Document:

exv10w12w2

 

EXHIBIT 10.12.2

AMENDMENT

     This AMENDMENT to the EXECUTIVE EMPLOYMENT AGREEMENT effective as of
November 1, 2001, (“Employment Agreement”), by and among Interstate Hotels &
Resorts, Inc. (successor in interest to MeriStar Hotels & Resorts, Inc., the
“Company”), MeriStar Management Company L.L.C. (the “LLC”), and Paul W.
Whetsell (the “Executive”), is hereby entered into on this 13th day of
December, 2002 by and among the parties.

     For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by Executive, the Company, and the LLC, the parties
each agree to amend the Employment Agreement as follows:

     I.     Section 4(a) of the Employment Agreement is hereby deleted and replaced, in its entirety, as follows:

     “(a) During the Term, the Company and the LLC will pay the Executive a
base salary at an aggregate annual rate of not less than $350,000 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. Once increased, such base salary may not be decreased.
Such salary shall be paid in periodic installments in accordance with the
Company’s standard practice, but not less frequently than semi-monthly.”

     II.     Section 4(b) of the Employment Agreement is hereby deleted and replaced, in its entirety, as follows:

     “(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 of 150% of base salary.
However, such bonus amount will be completely at the Board’s discretion and,
unless the Company performs exceptionally, is expected to be in the 40% of base
salary range.”

     III. Section 4(d) of the Employment Agreement is hereby deleted and replaced, in its entirety, as follows:

     “(d) The Executive shall be granted 150,000 stock options in the Company
on December 13, 2002 at the then current market price. The options will vest
equally on the first, second and third anniversary of the date of grant.
Annual stock option grants thereafter shall be at the discretion of the Board.
The Executive shall also be granted 150,000 restricted stock shares in the
Company on December 13, 2002 at the then current market price. The restricted
stock shares will vest equally on the first, second and third anniversary of
the date of grant. Annual restricted stock share grants thereafter shall be at
the discretion of the Board.”

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

 

	 	 	 	 
	EXECUTIVE:	 	
INTERSTATE HOTELS & RESORTS, INC.
	 
	By:__________________	 	 	
By:__________________
	Paul W. Whetsell	 	 	
Name:
	 	 	 	
Title:
	 	 	 
	 	 	LLC:
	 	 	 
	 	 	
MERISTAR MANAGEMENT COMPANY, LLC

By:  Interstate Hotels & Resorts, Inc.,

its general partner
	 
	 	 	
By:__________________
	 	 	Name:
	 	 	Title:exv10w13w1

 

EXHIBIT 10.13.1

December 10, 1998

Mr. Steven D. Jorns

900 Kingsbury Way

Southlake, Texas 76092

Dear Mr. Jorns:

     Reference is hereby made to that certain Executive Employment Agreement,
made as of August 3, 1998, by and between you and the undersigned (the
“Employment Agreement”). Unless otherwise indicated, each capitalized term
used herein shall have the meaning ascribed thereto in the Employment
Agreement.

     This letter, when executed and returned by you, shall constitute an
amendment to the Employment Agreement in the following respects:

	1.	 	Effective January 1, 1999, you will no longer serve as the Chief
Operating Officer of either the Company or the Partnership although you
will continue to serve as the Vice-Chairman of the Company and the
Partnership and you will devote such of your business time to the business
and affairs of the Company and the Partnership as shall be required to
perform the duties of such office.
	 
	2.	 	Effective January 1, 1999, your annual base salary shall be reduced to $90,000.
	 
	3.	 	The Company or the Partnership will no longer be required under the terms
of the Employment Agreement (i) to pay you an annual bonus, (ii) to grant
you stock option grants pursuant to the Company’s Incentive Plan or (iii)
to permit you to participate in any profit-sharing, bonus, stock option or
other incentive compensation plans now or hereafter adopted by the Company
or the Partnership for any fiscal year ending after December 31, 1998.
You shall retain all the rights presently granted you under the Employment
Agreement with respect to any stock options or restricted stock which you
presently hold or which may be awarded to you with respect to the fiscal
year ending December 31, 1998.

     Except as specifically set forth above, the Employment Agreement shall
remain in full force and effect without amendment or modification.

 

 

Mr. Steven D. Jorns

December 10, 1998

Page 2

     In addition, you hereby agree (i) prior to January 1, 1999, to execute and
deliver to the Company and the Partnership resignations from the position of
Chief Operating Officer and (ii) to execute and deliver to the company and the
Partnership such other documents as they, from time to time, may reasonably
request to further effect the amendments to the Employment Agreement set forth
above.

     Please execute and return to the undersigned two copies of this letter to
evidence your agreement with the terms hereof.

	 	 	 
	 	 	
MeriStar Hotels & Resorts, Inc.
	 	 	 
	 	 	
By:__________________
	 	 	 
	 	 	
MeriStar H & R Operating Partnership, L.P.
	 	 	 
	 	 	
By: MeriStar Hotels & Resorts, Inc.
      As
general partner
	 	 	 
	 	 	
By:__________________
	 	 	 
	Agreed to by: __________________

                          Steven D. Jornsexv10w14

 

EXHIBIT 10.14

EXECUTIVE EMPLOYMENT AGREEMENT

EXECUTIVE EMPLOYMENT AGREEMENT, effective as of November 1, 2002 by and between
INTERSTATE HOTELS & RESORTS, INC., a Delaware corporation (the “Company”),
MERISTAR MANAGEMENT COMPANY, L.L.C., a Delaware limited liability company (the
“LLC”) and any successor employer, and JOHN EMERY (the “Executive”), an
individual residing at 8262 Private Lane, Annandale, VA 22003.

     The Company and the LLC desire to employ the Executive in the capacities
of President and Chief Operating 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 LLC each hereby employ the
Executive, and the Executive agrees to be employed by the Company and the LLC,
upon the terms and subject to the conditions set forth herein, for a term of
three (3) years, commencing on November 1, 2002 (the “Commencement Date”), and
ending on November 1, 2005 unless terminated earlier in accordance with Section
5 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 the one hand, or the
Company and the LLC, on the other, give notice to the other party and 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 titles and offices of,
and serve in the positions of, President and Chief Operating Officer of the
Company and the LLC. The Executive shall undertake the responsibilities and
exercise the authority customarily performed, undertaken and exercised by
persons situated in a 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
positions.

               (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 LLC 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
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

 

 

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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 LLC.

               (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 positions as President and Chief Operating
Officer and with his duties and responsibilities hereunder.

     3.        Board of Directors. While it is understood that the right to elect
directors of the Company is by law vested in the stockholders and directors of
the Company, it is nevertheless mutually contemplated that, subject to such
rights, during the Term the Executive will serve as a member of the Company’s
Board of Directors.

     4.        Salary; Additional Compensation; Perquisites and Benefits.

               (a)      During the Term, the Company and the LLC will pay the Executive a base
salary at an aggregate annual rate of not less than $525,000 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. Once increased, such base salary may not be decreased. Such salary
shall be paid in periodic installments in accordance with the Company’s
standard practice, but not less frequently than semi-monthly.

               (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 cash bonus equal to an amount
between 0% and 175% of base salary.

               (c)      During the Term, the Executive will participate in all plans now
existing or hereafter adopted by the Company or the LLC for their 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. Notwithstanding the foregoing, the Company and the LLC may, in their
sole discretion, discontinue or eliminate any such plans.

               (d)      The Executive shall be eligible for stock option grants from time to
time pursuant to the Company’s Incentive Plan in accordance with the terms

 

 

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thereof. All stock option grants shall be at the discretion of the Board.
Executive shall receive a separate option agreement governing any such grants.

               (e)      The Company and the LLC will reimburse the Executive, in accordance
with its 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.

               (f)      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.

               (g)      The Company, at its sole cost, shall pay (i) up to $10,000 annually
(to be increased annually by the prior year’s consumer price index, “CPI”)
toward the premium of a life insurance policy with a death benefit of at least
$3,000,000 payable to a beneficiary designated by the Executive and (ii) up to
$15,000 annually (to be increased annually by the prior year’s CPI) toward the
premium of a disability policy which, upon a determination of the Executive’s
Disability (as hereinafter defined), pays at least $3,000,000 to the Executive.

               (h)      The Executive shall be granted a car allowance of up to $1,000 per
month.

               (i)      To the fullest extent permitted by applicable law, the Executive shall
be indemnified and held harmless by the Company and the LLC 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 LLC.

               Indemnification under this Section 4(i) shall be in addition to, and not
in substitution of, any other indemnification by the Company or the LLC 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 4(i) shall be paid by the Company or the LLC, as the
case may be, in advance of the final disposition of such action, suit or
proceeding upon the Company’s or the LLC’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, including fraud, theft,
misfeasance, or malfeasance against the Company or the LLC, which precludes
indemnification under the provisions of such applicable law. Such written
undertaking in clause (y) shall be
accepted by the Company or the LLC, as the case may be, without security
therefor and without reference to the financial ability of the Executive to
make repayment thereunder.

 

 

4

The Company and the LLC 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 $25,000,000, subject to customary exclusions, with respect to claims made
against officers and directors of the Company or the LLC; provided, however,
the Company or the LLC, 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 LLC, it cannot be obtained at a
reasonable cost.

     5.        Termination.

               (a)      The Term will terminate immediately upon the Executive’s death,
Disability, or, upon thirty (30) days’ prior written notice by the Company, in
the case of a Determination of 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” shall occur when a physician, reasonably satisfactory to both
the Executive and the Company and paid for by the Company or the LLC, finds
that the Executive will likely be unable to perform his duties and
responsibilities under this Agreement for the above-specified period due to a
physical or mental incapacity or impairment. Such 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 LLC and whose Determination of
Disability shall be binding on the Executive and the Company. 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 or Determination of Disability in accordance with this section.

               (b)      The Term may be terminated by the Company upon notice to the Executive
and with or without “Cause” as defined herein.

               (c)      The Term may be terminated by the Executive upon notice to the Company
and with or without “Good Reason” as defined herein.

     6.      Severance.

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

	 	 	 	 	 
	 	 	
(i)
	 	the Company and the
LLC 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 restricted shares will terminate
immediately; and

 

 

5

	 	 	 	 	 
	 	 	(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
LLC 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 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
LLC 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;
	 	 	 	 	 
	 	 	
(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; and
	 	 	 	 	 
	 	 	
(iv)
	 	all of the
Executive’s unvested restricted stock will
immediately vest and all of the restricted stock
of the Company held by the Executive shall
become free from all contractual restrictions.

               (d)      Subject to Section 6(e) hereof, if the Term is terminated by the
Company without Cause or other than by reason of Executive’s death or
Disability, in

 

 

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addition to any other remedies available, or if the Executive terminates the Term for Good Reason,

	 	 	 	 	 
	 	 	
(i)
	 	the Company and the
LLC shall pay the Executive a lump sum equal to
the product of (x) the sum of (A) the
Executive’s then annual base salary and (B) the
amount of the Executive’s bonus for the
preceding calendar year, multiplied by (y) the
greater of (A) two (2) and (B) a fraction, the
numerator of which is the number of days
remaining in the Term (without further
extension) and the denominator of which is 365;
provided that, if Executive separates from
employment pursuant to this Section 6(d) prior
to his being notified of his bonus for calendar
year 2002 (to be paid in 2003), then Executive’s
bonus amount for purposes of this Section
6(d)(i) will be 87.5% of Executive’s base
salary. If, however, Executive separates from
employment pursuant to this Section 6(d) after
he is notified of his calendar year 2002 bonus,
but prior to being notified of his bonus for
calendar year 2003 (to be paid in 2004), then
Executive’s bonus for purposes of this Section
6(d)(i) shall be an amount equal to Executive’s
calendar year 2002 bonus annualized as if the
Company (post-merger) had existed during the
entire calendar year of 2002.
	 	 	 	 	 
	 	 	
(ii)
	 	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;
	 	 	 	 	 
	 	 	
(iii)
	 	all of the
Executive’s unvested restricted stock will
immediately vest and all of the restricted stock
of the Company held by the Executive shall
become free from all contractual restrictions;
and
	 	 	 	 	 
	 	 	
(iv)
	 	the Company shall
also continue in effect the Executive’s health
and dental benefits (or similar health and
dental benefits paid to senior executives) noted
in Section 4(c) hereof or their equivalent for a
period equal to the greater of (X) two and (2)
years or the remaining Term, without further
extension or (Y) the date on which the Executive
obtains health insurance coverage from a
subsequent employer.

 

 

7

               (e)      If, within twenty-four (24) months following a Change in Control, the
Term is terminated by the Executive for Good Reason or by the Company without
Cause, 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 6(d) hereof; provided, that the amount of the
multiplier described in clause (d)(i)(y)(A) of Section 6 hereof shall be
increased from two (2) times to three (3) times.

               (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:

		
	 	                  (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
6(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, or embezzlement
affecting the Company or the LLC;
	 
	 	                  (iv)      the Executive’s conviction of, or a plea of guilty or nolo
contendere to, an offense which is a felony;
	 
	 	                  (v)      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 LLC.

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

 

 

8

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 to 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;
	 
	 	                  (ii)      the failure of the Company to nominate the Executive to the
Board or the failure of the Executive to be elected to the Board;
	 
	 	                  (iii)      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;
	 
	 	                  (iv)      any material breach of this Agreement by the Company or the LLC
which is continuing;
	 
	 	                  (v)      a Change in Control; provided that a Change of Control shall
only constitute Good Reason if (i) the Executive terminates this
Agreement within the six month period following a Change of Control, (ii)
the Company terminates the Executive within two years following a Change
of Control or (iii) the Company changes the Executive’s job title,
responsibilities or decreases Executive’s compensation or Sections 6h(ii)
or 6(h)(iii) occur within two years following a Change of Control and
Executive within six months after such change (but not later than two
years following the Change of Control) terminates the Term of this
Agreement; or
	 
	 	provided, however, that the Executive shall not be deemed to have Good
Reason pursuant to clauses (h)(i), (ii) or (iv) above unless the
Executive gives the Company or the LLC, as the case may be, written
notice that the specified conduct or event has occurred and the Company
or the LLC fails to cure such conduct or event within thirty (30) days
of the receipt of such notice.

               (i)      As used herein, the term “Change in Control” shall have the
following meaning:

		
	 	                  (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 thirty (30%) percent or more of
the combined voting power of the Company’s then outstanding voting
securities;
	 
	 	                  (ii)      the individuals who were members of the Board (the “Incumbent
Board”) during the previous twelve (12) month period, cease for

 

 

9

		
	 	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 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 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
	 
	 	                  (iv)      approval by the stockholders of the Company of any transaction
(including without limitation a “going private transaction”) involving
the Company if the stockholders of the Company, immediately before such
transaction, do not as a result of such transaction, own directly or
indirectly, more than fifty (50%) percent of the combined voting power of
the then outstanding voting securities of the corporation resulting from
such transaction in substantially the same proportion as their ownership
of the combined voting power of the voting securities of the Company
outstanding immediately before such transaction.

     Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur pursuant to clause (i)(i) above solely because thirty (30%) 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 6 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 6.

               (k)      Excise Tax Payments.

		
	 	                  (i)      Gross-Up Payment. If it shall be determined that any payment or
distribution of any type to or in respect of the Executive, by the

 

 

10

		
	 	Company, the LLC, or any other person, whether paid or payable or
distributed or distributable pursuant to the terms of the Agreement or
otherwise (the “Total Payments”), is or will be subject to the excise tax
imposed by Section 4999 of the Internal Code of 1986, as amended (the
“Code”) or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
collectively referred to as the “Excise Tax”), then the Executive shall
be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes) imposed
upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
	 
	 	                  (ii)      Determination by Accountant.
	 
	 	                        (A)      All computations and determinations relevant to this Section
6(k) shall be made by a national accounting firm selected by the Company
from among the five (5) largest accounting firms in the United States
(the “Accounting Firm”) which firm may be the Company’s accountants. Such
determinations shall include whether any of the Total Payments are
“parachute payments” (within the meaning of Section 280G of the Code).
In making the initial determination hereunder as to whether a Gross-Up
Payment is required the Accounting Firm shall determine that no Gross-Up
Payment is required, if the Accounting Firm is able to conclude that no
“Change of Control” has occurred (within the meaning of Section 280G of
the Code) on the basis of “substantial authority” (within the meaning of
Section 6230 of the Code) and shall provide opinions to that effect to
both the Company and the Executive. If the Accounting Firm determines
that a Gross-Up Payment is required, the Accounting Firm shall provide
its determination (the “Determination”), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and
any other relevant matter both to the Company and the Executive by no
later than ten (10) days following the Termination Date, if applicable,
or such earlier time as is requested by the Company or the Executive (if
the Executive reasonably believes that any of the Total Payments may be
subject to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive
and the Company with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons therefor)
and that the Executive has substantial authority not to report any Excise
Tax on his federal income tax return.
	 
	 	                        (B)      If a Gross-Up Payment is determined to be payable, it shall be
paid to the Executive within twenty (20) days after the later of (i) the
Determination (and all accompanying calculations and other material
supporting the Determination) is delivered to the Company by the
Accounting Firm or (ii) the date of the event which leads to the Gross-up
Payment. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive, absent manifest error.

 

 

11

		
	 	                        (C)      As a result of uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the Company
should have been made (“Underpayment”), or that Gross-Up Payments will
have been made by the Company which should not have been made
(“Overpayments”). In either such event, the Accounting Firm shall
determine the amount of the Underpayment or Overpayment that has
occurred. In the case of an Underpayment, the amount of such
Underpayment (together with any interest and penalties payable by the
Executive as a result of such Underpayment) shall be promptly paid by the
Company to or for the benefit of the Executive.
	 
	 	                        (D)      In the case of an Overpayment, the Executive shall, at the
direction and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund), follow
reasonable instructions from, and procedures established by, the Company,
and otherwise reasonably cooperate with the Company to correct such
Overpayment, provided, however, that (i) the Executive shall not in any
event be obligated to return to the Company an amount greater than the
net after-tax portion of the Overpayment that he has retained or has
recovered as a refund from the applicable taxing authorities and (ii)
this provision shall be interpreted in a manner consistent with the
intent of Section 6(k)(i), which is to make the Executive whole, on an
after-tax basis, from the application of the Excise Taxes, it being
acknowledged and understood that the correction of an Overpayment may
result in the Executive repaying to the Company an amount which is less
than the Overpayment.
	 
	 	                        (E)      The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service relating to the possible application of
the Excise Tax under Section 4999 of the Code to any of the payments and
amounts referred to herein and shall afford the Company, at its expense,
the opportunity to control the defense of such claim.

     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.        Confidential Information.

               (a)      The Executive acknowledges that the Company and its subsidiaries or
affiliated ventures (“Company Affiliates”) own and have developed and compiled,
and will in the future own, develop and compile, certain Confidential

 

 

12

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.

               (d)      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 customers of the Company, as of,
or within one (1) year prior to, the

 

 

13

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.

               (e)      The Executive agrees that for a period of six (6) months after his
employment terminates, he will not directly or indirectly solicit any employee
who directly reported to Executive within one (1) year prior to Executive’s
termination of employment. Executive will not be prohibited from soliciting
any person who has been terminated by the Company, and any employee (whether a
direct report or not) may voluntarily seek employment with Executive or
Executive’s new company after Executive employment terminates.

     9.        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 8 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 8 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.

               (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 6 of this
Agreement and such failure shall continue for twenty (20) days after written
notice thereof from the Executive, all restrictions on the activities of the
Executive under Section 8 hereof shall be immediately and permanently
terminated.

     10.        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.

     11.        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

 

 

14

thereof or by facsimile with receipt confirmed by the addressee. Such
notices shall be addressed respectively:

	 	If to the Executive, to:

	 	8262 Private Lane,

Annandale, VA 22003

	 	If to the Company or to the LLC, to:

	 	Interstate Hotels & Resorts, Inc.

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.

     12.        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 LLC 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 LLC.

               (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.

               (c)      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.

               (d)      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.

               (e)      The Company and the LLC 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.

 

 

15

               (f)      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 (other than previously executed option
agreements, restricted stock agreements executed by the Executive and the
Company and/or the LLC, the “Grant Agreements”), 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 (other
then the Grant Agreements), including without limitation, the Executive
Employment Agreement entered into as of August 3, 1998 and the Executive
Employment Agreement entered into as of April 1, 2000, between the Executive
and MeriStar Hotels & Resorts, Inc. and the Amendment thereto executed on March
26, 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 (other than the Grant Agreements).

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

	 	EXECUTIVE:

	 	______________________________

John Emery

	 	COMPANY:

	 	INTERSTATE HOTELS & RESORTS, INC.

	 	By:___________________________

Name:

Title:

	 	LLC:

	 	MERISTAR MANAGEMENT COMPANY, LLC

	 	By: Interstate Hotels & Resorts, Inc.,

its general partner

	 	By:___________________________

Name:

Title:

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