Exhibit 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, effective as of November 1, 2001 by and between
MERISTAR HOTELS & RESORTS, INC., a Delaware corporation (the "Company"),
MERISTAR MANAGEMENT COMPANY, LLC, a Delaware limited liability company (the
"LLC"), and ROBERT MORSE (the "Executive"), an individual residing at 8414 Holly
Leaf Dr., McLean, VA 22102.
The Company and the LLC desire to employ the Executive in the
capacity of President - Hotels & Resorts 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
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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, 2001 (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
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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 LLC,
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.
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(a) During the Term, the Executive will hold the title and
office of, and serve in the position of, President - Hotels & Resorts 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 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, provided, that the Executive
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may devote his business time to providing services to MeriStar Hospitality
Corporation, so long as such activity does not
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interfere with the performance of the Executive's duties
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
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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 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 position as President - Hotels & Resorts and with his duties
and responsibilities hereunder.
3. 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 $425,000
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.
(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; target - 100% of base
salary; and maximum bonus amount - 125% 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. As a returning employee, you will be given full credit for your
previous service in determining length of service for employee benefits.
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(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 thereof.
(e) The Company and the LLC 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) 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 3(g) 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 3(g) 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 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. 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 $5,000,000, subject to customary exclusions, with respect to
claims made against officers and directors of the Company or the LLC; provided,
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however , the Company or the LLC, as the case may be, shall be relieved of this
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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.
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4. Termination.
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(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 LLC
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
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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 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.
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(a) If the Term is terminated by the Company for Cause,
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, and all unvested options will terminate immediately and 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, 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, and all unvested
options will terminate immediately and 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, 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
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which the termination occurred. In addition, 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. In addition, 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 .
(d) Subject to Section 5(f) hereof, if the Agreement is
not renewed by the Company in accordance with Paragraph 1, the Company and the
LLC 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. In addition, 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 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) Subject to Section 5(f) hereof, if the Term is
terminated by the Company without Cause or other than by reason of his death or
Disability, in addition to any other remedies available, or if the Executive
terminates the Term for Good Reason, the Company and the LLC 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. In addition, 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 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.
(f) 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 Paragraph 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(e) hereof; provided, that the amount
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of the multiplier described in clause (e) of Section 5 hereof shall be increased
from one times to two times.
(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
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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;
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(ii) any willful and intentional act of the
Executive involving malfeasance, fraud, theft, misappropriation of funds,
embezzlement or dishonesty affecting the Company or the LLC; 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.
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;
(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 LLC which is continuing; or
(iv) a Change in Control;
provided, however, that the Executive shall not be deemed to have Good Reason
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pursuant to clauses (ii) and (iii) 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. Change of Control
will not be deemed "Good Reason", however,
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if the 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
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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 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 hisemployment 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
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employment shall be set-off or in any other way limit orreduce 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 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 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.
(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 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, 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
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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) 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.
7. Specific Performance.
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(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.
(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.
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8. Withholding. The parties agree that all payments to
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be made to the Executive by the Company pursuant to the Agreement shall be
subject to all applicable withholding obligations of such company.
9. Notices. All notices required or permitted
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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:
Robert Morse
8414 Holly Leaf Dr.
McLean, VA 22102
If to the Company or to the LLC, to:
MeriStar Hotel & 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.
10. Miscellaneous.
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(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) 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 in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. 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 6 hereof, in which case the Company
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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 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.
(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, 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]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the date first above written.
EXECUTIVE:
/s/ Robert Morse
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COMPANY:
MERISTAR HOTELS & RESORTS, INC.
By: /s/ Christopher L. Bennett
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Name:
Title:
LLC:
MERISTAR MANAGEMENT COMPANY,
LLC
By: MeriStar Hotels & Resorts, Inc.,
its general partner
By: /s/ Christopher L. Bennett
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Name:
Title: