Document:

exv10w16

 

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
	
	 	

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

	Date	 	MeriStar Hospitality
Corporation
By
	 
		 	Chief Executive Officer
		 	

		 	Title
	 

 

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.

 

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
	
	 	
	 	
	 	
	 	
	 	
	 	 	 	 	 	
	 	

	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	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 
	 
	 	Name: Emery, John	 	 	 	 	 	 	 	 	 	 	 	 	Avg. Life	 	 	6.49	 	 	Avg. Out	 	$	17.34	 	 	 	269,064	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Avg. Exer	 	$	17.66	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	 
	 
	 	TOTALS	 	 	 	 	 	 	 	 	 	 	 	 	 	Avg. Life	 	 	6.49	 	 	Avg. Out	 	$	17.34	 	 	 	269,064	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Avg. Exer	 	$	17.66exv10w17

 

Exhibit 10.17

EXECUTIVE EMPLOYMENT AGREEMENT

EXECUTIVE EMPLOYMENT AGREEMENT, effective as of December 2, 2002 by and between
MERISTAR HOSPITALITY CORPORATION, a Maryland corporation (the “Company”),
MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the “Partnership”), and DONALD D. OLINGER (the “Executive”), an
individual residing at 4 Pissaro Court, North Potomac, MD 20878.

     The Company and the Partnership desire to employ the Executive in the
capacity of Chief Financial Officer and the Executive desires to be so
employed, on the terms and subject to the conditions set forth in this
agreement (the “Agreement”);

     Now, therefore, in consideration of the mutual covenants set forth herein
and other good and valuable consideration the parties hereto hereby agree as
follows:

     1.     Employment Term. The Company and the Partnership each hereby
employ the Executive, and the Executive agrees to be employed by the Company
and the Partnership, upon the terms and subject to the conditions set forth
herein, for a term of three (3) years, commencing on December 2, 2002 (the
“Commencement Date”), unless terminated earlier in accordance with Section 4 of
this Agreement; provided that such term shall automatically be extended
from time to time for additional periods of one calendar year from the date on
which it would otherwise expire unless the Executive, on one hand, or the
Company and the Partnership, on the other, gives notice to the other party or
parties prior to such date that it elects to permit the term of this Agreement
to expire without extension on such date. (The initial term of this Agreement
as the same may be extended in accordance with the terms of this Agreement is
hereinafter referred to as the “Term”).

     2.     Positions: Conduct.

            (a) During the Term, the Executive will hold the title and office of, and
serve in the position of, Chief Financial Officer of the Company and the
Partnership. The Executive shall undertake the responsibilities and exercise
the authority customarily performed, undertaken and exercised by persons
situated in similar executive capacity, and shall perform such other specific
duties and services (including service as an officer, director or equivalent
position of any direct or indirect subsidiary without additional compensation)
as they shall reasonably request consistent with the Executive’s position.

            (b) During the Term, the Executive agrees to devote his full business time
and attention to the business and affairs of the Company and the Partnership
and to faithfully and diligently perform, to the best of his ability, all of
his duties and responsibilities hereunder. Nothing in this Agreement shall
preclude the Executive from devoting reasonable time and attention to (i)
serving, with the approval of the Board, as a director, trustee or member of
any committee of any organization, (ii) engaging in charitable and community
activities and (iii) managing his personal

 

 

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investments and affairs; provided that such activities do not
involve any material conflict of interest with the interests of the Company or,
individually or collectively, interfere materially with the performance by the
Executive of his duties and responsibilities under this Agreement.
Notwithstanding the foregoing and except as expressly provided herein, during
the Term, the Executive may not accept employment with any other individual or
entity, or engage in any other venture which is directly or indirectly in
conflict or competition with the business of the Company or the Partnership.

            (c) The Executive’s office and place of rendering his services under this
Agreement shall be in the principal executive offices of the Company which
shall be in the Washington, D.C. metropolitan area. Under no circumstances
shall the Executive be required to relocate from the Washington, D.C.
metropolitan area or provide services under this Agreement in any other
location other than in connection with reasonable and customary business
travel. During the Term, the Company shall provide the Executive with
executive office space, and administrative and secretarial assistance and other
support services consistent with his position as Chief Financial Officer and
with his duties and responsibilities hereunder.

     3.     Salary; Additional Compensation; Perquisites and Benefits.

            (a) During the Term, the Company and the Partnership will pay the
Executive a base salary at an aggregate annual rate of not less than $325,000
per annum, subject to annual review by the Compensation Committee of the Board
(the “Compensation Committee”), and in the discretion of such Committee,
increased from time to time. Such salary shall be paid in periodic
installments in accordance with the Company’s standard practice, but not less
frequently than semi-monthly. The first annual review for which Executive
shall be eligible for a raise shall be on or about April 1, 2003.

            (b) For each fiscal year during the Term, the Executive will be eligible
to receive a bonus from the Company. The award and amount of such bonus shall
be based upon the achievement of predefined operating or performance goals and
other criteria established by the Compensation Committee, which goals shall
give the Executive the opportunity to earn a bonus in the following amounts:
threshold target — 25% of base salary; internal plan: 60% of base salary;
target — 100% of base salary; and maximum bonus amount — 125% of base salary.

            (c) The Company shall also pay Executive for his 2002 pro-rated
anticipated bonus from his previous employer, to the extent such bonus is not
paid by Executive’s previous employer. Such anticipated bonus equals $175,000,
and shall be paid, to the extent not paid by Executive’s previous employer, in
two thirds (2/3) cash and one-third (1/3) restricted stock. To the extent such
bonus is not paid by Executive’s previous employer, such cash payment and such
restricted stock payment shall be paid after a determination of the Executive’s
final bonus amount, but in any event, no later March 31, 2003.

            (d) During the Term, the Executive will participate in all plans now
existing or hereafter adopted by the Company or the Partnership for their

 

 

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management employees or the general benefit of their employees, such as
any pension, profit-sharing, bonuses, stock option or other incentive
compensation plans, life and health insurance plans, or other insurance plans
and benefits on the same basis and subject to the same qualifications as other
senior executive officers.

            (e) On December 13, 2002, the Executive shall be granted 50,000 shares of
restricted stock and 100,000 stock options in the Company. Such restricted
stock shall not vest until June 13, 2003. If the Executive terminates this
Agreement without Good Reason, or if the Company terminates the Agreement for
Cause prior to June 13, 2003, then Executive forfeits all shares in such
restricted stock. With respect to the 100,000 stock options grant, such
options shall vest over three (3) years, pursuant to the Company’s Incentive
Plan and in accordance with the terms thereof. At the Board’s sole discretion,
Executive shall also be eligible for stock option grants from time to time
(currently anticipated to be considered during May of each year) pursuant to
the Company’s Incentive Plan and in accordance with the terms thereof. In
addition, Executive shall be eligible for annual restricted stock grants
ranging from a minimum of 15,000 shares to a maximum of 40,000 shares, as
determined by the Board, in its sole discretion, and such restricted stock
grants shall vest equally over three years, and in accordance with the terms of
the Company’s standard form of restricted stock agreement.

            (f) The Company and the Partnership will reimburse the Executive, in
accordance with their standard policies from time to time in effect, for all
out-of-pocket business expenses as may be incurred by the Executive in the
performance of his duties under this Agreement.

            (g) The Executive shall be entitled to vacation time to be credited and
taken in accordance with the Company’s policy from time to time in effect for
senior executives, which in any event shall not be less than a total of four
weeks per calendar year. Such vacation time shall not be carried over year to
year, and shall not be paid out upon termination of employment, or upon
expiration of this Agreement.

            (h) To the fullest extent permitted by applicable law, the Executive shall
be indemnified and held harmless by the Company and the Partnership against any
and all judgments, penalties, fines, amounts paid in settlement, and other
reasonable expenses (including, without limitation, reasonable attorneys’ fees
and disbursements) actually incurred by the Executive in connection with any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative, investigative or other) for any action or omission in
his capacity as a director, officer or employee of the Company or the
Partnership.

     Indemnification under this Section 3(h) shall be in addition to, and not
in substitution of, any other indemnification by the Company or the Partnership
of its officers and directors. Expenses incurred by the Executive in defending
an action, suit or proceeding for which he claims the right to be indemnified
pursuant to this Section 3(h) shall be paid by the Company or the Partnership,
as the case may be, in advance of the

 

 

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final disposition of such action, suit or proceeding upon the Company’s or
the Partnership’s receipt of (x) a written affirmation by the Executive of his
good faith belief that the standard of conduct necessary for his
indemnification hereunder and under the provisions of applicable law has been
met and (y) a written undertaking by or on behalf of the Executive to repay the
amount advanced if it shall ultimately be determined by a court that the
Executive engaged in conduct which precludes indemnification under the
provisions of such applicable law. Such written undertaking in clause (y)
shall be accepted by the Company or the Partnership, as the case may be,
without security therefor and without reference to the financial ability of the
Executive to make repayment thereunder. The Company and the Partnership shall
use commercially reasonable efforts to maintain in effect for the Term of this
Agreement a directors’ and officers’ liability insurance policy, with a policy
limit of at least $5,000,000, subject to customary exclusions, with respect to
claims made against officers and directors of the Company or the Partnership;
provided, however , the Company or the Partnership, as the case
may be, shall be relieved of this obligation to maintain directors’ and
officers’ liability insurance if, in the good faith judgment of the Company or
the Partnership, it cannot be obtained at a reasonable cost.

     4.     Termination.

            (a) The Term will terminate immediately upon the Executive’s death or,
upon thirty (30) days’ prior written notice by the Company, in the case of a
determination of the Executive’s Disability. As used herein the term
“Disability” means the Executive’s inability to perform his duties and
responsibilities under this Agreement for a period of more than 120 consecutive
days, or for more than 180 days, whether or not continuous, during any 365-day
period, due to physical or mental incapacity or impairment. A determination of
Disability will be made by a physician reasonably satisfactory to both the
Executive and the Company and paid for by the Company or the Partnership whose
decision shall be final and binding on the Executive and the Company;
provided that if they cannot agree as to a physician, then each shall
select and pay for a physician and these two together shall select a third
physician whose fee shall be borne equally by the Executive and either the
Company or the Partnership and whose determination of Disability shall be
binding on the Executive and the Company. Notwithstanding the foregoing, the
Executive shall not be considered “Disabled” unless he qualifies for disability
benefits under the terms and conditions of the Company’s then existing
long-term disability plan. Should the Executive become incapacitated, his
employment shall continue and all base and other compensation due the Executive
hereunder shall continue to be paid through the date upon which the Executive’s
employment is terminated for Disability in accordance with this section.

            (b) The Term may be terminated by the Company upon notice to the Executive
upon the occurrence of any event constituting “Cause” as defined herein.

            (c) The Term may be terminated by the Executive upon notice to the Company
of any event constituting “Good Reason” as defined herein.

     5.     Severance.

 

 

5

            (a) If the Term is terminated by the Company for Cause,

	 	(i)	 	the Company and the
Partnership will pay to the Executive an
aggregate amount equal to the Executive’s
accrued and unpaid base salary through the date
of such termination;
	 
	 	(ii)	 	all unvested options
and unvested restricted shares will terminate
immediately; and
	 
	 	(iii)	 	any vested options
issued pursuant to the Company’s Incentive Plan
and held by the Executive at termination, will
expire ninety (90) days after the termination
date.

            (b) If the Term is terminated by the Executive other than because of
death, Disability or for Good Reason,

	 	(i)	 	the Company and the
Partnership will pay to the Executive an
aggregate amount equal to the Executive’s
accrued and unpaid base salary through the date
of such termination;
	 
	 	(ii)	 	all unvested options
and unvested restricted shares terminate
immediately; and
	 
	 	(iii)	 	any vested options
issued pursuant to the Company’s Incentive Plan
and held by the Executive at termination, will
expire ninety (90) days after the termination
date.

            (c) If the Term is terminated upon the Executive’s death or Disability,

	 	(i)	 	the Company and the
Partnership will pay to the Executive’s estate
or the Executive, as the case may be, a lump sum
payment equal to the Executive’s base salary
through the termination date, plus a pro rata
portion of the Executive’s bonus for the fiscal
year in which the termination occurred;
	 
	 	(ii)	 	the Company will make
payments for one (1) year of all compensation
otherwise payable to the Executive pursuant to
this Agreement, including, but not limited to,
base salary, bonus and welfare benefits; and

 

 

6

	 	(iii)	 	all of the
Executive’s unvested stock options will
immediately vest and such options, along with
those previously vested and unexercised, will
become exercisable for a period of one (1) year
thereafter.

            (d) Subject to Section 5(e) hereof, if the Term is terminated by the
Company without Cause or other than by reason of Executive’s death or
Disability, in addition to any other remedies available, or if the Executive
terminates the Term for Good Reason,

	 	(i)	 	the Company and the
Partnership shall pay the Executive a lump sum
equal to the product of (x) one (1) times the
sum of (A) the Executive’s then annual base
salary and (B) the amount of the Executive’s
bonus for the preceding year, or in the case of
the initial year of the Executive’s employment,
the bonus will be $195,000;
	 
	 	(ii)	 	all of the
Executive’s unvested stock options will
immediately vest and such options, along with
those previously vested, will become exercisable
for a period of one (1) year thereafter; and
	 
	 	(iii)	 	and the Company
shall continue in effect the Executive’s health
insurance benefits until the earlier of (x) one
(1) year from the end of the term or (y) the
date on which the Executive obtains health
insurance coverage from a subsequent employer.

            (e) If, within eighteen (18) months following a Change in Control, the
Term is terminated by the Executive for Good Reason, or by the Company without
Cause, or if the Agreement is not renewed by the Company in accordance with
Section 1, in addition to any other rights which the Executive may have under
law or otherwise, the Executive shall receive the same payments and benefits
provided for under Section 5(d) hereof; provided, that the amount of the
multiplier described in clause (d) of Section 5 hereof shall be increased from
one times to two times. Additionally, if the Change of Control occurs in
2003, and there is no preceding year in which to calculate Executive’s bonus
under Section 5(d), then the Company agrees to use a minimum of the target
bonus for Executive in that calculation.

            (f) If at any time the Term is not extended pursuant to the proviso to
Section 1 hereof as a result of the Company giving notice thereunder that it
elects to permit the term of this Agreement to expire without extension, the
Company shall be deemed to have terminated the Executive’s employment without
Cause.

            (g) As used herein, the term “Cause” means:

 

 

7

		
	 	        (i) the Executive’s willful and intentional failure or refusal to
perform or observe any of his material duties, responsibilities or
obligations set forth in this Agreement; provided, however,
that the Company shall not be deemed to have Cause pursuant to this
clause (i) unless the Company gives the Executive written notice that the
specified conduct has occurred and making specific reference to this
Section 5(g)(i) and the Executive fails to cure the conduct within thirty
(30) days after receipt of such notice;
	 
	 	        (ii) any willful and intentional act of the Executive involving
malfeasance, fraud, theft, misappropriation of funds, embezzlement or
dishonesty affecting the Company or the Partnership; or
	 
	 	        (iii) the Executive’s conviction of, or a plea of guilty or nolo
contendere to, an offense which is a felony in the jurisdiction involved.
	 
	 	        (iv) Executive’s material breach of this Agreement; or
	 
	 	        (vi) Gross misconduct by Executive that is of such a serious or
substantial nature that a substantial likelihood exists that such
misconduct would injure the reputation of the Company if the Executive
were to remain employed by the Company or the Partnership.

Termination of the Executive for Cause shall be communicated by a Notice of
Termination. For purposes of this Agreement, a “Notice of Termination” shall
mean delivery to the Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Company’s Board at a meeting of the Board called and held for the purpose
(after reasonable notice to the Executive and reasonable opportunity for the
Executive, together with the Executive’s counsel, to be heard before the Board
prior to such vote) of finding that in the good faith opinion of the Board, the
Executive was guilty of conduct constituting Cause and specifying the
particulars thereof in detail, including, with respect to any termination based
upon conduct described in clause (i) above that the Executive failed to cure
such conduct during the thirty-day period following the date on which the
Company gave written notice of the conduct referred to in such clause (i). For
purposes of this Agreement, no such purported termination of the Executive’s
employment shall be effective without such Notice of Termination;

            (h) As used herein, the term “Good Reason” means the occurrence of any of
the following, without the prior written consent of the Executive:

		
	 	        (i) assignment of the Executive of duties materially inconsistent
with the Executive’s positions as described in Section 2(a) hereof, or
any significant diminution in the Executive’s duties or responsibilities,
other than in connection with the termination of the Executive’s
employment for Cause, Disability or as a result of the Executive’s death
or by the Executive other than for Good Reason;

 

 

8

		
	 	        (ii) the change in the location of the Company’s principal executive
offices or of the Executive’s principal place of employment to a location
outside the Washington, D.C. metropolitan area;
	 
	 	        (iii) any material breach of this Agreement by the Company or the
Partnership which is continuing; or
	 
	 	        (iv) a Change in Control; provided that a Change of Control shall
only constitute Good Reason if (a) the Company terminates the Executive
within eighteen months following a Change of Control or (b) the Company
changes the office location to a location outside of the Washington, D.C.
metropolitan area, or changes Executive’s job title, responsibilities or
decreases Executive’s compensation within eighteen months following a
Change of Control and Executive within six months after such change (but
not later than eighteen months following the Change of Control)
terminates his employment;

provided, however, that the Executive shall not be deemed to have
Good Reason pursuant to clauses (ii) and (iii) above unless the Executive gives
the Company or the Partnership, as the case may be, written notice that the
specified conduct or event has occurred and the Company or the Partnership
fails to cure such conduct or event within thirty (30) days of the receipt of
such notice. Change of Control will not be deemed “Good Reason,” however, if
the Company does not change the office location to a location outside of the
Washington, D.C. metropolitan area, or if Executive maintains the same title,
job responsibilities and compensation following a Change of Control.

               (i)As used herein, the term “Change in Control” means the occurrence of
any one of the following events:

		
	 	        (i) the acquisition (other than from the Company) by any “Person”
(as the term is used for purposes of Sections 13(d) or 14(d) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty (50%) percent or more of the
combined voting power of the Company’s then outstanding voting
securities; or

		
	 	        (ii) the individuals who were members of the Board (the “Incumbent
Board”) during the previous twelve (12) month period, cease for any
reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the Incumbent
Board;

		
	 	        (iii) approval by the stockholders of the Company of (a) merger,
transaction (including without limitation a “going private transaction”),
or consolidation involving the Company if the stockholders of the
Company, immediately before such merger or consolidation do not, as a
result of such merger or consolidation, own, directly or indirectly, more
than fifty (50%) percent

 

 

9

		
	 	of the combined voting power of the then outstanding voting
securities of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the combined
voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation or (b) a complete
liquidation or dissolution of the Company or an agreement for the sale or
other disposition of all or substantially all of the assets of the
Company; or

            Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur pursuant to clause (i) above solely because fifty (50%) percent or more
of the combined voting power of the Company’s then outstanding securities is
acquired by (a) a trustee or other fiduciary holding securities under one or
more employee benefit plans maintained by the Company or any of its
subsidiaries or (b) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the stockholders of the Company
in the same proportion as their ownership of stock in the Company immediately
prior to such acquisition.

            (j) The amounts required to be paid and the benefits required to be made
available to the Executive under this Section 5 are absolute. Under no
circumstances shall the Executive, upon the termination of his employment
hereunder, be required to seek alternative employment and, in the event that
the Executive does secure other employment, no compensation or other benefits
received in respect of such employment shall be set-off or in any other way
limit or reduce the obligations of the Company under this Section 5.

            (k) Notwithstanding the previous provisions, if payments made pursuant to
this Section 5 are considered “parachute payments” under Section 280G of the
Internal Revenue Code of 1986, then the sum of such parachute payments plus any
other payments made by the Company to the Executive which are considered
parachute payments shall be limited to the greatest amount which may be paid to
the Executive under Section 280G without causing any loss of deduction to the
Company under such section; but only if, by reason of such reduction, the net
after tax benefit of Executive shall exceed the net after tax benefit if such
reduction were not made. “Net after tax benefit” for purposes of this
Agreement shall mean the sum of (i) the total amounts payable to Executive
under Section 5, plus (ii) all other payments and benefits which the Executive
receives or is then entitled to receive from the Company that would constitute
a “parachute payment” which the meaning of Section 280G of the Code, less (iii)
the amount of federal income taxes payable with respect to the foregoing shall
be paid to Executive (based upon the rate in effect for such years as set forth
in the Code at the time of termination of Executive’s employment), less (iv)
the amount of excise taxes imposed with respect to the payments and benefits
described in (i) and (ii) above by Section 4999 of the Code.

     6.     Confidential Information and Covenants.

            (a) The Executive acknowledges that the Company and its subsidiaries or
affiliated ventures (“Company Affiliates”) own and have developed and

 

 

10

compiled, and will in the future own, develop and compile, certain
Confidential Information and that during the course of his rendering services
hereunder Confidential Information will be disclosed to the Executive by the
Company Affiliates. The Executive hereby agrees that, during the Term and for
a period of three years thereafter, he will not use or disclose, furnish or
make accessible to anyone, directly or indirectly, any Confidential Information
of the Company Affiliates. In particular, Executive covenants and agrees that
Executive shall not, directly or indirectly, communicate or divulge, or use for
the benefit of Executive or for any other person, or to the disadvantage of the
Company, the Confidential Information or any information in any way relating to
the Confidential Information, without prior written consent from the Company.

            (b) As used herein, the term “Confidential Information” means any trade
secrets, confidential or proprietary information, or other knowledge, know-how,
information, documents, materials, owned, developed or possessed by a Company
Affiliate pertaining to its businesses, including, but not limited to, records,
memoranda, computer files and disks, audio and video tapes, CD’s, and property
in any form containing information generally not known in the hospitality
industry, including but not limited to trade secrets, techniques, know-how
(including designs, plans, procedures, processes and research records),
operations, market structure, formulas, data, programs, licenses, prices,
costs, software, computer programs, innovations, discoveries, improvements,
research, developments, test results, reports, specifications, data, formats,
marketing data and business plans and strategies, customer lists, client lists
and client contact lists, 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 the Executive, (ii) becomes generally known
or generally available to the public subsequent to its disclosure to the
Executive through no wrongful act of the Executive, (iii) is or becomes
available to the Executive from sources other than the Company Affiliates which
sources are not known to the Executive to be under any duty of confidentiality
with respect thereto or (iv) the Executive 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 the Executive provides
the Company with prior notice of the contemplated disclosure and reasonably
cooperates with the Company, at the Company’s sole expense, in seeking a
protective order or other appropriate protection of such information).

            (c) Upon demand by the Company and/or upon termination of employment with
the Company for any reason, Executive shall promptly deliver to the Company all
property and materials, whether written, descriptive, or maintained in some
other form belonging to or relating to the Company, its business affairs and
those of its Affiliates, including all Confidential Information. If Executive
desires to retain copies of any forms or other materials developed by Executive
during his employment with the Company, he may request permission to do so from
the Chief Executive Officer, which permission shall not be unreasonably
withheld.

 

 

11

            (d) The Executive agrees that during his employment hereunder and for a
period of twelve months thereafter he will not solicit, raid, entice or induce
any person that then is or at any time during the twelve-month period prior to
the end of the Term was an employee of a Company Affiliate (other than a person
whose employment with such Company Affiliate has been terminated by such
Company Affiliate), to become employed by any person, firm or corporation.

            (e) The Executive agrees that during his employment
hereunder and for a period of twelve (12) months thereafter he will not solicit
or accept the business of, or assist any other person to solicit or accept the
business of, any persons or entities who were vendors of the Company, as of, or
within one (1) year prior to, the Executive’s termination of employment, for
the purposes of providing products or services competitive with the products or
services of the Company or to cause such customers to reduce or end their
business with the Company.

     7.     Cooperation with Company. Following the termination of the
Executive’s employment for any reason, Executive shall fully cooperate with the
Company in all matters relating to the winding up of his pending work on behalf
of the Company including, but not limited to, any litigation in which the
Company is involved and the orderly transfer of any such pending work to other
employees of the Company as may be designated by the Company. The Company
agrees to reimburse the Executive for any out-of-pocket expense he incurs in
performing any work on behalf of the Company following the termination of his
employment.

     8.     Specific Performance.

            (a) The Executive acknowledges that the services to be rendered by him
hereunder are of a special, unique, extraordinary and personal character and
that the Company Affiliates would sustain irreparable harm in the event of a
violation by the Executive of Section 6 hereof. Therefore, in addition to any
other remedies available, the Company shall be entitled to specific enforcement
and/or an injunction from any court of competent jurisdiction restraining the
Executive from committing or continuing any such violation of this Agreement
without proving actual damages or posting a bond or other security. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies available to it for such breach or threatened breach, including the
recovery of damages.

            (b) If any of the restrictions on activities of the Executive contained in
Section 6 hereof shall for any reason be held by a court of competent
jurisdiction to be excessively broad, such restrictions shall be construed so
as thereafter to be limited or reduced to be enforceable to the maximum extent
compatible with the applicable law as it shall then appear; it being understood
that by the execution of this Agreement the parties hereto regard such
restrictions as reasonable and compatible with their respective rights.

 

 

12

            (c) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company fails to make any payment of any amounts or provide any
of the benefits to the Executive when due as called for under Section 5 of this
Agreement and such failure shall continue for twenty (20) days after notice
thereof from the Executive, all restrictions on the activities of the Executive
under Section 6 hereof shall be immediately and permanently terminated.

     9.     Withholding. The parties agree that all payments to be made to
the Executive by the Company pursuant to the Agreement shall be subject to all
applicable withholding obligations of such company.

     10.    Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed given and received when delivered personally,
four (4) days after being mailed if sent by registered or certified mail,
postage pre-paid, or by one (1) day after delivery if sent by air courier (for
next-day delivery) with evidence of receipt thereof or by facsimile with
receipt confirmed by the addressee. Such notices shall be addressed
respectively:

	 
	If to the Executive, to:
	 
	Donald D. Olinger

4 Pissaro Court

North Potomac, MD  20878
	 
	If to the Company or to the Partnership, to:
	 
	MeriStar Hospitality Corporation

1010 Wisconsin Avenue, N.W.

Washington, D.C. 20007

Attention:  Legal Department

or to any other address of which such party may have given notice to the other
parties in the manner specified above.

     11.     Miscellaneous.

              (a) This Agreement is a personal contract calling for the provision of
unique services by the Executive, and the Executive’s rights and obligations
hereunder may not be sold, transferred, assigned, pledged or hypothecated by
the Executive. The rights and obligations of the Company and the Partnership
hereunder will be binding upon and run in favor of their respective successors
and assigns. The Company will not be deemed to have breached this Agreement if
any obligations of the Company to make payments to the Executive are satisfied
by the Partnership.

              (b) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware, without regard to
conflict of laws principles.

 

 

13

              (c) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

              (d) The headings of the various sections of this Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.

              (e) The provisions of this Agreement which by their terms call for
performance subsequent to the expiration or termination of the Term shall
survive such expiration or termination.

              (f) The Company and the Partnership shall reimburse the Executive for all
costs incurred by the Executive in any proceeding for the successful
enforcement of the terms of this Agreement, including without limitation all
costs of investigation and reasonable attorneys fees and expenses.

              (g) This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof (including, without limitation, the offer
letter dated October 14, 2002 ), all of which shall be terminated on the
Commencement Date. In addition, the parties hereto hereby waive all rights
such party may have under all other prior agreements and undertakings, both
written and oral, among the parties hereto.

[SIGNATURE PAGE FOLLOWS]

 

 

14

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.

	 
	EXECUTIVE:
	 
	DONALD D. OLINGER
	 
	 

/s/ DONALD D. OLINGER
	 
	COMPANY:
	 
	MERISTAR HOSPITALITY CORPORATION
	 
	By: /s/ PAUL W. WHETSELL
	 
	       Name:
Paul W. Whetsell
	       Title:
Chief Executive Officer
	 
	PARTNERSHIP:
	 
	MERISTAR HOSPITALITY OPERATING

PARTNERSHIP, L.P.
	 
	By: MERISTAR HOSPITALITY
CORPORATION

       Its General Partner
	 
	By: /s/ PAUL W. WHETSELL

       Name: Paul W. Whetsell
	       Title:
Chief Executive Officer

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