Exhibit 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, made as of May 28, 1997 by and between
CAPSTAR HOTEL COMPANY, a Delaware corporation (the "Company"), and JOHN EMERY
(the "Executive"), an individual residing at 7308 Calvert Street, Annandale, VA
22003.
The Company desires 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 hereby employs the Executive, and
the Executive agrees to be employed by the Company, upon the terms and subject
to the conditions set forth herein, for a term commencing on the date of this
Agreement (the "Commencement Date") and terminating on December 31, 1999 unless
terminated earlier in accordance with Section 4 of this Agreement (the "Term").
2. POSITION; CONDUCT.
(a) During the Term, the Executive will hold the title and office of,
and serve in the position of, Chief Financial Officer. The Executive shall
report to the executive officers of the Company and shall perform such 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 its
subsidiaries 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 of Directors of the
Company, 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 the
Subsidiary or, individually or collectively, interfere materially with the
performance by the Executive of his duties and responsibilities under this
Agreement; and provided, further, that nothing in this Agreement shall prohibit
the Executive from engaging in those activities described on Schedule A annexed
hereto (the "Exempted
Activities")
(c) 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 and with his duties and
responsibilities hereunder.
3. SALARY; ADDITIONAL COMPENSATION; PERQUISITES AND BENEFITS.
(a) During the Term, the Company will pay the Executive a base salary
at an annual rate of not less than $200,000 per annum, subject to annual review
by the Compensation Committee of the Board of Directors of the Company (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 under Company's Management Bonus Plan or such other
plan adopted from time to time. The award and amount of such bonus shall be
based upon the Compensation Committee's determination of actual performance as
measured against goals which goals shall give the Executive the opportunity to
earn a bonus of up to 100% of his base salary.
(c) During the Term, the Executive will participate in all plans now
existing or hereafter adopted by the Company or the Subsidiary for the
management employees or the general benefit of the their employees, such as
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. To the
extent permitted by law, the Executive shall be given credit for his years of
service to any predecessor entity of the Company in determining all waiting
periods and vesting periods under such plans.
(d) The Executive shall be eligible for stock option grants from time
to time pursuant to the Company's 1996 Equity Incentive Plan in accordance with
the terms thereof. The Committee designated in accordance with such plan has
granted to the Executive, effective on the Commencement Date, options to
purchase 50,000 shares of the common stock of the Company at an exercise price
equal to the closing price of such common stock in New York
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Stock Exchange trading on the Commencement Date. Subject to the terms of
Section 6(f) of this Agreement as to the acceleration of vesting of stock
options, the such options shall vest as follows: Such options shall vest as
follows:
First anniversary of the Commencement Date.. 33-1/3% vested
Second anniversary of the Commencement Date. 66-2/3% vested
Third Anniversary of the Commencement Date.. 100% vested
Such options shall be exercisable, subject to vesting, for ten years from the
date of grant and in all other respects shall be subject to the terms and
conditions of the 1996 Equity Incentive Plan.
(e) The Company 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.
(g) The Executive shall be granted a car allowance of up to $700.00
per month for the lease of an automobile to be leased by the Company for the use
of the Executive.
4. TERMINATION.
(a) The Term will terminate upon the Executive's death.
(b) Upon written notice, the Company may terminate this Agreement for
Cause. As used herein, the term "Cause" means:
(i) the Executive's inability to perform his duties and responsibilities
under this Agreement for a period of more than 120 days, whether or not
continuous, during any 365-day period, due to physical or mental incapacity
or impairment;
(ii) if the Executive commits acts of willful malfeasance or gross
negligence in connection with his employment hereunder;
(iii) the Executive's conviction of (or a plea of NOLO CONTENDERE to) an
offense which is a felony in the jurisdiction involved;
(iv) if, after written notice thereof, the Executive repeatedly fails or
neglects to perform any material duties of his employment hereunder; or
(v) if the Executive breaches any other specific provision of this
Agreement and, if such breach is curable, he fails
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to cure same within thirty (30) days of written notice thereof.
(c) If the Executive's employment is terminated for Cause, or if he
dies, the Company will pay to the Executive an aggregate amount equal to the
Executive's accrued and unpaid base salary through the date of such termination,
additional salary payments in lieu of the Executive's accrued and unused
vacation time, unreimbursed business expenses, unreimbursed medical, dental and
other employee benefit expenses in accordance with the applicable plans, and any
and all other benefits provided under the terms of applicable employee plans to
terminated employees (the "Standard Termination Payments").
(d) Notwithstanding anything to the contrary contained herein, upon
written notice to the Executive, the Company may terminate his employment
without Cause at any time. In the event of such termination, the Company will
have no further obligation to the Executive or any other person in respect of
his employment other than the lump sum payment of (i) the Standard Termination
Payments through the date of such termination and (ii) an amount equal to the
greater of the Executive's base salary for the remainder of the Term or for one
year, less any amounts owed by the Executive to the Company of its Affiliates
(provided, that loans made to the Executive by the Company or its Affiliates or
predecessor entities relating to the purchase by the Executive of an equity
interest in such entities shall remain due in accordance with their terms). In
addition, immediately upon the effectiveness of such termination, (Y) all
options granted to the Executive shall immediately vest and be exercisable and
(Z) all restrictions on restricted stock issued to the Executive shall be
terminated.
(e) If the Executive so notifies the Company within thirty (30) days
after the occurrence of any of the following events, the Executive may terminate
his employment by the Company hereunder:
(i) a material reduction in the authority of the Executive or a material
adverse change in the Executive's working conditions if, after such
reduction or change, the Executive's authority or working conditions are
not commensurate with those of executives holding chief financial officer
positions at companies comparable to the Company in the lodging industry (a
"Material Adverse Change");
(ii) the Executive is required to relocate from the Washington, D.C.
metropolitan area without his consent; or
(iii) a Change of Control occurs and the Executive reasonably believes
that a Material Adverse Change will occur as a result of such Change of
Control.
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As used herein (X) the term "Change in Control" means the occurrence of any
events such that any "person", as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, other than Acadia Partners L.P.
and its Affiliates and the Company's management becomes a "beneficial owner", as
such term is used in Rule 13d-3 promulgated under such Act, of 35% or more of
the Voting Stock of the Company; provided that no Change of Control shall be
deemed to have occurred so long as the Executive continues to report to Paul W.
Whetsell; (Y) an Affiliate of a person or other entity means a person or other
entity that directly or indirectly controls, is controlled by or is under common
control with the person or other entity specified (including without limitation
any investment entity managed by the person or other entity specified or a
person or entity that directly or indirectly controls, is controlled by or under
common control with the person or other entity specified) and (Z) the term
"Voting Stock" means capital stock of any class or classes having general voting
power under ordinary circumstances, in the absence of contingencies, to elect
the directors or their equivalent.
If the Executive's employment is terminated pursuant to this Section
4(e), the Company will have no further obligation to the Executive or any other
person in respect of his employment other than payment of (i) the Standard
Termination Payments through the date of such termination and (ii) the
Executive's base salary for two years following the effective date of such
termination; provided, that such payments under clause (ii) above shall be
reduced by any amounts earned by the Executive from the rendering of personal
services in any capacity during such two year period. In addition, immediately
upon the effectiveness of such termination, (Y) all options granted to the
Executive shall immediately vest and be exercisable and (Z) all Company imposed
restrictions on restricted stock issued to the Executive shall be terminated.
5. CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges that the Company and its subsidiaries
or affiliated ventures ("Company Affiliates") own and have developed and
compile, 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 thereafter,
he will not use or disclose, furnish or make accessible to anyone, directly or
indirectly, any Confidential Information of the Company Affiliates.
(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
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its businesses 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 the Executive, (ii) becomes
generally known or generally available to the public subsequent 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).
6. RESTRICTIVE COVENANTS. (a) The Executive agrees that for a
period of twelve months after the termination of his employment with the Company
the Executive will not, directly or indirectly, as a principal, agent or
otherwise, engage or participate in, or as an employee, consultant or advisor
render services or advise with respect to any transaction in which the Company
was actively engaged or with respect to which the Company had given active
consideration during the twelve month period immediately prior to the
termination of the Employee's employment with the Company.
(b) The Executive agrees that during his employment hereunder and for
a period of twenty-four 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.
7. 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 5 or 6 hereof. Therefore, in addition to
any
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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 Sections 5 or 6 shall for any reason be held by a court of
competent jurisdiction to be excessively broad as to duration, geographical
scope or activity of subject, 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.
8. 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 the Company.
9. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed given and received when delivered personally, four
days after being mailed if sent by registered or certified mail, postage
prepaid, or by one 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:
Mr. John Emery
7308 Calvert Street
Annandale, VA 22003
If to the Company or any Company Affiliate, to:
CapStar Hotel Company
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
Attention: Chief Executive Officer
or to any other address of which such party may have given notice to the other
parties in the manner specified above.
10. MISCELLANEOUS.
(a) This Agreement is a personal contract calling for
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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
hereunder will be binding upon and run in favor of their respective successors
and assigns.
(b) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware.
(c) Any controversy arising out of or relating to this Agreement or
any breach hereof shall be settled by arbitration in Washington, D.C. by a
single neutral arbitrator who shall be a retired federal or state court judge in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment upon any award rendered may be entered in any court
having jurisdiction thereof, except in the event of a controversy relating to
any alleged violation by the Executive of Section 5 or 6 hereof, the Company
shall be entitled to seek injunctive relief from a court of competent
jurisdiction without the requirement to seek arbitration.
(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 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE:
---------------------------
John Emery
COMPANY:
CAPSTAR HOTEL COMPANY
By:
------------------------
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SCHEDULE A
The Exempted Activities shall mean acting as an officer of CapStar Hotels,
Inc. and Latham Hotels, Inc. and their respective subsidiaries in connection
with their general affairs and in connection with the ownership, management,
financing and sale of their interests (and the interests of entities in which
they are general partners or principals) in the following hotels.
1. Inn at Morro Bay, Morro Bay, California
2. Residence Inn, Orange California
3. Sheraton Inn Denver Airport, Denver, Colorado
4. Ramada Inn, Slidell, Louisiana
5. Cranwell Resort, Lenox, Massachusetts
6. Radisson Inn North Country, West Lebanon, New Hampshire
7. Ramada Hotel LaGuardia Airport, Queens, New York
8. Quality Inn Shenandoah Valley, New Market, Virginia
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