniversary date that each option award was granted. The schedule
of these options is attached as Exhibit B to this Agreement.

     7. If other senior officers of MeriStar receive bonus payments in 2002,
then MeriStar agrees to pay Mr. Emery a pro-rated portion (9/12th) of such bonus
amount, less applicable taxes and withholdings. Such payment shall be made no
later than April 15, 2003.

     8. MeriStar agrees to pay monthly lease payments on Mr. Emery’s automobile
lease for the remainder of the term, up through April 2003. Mr. Emery agrees to
reimburse the Company for any lease payments made from November 1, 2002 through
April 2003.

     9. The parties agree to keep the terms of this Agreement confidential and
not to disclose the terms to any person (other than immediate family, MeriStar
management with a need to know, legal counsel, and financial and tax advisors)
without express written consent from all parties to the Agreement.
Notwithstanding the provisions of this paragraph, it will not be a breach of
this Settlement Agreement and General Release for any party to submit or reveal
the terms hereof when required by any court or administrative agency asserting
jurisdiction over the instant settlement, or related matters.

     10.  (a)  Mr. Emery understands and acknowledges that MeriStar and its
subsidiaries or affiliated ventures (“Company Affiliates”) own and have
developed and compiled certain Confidential Information, and that during the
course of his rendering services to MeriStar, Confidential Information was
disclosed to him by the Company Affiliates. Mr. Emery agrees that, for a period
of three years up through November 1, 2005, he will not use or disclose, furnish
or make accessible to anyone, directly or indirectly, any Confidential
Information of the Company Affiliates.

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     (b) As used herein, the term “Confidential Information” means any trade
secrets confidential or proprietary information, or other knowledge, know-how,
information, documents or materials, owned, developed or possessed by a Company
Affiliate pertaining to its business the confidentiality of which such company
takes reasonable measures to protect, including, but not limited to, trade
secrets, techniques, know-how (including designs, plans, procedures, processes
and research records), software, computer programs, innovations, discoveries,
improvements, research, developments, test results, reports, specifications,
data, formats, marketing data and business plans and strategies, agreements and
other forms of documents, expansion plans, budgets, projections, and salary,
staffing and employment information. Notwithstanding the foregoing, Confidential
Information shall not in any event include information which (i) was generally
known or generally available to the public prior to its disclosure to Mr. Emery,
(ii) becomes generally known or generally available to the public subsequent to
its disclosure to Mr.  Emery through no wrongful act of Mr. Emery, (iii) is or
becomes available to Mr. Emery from sources other than the Company Affiliates
which sources are not known to Mr. Emery to be under any duty of confidentiality
with respect thereto or (iv) Mr. Emery is required to disclose by applicable law
or regulation or by order of any court or federal, state or local regulatory or
administrative body (provided that Mr. Emery provides MeriStar with prior notice
of the contemplated disclosure and reasonably cooperates with MeriStar, at
MeriStar’s sole expense, in seeking a protective order or other appropriate
protection of such information).

     (c) Mr. Emery agrees that he will not reveal or disclose, sell, use,
lecture upon, or publish any such Confidential Information or authorize anyone
else to do so at any time subsequent to his employment with MeriStar. Mr. Emery
agrees to return to MeriStar immediately all documents, files, lists and other
information, whether in hard copy or machine readable form which relate or refer
in any way to MeriStar's business, its shareholders, or employees, and any
future use of same by Mr. Emery is prohibited. Failure to comply with this
paragraph will constitute a material breach of the Agreement. Nothing in this
paragraph will prohibit Mr.  Emery from entering into future contracts with
MeriStar or its related entities.

     (d) Paragraphs 10(a)(b) and (c) above will not apply to Mr. Emery so long
as Mr. Emery remains employed as an executive officer of Interstate Hotels &
Resorts, Inc.

     11. Mr. Emery agrees he will not make any false or disparaging statements
about MeriStar or any of its corporate managers or employees. MeriStar agrees
that it has not and will not make any statements that are professionally or
personally disparaging about, or adverse to Mr. Emery, including, but not
limited to, any statements that disparage his capability or any other aspect of
his performance while under the employ of MeriStar, and that MeriStar will not
engage in any conduct which is intended to harm professionally or personally
Mr. Emery’s reputation.

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      12.   Mr. Emery states that he is signing this Agreement knowingly and
voluntarily, that he has not been coerced into signing this Agreement, and that
this Agreement resolves all matters between him and MeriStar.

      13.   The parties agree that if any part of this Agreement is found to be
illegal or invalid, the rest of the Agreement will still be enforceable.

      14.   This Agreement shall never at any time for any purpose be considered
as an admission of liability or wrongdoing by MeriStar or Mr. Emery.

      15.   This Agreement is nonprecedential and may not be raised as evidence
by any person in connection with any subsequent litigation, except as necessary
to enforce this Agreement.

      16.   If MeriStar determines that Mr. Emery has breached the terms of this
Agreement, and intends to enforce its rights under the Agreement against
Mr. Emery, where practical, MeriStar agrees to give Mr. Emery written notice
that the specified conduct or event has occurred, and that MeriStar intends to
pursue its rights under the Agreement if Mr. Emery fails to cure such conduct or
event within thirty (30) days of the receipt of such notice.

      17.   This Agreement comprises the entire agreement between MeriStar and
Mr. Emery and cancels all previous negotiations and agreements in connection
with the subject matter of this Agreement. This Agreement may not be modified or
supplemented except in a writing signed by MeriStar and Mr. Emery.

      18.   This Agreement will be interpreted in accordance with the laws of
the District of Columbia without giving effect to its conflict of law
principles.

      19.   The parties agree that any and all disputes, controversies or claims
arising under or in connection with this Agreement including, without
limitation, those relating to the general validity, enforceability or breach of
this Agreement, shall be subject to confidential, binding arbitration under the
Commercial Rules of the American Arbitration Association. The decision of the
Arbitrator shall be final and binding. The Arbitrator shall have no authority to
add to, delete from or otherwise modify the terms of this Agreement. In the
event a dispute over the interpretation or breach of this Agreement is brought
to arbitration, the Arbitrator shall order the non-prevailing party to pay the
other’s attorneys’ fees and costs associated with the arbitration. Nothing in
this paragraph requires MeriStar to pursue arbitration as a condition precedent
to pleading this Agreement as a bar to any action or suit before any court or
administrative agency. The decision of the arbitrator shall be final and
conclusive, and the parties waive any right to trial de novo or appeal excepting
only confirming the arbitrator’s administrative proceeding against the other
with respect to any arbitrable dispute by any method other than arbitration in

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accordance with this paragraph, the responding party shall be entitled to
recover from the initiating party all damages, costs, expenses and attorney’s
fees incurred as a result of such action.

     The undersigned state that they have carefully read this Agreement, that
they know and understand its terms, and they sign it freely.

        /s/ John Emery

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Date   Mr. John Emery     /s/ Paul W. Whetsell

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Date   MeriStar Hospitality Corporation
By     Chief Executive Officer  

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  Title  

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EXHIBIT A — Restricted Shares Legend

     The shares represented by this certificate have not been registered under
the Securities Act of 1933 and may not be sold, offered for sale or otherwise
transferred or disposed unless a registration statement under such Act is in
effect with respect thereto or unless the company has received an opinion of
counsel satisfactory to it, that an exemption from such registration is
applicable to said shares. Such shares are subject to an agreement restricting
resale of the shares within a one (1) year period unless the Company is given a
right of first refusal at the price of $.01 per share. The shares shall remain
subject to such restriction during such period notwithstanding any transfer.

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EXHIBIT B

      MeriStar Hospitality Corporation   OUTSTANDING AND EXERCISABLE BY PRICE  
  AS OF 9/30/02     ID is equal to emeryj

 

                                                                               
              Option   Expiration   Remaining           Option   Shares Name  
ID   Number   Date   Date   Life in Years           Price   Outstanding

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Emery, John
  EmeryJ     103       8/20/96       8/20/96               3.89             $
15.64       1,564  
Emery, John
  EmeryJ     104       8/20/96       8/20/96               3.89             $
15.64       17,500  
Emery, John
  EmeryJ     00000002       2/4/99       2/4/09               6.35             $
19.19       150,000  
Emery, John
  EmeryJ     00000022       12/14/99       12/14/09               7.21          
  $ 14.88       100,000  
 
                                                                   

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  Name: Emery, John                         Avg. Life     6.49     Avg. Out   $
17.34       269,064  
 
                                                  Avg. Exer   $ 17.66          
 
                                                                   

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  TOTALS                           Avg. Life     6.49     Avg. Out   $ 17.34    
  269,064  
 
                                                  Avg. Exer   $ 17.66