Exhibit 10.21
EXECUTIVE EMPLOYMENT
AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, effective as of
January 1, 2005, by and between MERISTAR HOSPITALITY CORPORATION, a
Maryland corporation (the “Company”), MERISTAR
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the “Partnership”), and PAUL W. WHETSELL
(the “Executive”), an individual residing at
[address].
The Company and the Partnership
desire to employ the Executive in the capacity of Chairman of the
Board of Directors and Chief Executive 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 January 1,
2005 (the “Commencement Date”), 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
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 titles and offices of, and serve in the positions of,
Chairman of the Board of Directors and Chief Executive Officer of
the Company and the Partnership. The Executive shall report to the
Board of Directors of the Company (the “Board”),
undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons situated
in similar executive capacities, and 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 the Board 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
Partnership and to faithfully and diligently
perform, to the best of his ability, all of his duties and
responsibilities hereunder. The Company is aware that the Executive
serves as the Chairman of the Board of Directors of Interstate
Hotels & Resorts, Inc. (“Interstate”) in a
non-executive capacity. 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 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 Chairman of the Board and
Chief Executive 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 Partnership will pay the Executive a base salary at an
aggregate annual rate of not less than $635,000 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 determined by
the Compensation Committee during an annual review of the
Executive’s performance. Eighty percent (80%) of this annual
bonus shall be based upon the Company’s achievement of
predefined operating or performance goals, such as FFO/Share and
EBITDA. The remainder of the Executive’s annual bonus shall
be determined, at the discretion of the Compensation Committee,
upon the Executive’s
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individual performance. The Executive shall have
the opportunity to earn an annual bonus in the following amounts:
threshold target - 25% of base salary; internal plan - 75% of base
salary; target - 125% of base salary; and maximum bonus amount -
150% of base salary. In addition to the foregoing bonus amounts,
the Executive will be eligible to receive in 2007 a one-time
additional bonus award in stock having a maximum value of
$1,250,000 as a long term incentive for the 2004, 2005, and 2006
fiscal years based upon the achievement of certain absolute and
relative shareholder returns, the calculation of which shall be
made in a manner consistent with the calculation of the
Executive’s other long term stock incentive awards for those
years. Such one-time additional bonus award shall be in addition
to, and not to the exclusion of, any other long-term incentive
stock awards to which the Executive might otherwise be entitled to
for the 2004, 2005, and 2006 fiscal years.
(c) During the Term, the Executive
will participate in all plans now existing or hereafter adopted by
the Company or the Partnership 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.
(d) At the Board’s sole
discretion, Executive shall be eligible for stock option grants
from time to time pursuant to the Company’s Incentive Plan
and in accordance with the terms thereof.
(e) 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.
(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 $40,000 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 $2,000,000 payable to a beneficiary designated by the
Executive and (ii) up to $12,000 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 $2,000,000 to
the Executive.
(h) The Executive shall be granted a
car allowance of up to $1,700 per month (to be increased annually
by the prior year’s CPI) toward the lease of an automobile to
be leased by the Company for the use of the Executive.
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(i) 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
4(i) 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 4(i) shall be paid by the
Company or the Partnership, as the case may be, in advance of the
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.
5. 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.
Should
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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.
6. Severance .
(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 stock 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 stock 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.
(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;
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(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
Executive’s restricted stock shall become free from all
contractual restrictions; and
(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
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) the
sum of (A) the Executive’s then annual base salary and (B)
the amount of the Executive’s bonus for the preceding year,
multiplied by (y) the greater of (A) two and one-half (2 ½)
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;
(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
Executive’s restricted stock shall become free from all
contractual restrictions; and
(iv) the Company shall also continue
in effect the Executive’s health benefits noted in Section
4(c) hereof or their equivale
