Exhibit 10.5.2

 

MERISTAR HOSPITALITY CORPORATION

 

NON-EMPLOYEE DIRECTORS’ INCENTIVE PLAN

 

ARTICLE I

 

Definitions

 

1.1 Award Date means the first business day following the Company’s annual
meeting of stockholders, beginning with the annual meeting of stockholders in
1999.

 

1.2 Board means the Board of Directors of the Company.

 

1.3 Committee means the Board or the committee appointed by the Board to
administer the Plan.

 

1.4 Common Stock means the common stock of the Company.

 

1.5 Company means MeriStar Hospitality Corporation, a Maryland corporation.

 

1.6 Fair Market Value means, on any given date: if the Common Stock is not
listed on an established stock exchange, Fair Market Value shall be the average
of the final bid and asked quotations on the over-the-counter market in which
the Common Stock is traded or, if applicable, the reported “closing” price of a
share of Common Stock in the New York over-the-counter market as reported by the
National Association of Securities Dealers, Inc. If the Common Stock is listed
on one or more established stock exchanges, Fair Market Value shall be deemed to
be the highest closing price of a share of Common Stock reported on any of such
exchanges. In any case, if no sale of Common Stock is made on any stock exchange
or over-the-counter market on that date, then Fair Market Value shall be
determined as of the next preceding day on which there was a sale.

 

1.7 First Award Date means the date following the consummation of the merger
contemplated by the Agreement and Plan of Merger among American General
Hospitality Corporation and American General Hospitality Operating Partnership,
L.P., and Capstar Hotel Company, Capstar Management Company, L.P. and Capstar
Management Company II, L.P., dated as of March 15, 1998, upon which the
Participant commences service as a member of the Board, whether by election or
appointment.

 

1.8 Internal Revenue Code means the Internal Revenue Code of 1986, as amended.

 

1.9 Option means a stock option that entitles the holder to purchase shares of
Common Stock from the Company on the terms set forth in Article IV of this Plan.

 

1.10 Participant means a member of the Board who, on the First Award Date or
applicable Award Date, is not an employee or officer of the Company or any
“subsidiary” or “parent” corporation of the Company within the meaning of
Section 424 of the Internal Revenue Code.

 

1.11 Plan means the MeriStar Hospitality Corporation Non-Employee Directors’
Incentive Plan.

 

ARTICLE II

 

Purposes

 

The Plan is intended to (i) assist the Company in recruiting and retaining
non-employee directors and (ii) promote a greater identity of interest between
Participants and stockholders by enabling Participants to participate in the
Company’s future success.

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ARTICLE III

 

Administration

 

The Plan shall be administered by the Committee. The Committee shall have
complete authority to interpret all provisions of the Plan; to adopt, amend, and
rescind rules and regulations pertaining to the administration of the Plan and
to make all other determinations necessary or advisable for the administration
of the Plan. The express grant in the Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. Any decision made, or action taken, by the Committee in connection
with the administration of the Plan shall be final and conclusive. No member of
the Committee shall be liable for any act done in good faith with respect to the
Plan. All expenses of administering the Plan shall be borne by the Company.

 

ARTICLE IV

 

Options & Common Stock Grants

 

4.1 Grant of Options. Each Participant shall be granted an Option for 7,500
shares of Common Stock on the applicable First Award Date. Thereafter, each
Participant shall receive an annual grant of Common Stock on each Award Date
having a Fair Market Value of $20,000. All Options shall be evidenced by
Agreements that shall be subject to the applicable provisions of this Plan and
to such other provisions as the Committee may adopt which are not inconsistent
with the provisions of this Plan.

 

4.2 Option Price. The price per share of Common Stock purchased on the exercise
of an Option shall be the Fair Market Value on the date that the Option is
granted.

 

4.3 Maximum Option Period. The maximum period during which an Option may be
exercised shall be ten years from the date of grant.

 

4.4 Exercise of Options. All Options granted under the Plan shall vest in three
annual installments beginning on the date of grant and on subsequent
anniversaries thereof (each, a “Vesting Date”), provided the Participant
continues to serve as a director of the Company on such Vesting Date.

 

4.5 Effect of Termination of Services or Death. If a Participant ceases to serve
as a director of the Company for any reason, the Options that have been
previously granted to that Participant and that are not vested as of that date
shall be forfeited. Options that have vested as of the date of such cessation of
services may be exercised by the Participant, in accordance with and subject to
the terms of the Plan, after the date such Participant ceases to be a director
of the Company. If a Participant dies, the Options that have been previously
granted to that Participant and that are vested as of the date of death may be
exercised by the administrator of the Participant’s estate, or by the person to
whom such Options are transferred by will or the laws of descent and
distribution. In no event, however, may any Option be exercised after the
expiration date of such Option. Any Option or portion thereof that is not
exercised during the applicable time period specified above shall be deemed
terminated at the end of the applicable time period for purposes of Article VI
hereof.

 

4.6 Effect of a Change in Control. All Options granted pursuant to this Plan
shall immediately vest upon a Change in Control of the Company. For purposes of
the Plan, a “Change in Control” shall mean (i) the commencement of a public
tender offer for all or any portion of the Common Stock, (ii) a proposal to
merge, consolidate or otherwise combine with another company is submitted to the
stockholders of the Company for approval, or (iii) the Board approves any
transaction or event that would constitute a change of control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of the Securities Exchange Act of 1934, as amended.

 

4.7 Payment of Option Price. Payment of the Option price shall be made in cash,
cash equivalent acceptable to the Committee, Company Common Stock, or a
combination thereof. In addition, a Participant may provide instructions to the
Company that upon receipt of the Option price in cash from a broker or dealer
acting at the direction of the Participant in payment for any shares of Common
Stock pursuant to the exercise of an Option, the Company shall issue such shares
of Common Stock directly to the designated broker or dealer. If shares of Common
Stock are surrendered in payment of the Option price, the shares

 

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surrendered must have an aggregate Fair Market Value (determined as of the day
preceding the exercise date) that, together with any cash or cash equivalent
paid, is not less than the Option price for the number of shares of Common Stock
for which this Option is being exercised.

 

4.8 Nontransferability. Each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom an Option is granted, the Option
may be exercised only by the Participant. No right or interest of a Participant
in any Option shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.

 

4.9 Transferable Options. Section 4.8 hereof to the contrary notwithstanding, an
Option may be transferred by a Participant to the Participant’s children,
grandchildren, spouse, one or more trusts for the benefit of such family members
or a partnership in which such family members are the only partners; provided,
however, that the Participant may not receive any consideration for the
transfer. The holder of an Option transferred pursuant to this section shall be
bound by the same terms and conditions that governed the Option during the
period that it was held by the Participant.

 

4.10 Stockholder Rights. No Participant shall have any rights as a stockholder
with respect to shares of Common Stock subject to his or her Option until the
date of exercise of such option.

 

ARTICLE V

 

Shares in Lieu of Fees

 

5.1 Each Participant shall have the right to elect to receive payment of any or
all director fees in shares of Common Stock rather than cash. Unless a
Participant elects otherwise, fees paid in shares of Common Stock will be paid
at the same time as are fees paid in cash.

 

ARTICLE VI

 

Stock Subject to Plan

 

6.1 Shares Issued. Upon the exercise of an Option, the Company may deliver to
the Participant (or the Participant’s broker if the Participant so directs),
shares of Common Stock from its authorized but unissued Common Stock.

 

6.2 Aggregate Limit. The maximum aggregate number of shares of Common Stock that
may be issued under this Plan is the total of (i) two percent (2%) of the number
of shares of Common Stock that were outstanding as of the end of the immediately
preceding calendar year (rounded downward if necessary to eliminate fractional
shares); minus (ii) the number of shares subject to awards granted under the
Plan through the last day of the immediately preceding calendar year; plus (iii)
as of the last day of the immediately preceding calendar year, the number of
shares with respect to which previously granted awards under the Plan have
expired or have been forfeited. The maximum aggregate number of shares that may
be issued under this Plan shall be subject to adjustment as provided in Article
VII.

 

6.3 Reallocation of Shares. If an Option is terminated, in whole or in part, for
any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to other Options
to be granted under this Plan.

 

ARTICLE VII

 

Adjustment Upon Change in Common Stock

 

The provisions of this Plan and the terms of outstanding Options shall be
adjusted as the Committee shall determine to be equitably required in the event
that there is an increase or reduction in the number of shares of Common Stock,
or any change (including, but not limited to, a change in value) in the shares
of Common Stock or exchange of shares of Common Stock for a different number or
kind of shares or other securities of the Company by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, subdivision or consolidation of shares, extraordinary
dividend, change in

 

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corporate structure or otherwise. Any determination made under this Article VII
by the Committee shall be final and conclusive.

 

The issuance by the Company of shares of any class, or securities convertible
into shares of any class, for cash or property, or for labor or services, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares of obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the provisions of this Plan or the
terms of outstanding Options.

 

ARTICLE VIII

 

Compliance With Law and

Approval of Regulatory Bodies; Governing Law

 

No Common Stock shall be issued and no certificates for shares of Common Stock
shall be delivered under the Plan except in compliance with all applicable
federal and state laws and regulations, any listing agreement to which the
Company is a party, and the rules of all domestic stock exchanges on which the
Company’s Common Stock may be listed. The Company shall have the right to rely
on an opinion of its counsel as to such compliance. Any certificate issued to
evidence Common Stock issued upon the exercise of an Option granted under the
Plan may bear such legends and statements as the Committee may deem advisable to
assure compliance with federal and state laws and regulations. No Common Stock
shall be issued and no certificate for shares of Common Stock shall be delivered
upon the exercise of an Option granted under the Plan until the Company has
obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters. Except as to matters of
federal law, this Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Maryland
without giving effect to conflicts of law principles.

 

ARTICLE IX

 

General Provisions

 

9.1 Unfunded Plan. The Plan, insofar as it provides for awards, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by awards under the Plan. Any liability of the
Company to any person with respect to any award to be made under the Plan shall
be based solely upon any contractual obligations that may be created pursuant to
the Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.

 

9.2 Rules of Construction. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.

 

ARTICLE X

 

Amendment

 

The Board may amend from time to time or terminate the Plan at any time;
provided, however, that no amendment may become effective until stockholder
approval is obtained if the amendment (i) materially increases the aggregate
number of shares of Common Stock that may be issued under this Plan or (ii)
stockholder approval would be required for compliance with stock exchange rules.
No amendment shall, without a Participant’s consent, adversely affect any rights
of such Participant under any outstanding Option.

 

ARTICLE XI

 

Duration of Plan

 

No Option may be made under this Plan after December 31, 2008. Options made
before that date shall remain valid in accordance with their terms.

 

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ARTICLE XII

 

Effective Date of Plan

 

The Plan was originally adopted by the Board on July 11, 1996 and approved by
shareholders on July 15, 1996. The Plan was subsequently amended by the Board on
April 3, 1998, which amendments were approved by the stockholders on July 28,
1998.

 

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