SEPARATION AGREEMENT AND MUTUAL GENERAL RELEASE OF CLAIMS

Theodore W. Darnall (hereinafter referred to as “Employee”) and Starwood Hotels
& Resorts Worldwide, Inc. (hereinafter referred to as the “Company”) agree as
follows:

ONE: Termination of Employment.

Employee acknowledges that his employment with the Company will end upon his
resignation, which he hereby tenders as a result of a reduction in his role and
which will be effective October 15, 2006, unless such employment is terminated
earlier pursuant to the terms herein (hereinafter referred to as the
“Termination Date”). After the Termination Date, Employee will perform no
further duties, functions or services for the Company or any of its affiliates,
nor will he be entitled to any further compensation and/or benefits except as
described herein. Following the Termination Date, Employee shall be eligible for
continued insurance coverage under COBRA.

If, prior to October 15, 2006, Employee is terminated for cause or voluntarily
resigns his employment, the date that Employee’s employment is terminated for
cause or he voluntarily resigns shall be deemed the Termination Date. For
purposes of this Agreement, “cause,” shall mean (i) any material breach by
Employee of any of the duties, responsibilities or obligations of his employment
or any of the policies or practices of the Company; (ii) Employee’s willful
failure or refusal to properly perform (as determined by Company in its
reasonable discretion and judgment), or the habitual neglect of, the duties,
responsibilities or obligations of his employment, or to properly perform or
follow (as determined by Company in its reasonable discretion and judgment) any
lawful order or direction by the Company; (iii) any acts or omissions by
Employee that constitute (as determined by Company in its reasonable discretion
and judgment) fraud, dishonesty, breach of duty of loyalty, breach of trust,
gross negligence, civil or criminal illegality, or any other misconduct or
behavior that could subject the Company to civil or criminal liability or
otherwise adversely and materially affect the business, interests or reputation
of the Company or any of its affiliates. For the purposes of the acts described
in items (i) through (iii) of this paragraph, any determination that any act or
failure to act by Employee constitutes “cause” shall be made by the Company in
its reasonable discretion and judgment, provided that the Company shall provide
Employee with reasonable notice of such determination and an opportunity to
correct or cure any such act or failure to act .

TWO: Benefits.

Provided that (a) Employee executes this Agreement and does not revoke it
pursuant to Paragraph EIGHT herein; (b) his employment is not terminated for
cause prior to October 15, 2006; (c) he does not voluntarily resign prior to
October 15, 2006, and (d) within twenty-one (21) days after the Termination
Date, Employee shall have executed and delivered to the Company a General
Release and Waiver (“Release”) in the form annexed hereto as Appendix B and does
not revoke it, and in consideration for Employee’s agreements and covenants
including the release of claims set forth in this Agreement and as full and
complete and final satisfaction of any and all claims which Employee had, has or
may have against the Company, the Company agrees that within 30 days after the
Termination Date and subject to the conditions to payment set forth herein, it
will (i) pay Employee an amount equal to 12 months of his base salary in a lump
sum of $445,788.00 (which equals $595,788.00 less the $150,000 loan from the
Company to Employee that is due upon his separation from employment), less
applicable deductions; (ii) pay Employee the additional sum of $282,999.30
(which is an amount equal to 50% of his target bonus for the 2006 performance
year); (iii) pay out Employee’s 2005 and 2006 HOT feature in respect to unvested
benefits allocated to Employee under the Company’s Annual Incentive Plan as
follows: (a) cash in an amount equal to $101,506, which represents one-half of
the initial Hot Deduction of $203,012 made on March 1, 2005 (with the remaining
one-half having been paid out in vested Units on March 1, 2006) and (b) cash in
an amount equal to $210,889, which represents the Hot Deduction made on March 1,
2006; (iv) make COBRA premium payments on Employee’s behalf, minus Employee’s
normal contributions, for a period of 12 months should Employee choose to
continue coverage under the Company’s applicable plans after the Termination
Date; and (v) accelerate the vesting of 100% of Employee’s currently unvested
options. The vesting of Employee’s unvested restricted stock will not be
accelerated, and such stock will continue to vest in accordance with the award
agreements covering each grant subject to Employee’s compliance with the non
competition provisions set forth in Section 17 below; provided that the vesting
of such restricted stock shall not be accelerated upon a Change in Control (as
defined in the Company’s 2004 Long Term Incentive Compensation Plan) of the
Company, and provided further that in the event that a Change in Control of the
Company which results in the Company no longer having a class of common equity
securities traded on a national securities exchange or quoted on an inter-dealer
quotation system is consummated prior to any payment date above, Employee shall
be entitled to receive the highest amount paid per share in such Change in
Control transaction for each share of restricted stock on the applicable vesting
date.

Notwithstanding the foregoing, Employee will not be eligible to participate and
expressly and knowingly waives any right to participate in any employee benefit
plans (except health and life insurance plans) within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
(“ERISA”) or any other plan, policy or arrangement of the Company, including,
but not limited to, any plan, policy or arrangement relating to bonuses, profit
sharing, compensation, pension, severance, deferred compensation, fringe
benefits, insurance, welfare, post-retirement, stock purchases, disability,
accidents, sick time, vacation pay, termination, unemployment, executive
compensation, incentives, commissions or sales arrangements, change in control,
and other plan, agreement, policy, or arrangement (whether written or
unwritten), such as the Annual Incentive Plan; the Long Term Incentive
Compensation Plan; and the Employee Stock Purchase Plan; nor will he be eligible
to receive any incentives, bonuses, further option or stock grants under such
plans, provided that any benefits under any employee benefit plans that have
vested prior to the Termination Date shall be payable to Employee in accordance
with the terms of the plan(s).

Employee will not be entitled to any of the severance payments or benefits set
forth in Paragraph TWO or any other consideration under this Agreement until
after the later of all of the following: (i) receipt by the Company of this
Agreement signed by Employee; (ii) receipt by the Company within 21 days of the
Termination Date of the Release annexed hereto as Appendix B signed by Employee;
(iii) expiration of the revocation period set forth in numbered Paragraph EIGHT,
without Employee revoking this Agreement; and (iv) expiration of the revocation
period set forth in the Release annexed hereto as Exhibit B signed by Employee,
without Employee revoking such Release.

THREE: Mutual General Release.

In exchange for the agreement to provide the severance pay and other benefits
and arrangements provided for in this Agreement, Employee understands that he is
waiving any and all claims Employee may have against the Company and its
affiliates and subsidiaries and its and their officers, directors, employees,
agents, shareholders, employee benefit programs, administrators, insurers,
attorneys and successors and assigns (collectively “Releasees”), from any and
all claims, actions, suits, damages, complaints and grievances Employee, his
attorneys, heirs, dependents, beneficiaries, executors, administrators,
successors, and assigns, may have up to the date hereof related to Employee’s
employment with the Company or the termination of that employment. This includes
a release of any rights or claims Employee may have under the Age Discrimination
in Employment Act, which prohibits discrimination in employment based on age;
Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act
of 1991, which prohibit discrimination in employment based on race, color,
national origin, ancestry, religion or sex; the Pregnancy Discrimination Act,
which prohibits discrimination based on pregnancy; the Equal Pay Act, which
prohibits paying men and women unequal pay for equal work; the Civil Rights Acts
of 1866 and 1871, as amended, which protect against certain discrimination and
violations of individuals’ civil rights; the Americans with Disabilities Act,
which prohibits discrimination on the basis of physical or mental disability;
the Employee Retirement Income Security Act (ERISA), which regulates certain
conduct and practices relating to employee benefit and health plans; the Family
and Medical Leave Act, which provides time off to employees for certain family
and medical events and prohibits discrimination relating to such leaves of
absence; the Immigration Reform and Control Act, which prohibits discrimination
based upon an individual’s national origin citizenship status and/or work
authorization documents; the New York State Executive Law, the New York City
Administrative Code, and the New York State Constitution; or any other federal,
state or local laws or regulations prohibiting employment discrimination or
regulating employment or termination of employment. This also includes a release
by Employee of any claims for wrongful discharge and any other common law
claims. This release applies to all claims through the date of execution of this
Agreement and covers both claims that Employee knows about and those he may not
know about but excludes (i) any claim by Employee to enforce the terms of this
Agreement; and (ii) any claim to enforce Employee’s defense and/or
indemnification rights; and (iii) any claims related to actions or omissions
occurring after the execution of this Agreement.

In consideration of Employee’s agreements hereunder, the Company, on its own
behalf and on behalf of its current and former affiliates or related companies,
subsidiaries, branches and divisions, and the successors and assigns of all of
the foregoing (collectively, the “Company Releasor”) hereby releases Employee
and Employee’s heirs, executors, administrators, successors and assigns from or
in connection with any and all actions, claims or demands, known or unknown and
of any nature whatsoever and which Company Releasor ever had, now has or
hereafter can, shall or may have as of the date hereof relating to Employee’s
employment with the Company, except that this Release shall not apply to (i) any
obligation of Employee pursuant to this Agreement ; (ii) any act by Employee
during his employment that would constitute fraud or embezzlement; or (iii) any
actions, claims or demands related to actions or omissions occurring after the
date hereof.

FOUR: Acknowledgment of Full Payment.

Employee acknowledges that the payments and arrangements specified in
Paragraph TWO above represent sufficient consideration for Employee’s release of
claims and the other covenants contained in this Agreement. Employee expressly
acknowledges that the severance pay provided for in this Agreement exceeds,
supersedes and extinguishes any amount, if any, to which Employee may be
entitled under any employment agreement, verbal or written, as well as any
employment or personnel policies, procedures or handbooks including but not
limited to severance plans, policies or precedent utilized by the Company or any
other legal obligation which the Company may have to Employee. Employee further
acknowledges that in the absence of this Agreement, Employee would not be
entitled to, among other things, all of the payments and benefits specified in
paragraph TWO above. Other than Employee’s accrued but unused vacation pay for
which Employee will be compensated and Employee’s 401k plan benefits, Employee
also acknowledges that the Company has paid all sums owed to him as a result of
his employment with the Company and/or the termination of that employment and
that, other than as provided in this Agreement, Employee is not entitled to,
among other things, any further pay, benefits or severance.

Employee and the Company acknowledge and agree that to the extent that Employee
currently holds stock options and restricted stock, that this information is
accurately set forth on Appendix A hereto, Employee has no other rights that
relate to the securities of the Company or any of its affiliates or subsidiaries
and that other than as set forth herein such equity will expire in accordance
with the applicable long-term incentive plan and/or stock option agreements
and/or restricted stock agreements. Other than the fact that Employee’s
employment was terminated on the Termination Date and other than as detailed
expressly in Paragraph TWO herein, nothing in this Agreement shall be construed
to alter, amend or modify the terms and conditions governing any restricted
stock, stock options or similar rights, and any rights pertaining thereto,
granted to Employee prior to the Termination Date.

FIVE: Termination of All Existing Agreements.

Except as otherwise expressly provided herein, all rights and obligations of the
Company and Employee under any employment agreement Employee may have had with
the Company, and any other agreement, arrangement, obligation or understanding
between the Company and Employee are hereby cancelled and terminated as of the
Termination Date without liability of any party thereunder.

SIX: Non-Admission of Liability.

The parties have entered into this Agreement to effect a mutually acceptable
termination of Employee’s employment with the Company. Neither the Company nor
Employee believes nor admits that either or both of them have done anything
wrong.

SEVEN: Period for Review and Consideration of Agreement.

Employee understands that he has been given a period of 21 calendar days to
review and consider this Agreement. Employee further understands that he may
take as much or as little of this 21-day period of time to consider this
Agreement as he wishes, before signing this Agreement.

EIGHT: Revocation Period and Payment of Benefits.

This Agreement will not become effective or binding on the parties until seven
(7) days after it is signed, during which time Employee may revoke this
Agreement if he desires. Any revocation must be in writing and directed to Chief
Administrative Officer and General Counsel, 1111 Westchester Avenue, White
Plains, NY 10604.

NINE: Encouragement to Consult with Attorney.

Employee is encouraged to consult with an attorney before signing this
Agreement. Employee understands that whether to do so is his decision.

TEN: Binding Agreement.

This Agreement shall be binding upon and inure to the benefit of the parties, as
well as their heirs, administrators, representatives, agents, executors,
successors and assigns.

ELEVEN: Arbitration.

Any controversy, dispute or claim arising out of or related to this Agreement or
its enforceability shall be finally settled by final and binding arbitration
conducted by a single arbitrator selected by the parties in accordance with the
Employment Rules of the American Arbitration Association.

TWELVE: Confidentiality.

Employee represents and agrees that he will keep the payments and other terms
contained in this Agreement confidential, and that he will not disclose any
information concerning this Agreement to any third person, including but not
limited to any past or present employee of the Company, except as may be
required by law. Notwithstanding the foregoing, nothing herein shall preclude
Employee from disclosing the terms of this Agreement to his spouse, other
immediate family members, or to his accountant, legal counsel, insurer or tax
advisors; provided that any such person to whom such disclosure is made is
advised of and agrees to be bound by the provisions of this Paragraph. Employee
acknowledges that he will be responsible for any violation of the terms of this
Paragraph TWELVE by any of those persons.

THIRTEEN: Confidential Information.

As a senior executive officer of the Company, Employee acknowledges that he has
had access to Confidential Information (as hereinafter defined) of the Company
through the Termination Date. In recognition of Employee’s legal obligations and
the consideration set forth in this Agreement, Employee agrees not to disclose,
communicate or divulge to, or use for the direct or indirect benefit of, any
person (including Employee), firm, association or other entity (other than the
Company or its affiliates) any Confidential Information.

“Confidential Information” includes, but is not limited to, customer lists,
customer financial information, vendor lists, joint venture lists, actual,
contemplated and potential development projects, opportunities and partners,
development strategies, brand marketing and other brand strategies, information
relating to any current, past or prospective management agreement or joint
venture, design plans and strategies, personnel information, labor and personnel
strategies, databases, computer programs and software, frameworks, designs,
models, blueprints, marketing programs and plans, sales, financial, design,
training and technical information and plans, sales data and contacts, business
methods, business policies, procedures, techniques, research or development
projects or results, trade secrets (which includes the Company’s customer and
prospective customer lists), pricing policies, financial records, or other
financial, commercial, business or technical information relating to the Company
or any of its subsidiaries. To the extent any information described in this
paragraph is made public by or with the permission of the Company or any
affiliated person or entity, it shall not be considered to be Confidential
Information.

Employee hereby represents and agrees that on or before the Termination Date:
(i) Employee has returned or will return to the Company, and has not retained or
will not retain originals or any copies of all documents, records or materials
of any kind, whether written or electronically created or stored, which contain,
relate to or refer to any Confidential Information (“Confidential Materials”);
and (ii) Employee has not disclosed and will not disclose any Confidential
Information or Confidential Materials to any person or entity without the
express written authorization of an authorized officer of the Company.

In the event that Employee receives a subpoena or any other written or oral
request for disclosure or release of any Confidential Information, Confidential
Materials or any other information concerning the Company or its subsidiaries,
or its or their current or former employees, officers, directors, shareholders
or agents, Employee shall, within two (2) business days of the service or
receipt of such subpoena or other request, notify the Company in writing
directed to Chief Administrative Officer and General Counsel, Starwood Hotels &
Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, New York 10604,
and provide the Company with a copy of any subpoena or other written request, or
disclose the nature of the request for information, if oral.

FOURTEEN: Noninterference.

During the period commencing on the Termination Date and ending on the first
anniversary of the Termination Date, Employee solely with respect to matters of
which he is aware on or before the Termination Date, shall not take any action
or actions which are intended to or actually cause or encourage any person or
entity with which the Company intends to enter into a business relationship or
transaction (or any agent or affiliate thereof) to fail to enter into the
contemplated business relationship or complete the contemplated transaction.
Without limiting the generality of the foregoing, Employee agrees not to pursue
on his behalf or on behalf of any other person or entity or otherwise interfere
with the Company’s pursuit of any pending or contemplated deal, merger or
acquisition of which he was aware on or before the Termination Date.

FIFTEEN: Non-Disparagement.

Employee agrees not to engage in any act or say, publish or disseminate anything
(either directly or by or through another person) that is intended, or may
reasonably be expected, to harm the reputation, business or operations of the
Company, its customers, its employees, officers, directors or shareholders prior
to or after the Termination Date. The Company agrees that it will not make any
statements that are intended, or would reasonably be expected, to disparage or
defame Employee.

SIXTEEN: Future Cooperation.

After the Termination Date, Employee will comply with reasonable requests from
the Company for assistance and/or information in connection with any matters
and/or issues relating to or encompassed within the duties and responsibilities
of Employee’s employment, including without limitation, consulting with any of
the employees and/or attorneys of the Company with respect to, and/or appearing
as a witness in, any dispute, controversy, action or proceeding of any kind.
Employee agrees to appear as a witness in any proceeding of any kind and to make
himself available in advance for reasonable preparation upon the request of the
Company with reasonable advance notification without the need for the Company to
issue a subpoena. In connection with any of Employee’s cooperation efforts
mandated by this Paragraph SIXTEEN, Employee shall be entitled to receive an
agreed hourly or per diem amount (or reimbursement of lost wages as the case may
be) and reimbursement of reasonable travel and other out of pocket expenses
provided that those expenses are submitted pursuant to and are in conformance
with the then applicable Company policy relating to expense reimbursement.

SEVENTEEN: Non-Competition and Non-Solicitation

From the date hereof to the Final Payment Date (as defined below), Employee
agrees that he will not, without the prior written consent of the Company,
whether as an officer, director, employee, investor, consultant, or otherwise,
engage or be engaged by, or assist any other person, firm, corporation or
enterprise in engaging or being engaged by, or participate or make any financial
investment in, or otherwise assist in or be interested in any capacity to any
person or entity set forth on Appendix C attached hereto (the “Prohibited
Entities”). Nothing contained herein shall be deemed to prevent Employee from:
(a) owning, as a passive investment, not more than 1% of the outstanding
interests of any publicly traded company; or (b) assisting any future employer
of Employee or any affiliate of such employer (provided that neither such
employer nor such affiliate is itself a Prohibited Entity) to enter into and/or
implement any business transaction with a Prohibited Entity, including, without
limitation of the foregoing, any development, purchase, sale, franchise, or
management agreement transaction, but excluding any partnership or joint
venture.

From the date hereof to the Final Payment Date, Employee agrees that he will
not, without the prior written consent of the Company, directly solicit or
attempt to solicit for employment with or on behalf of any corporation,
partnership, joint venture or other business entity, any person who is or at any
time during the six-month period preceding the solicitation of such person was,
a management-level employee of the Company (including, without limitation, for
this purpose any employee at director level or above and any General Manager of
any hotel owned (in whole or in part) or managed by the Company).

So long as Employee has complied with the provisions of this Section 17,
Employee’s restricted stock shall vest in accordance with the terms of the
applicable awards subject to the provisions of Section 2 hereof and the Company
will deliver to Employee fully paid and non-assessable shares of the Company’s
common stock in the following amounts and on the following dates:

      Number of Shares   Date
9369
30,550
35,090
  February 18, 2007
February 10, 2008
February 7, 2009 (the “Final Payment Date”)

Simultaneously with each such delivery of shares or cash payment, the Company
will also pay to Employee an amount equal to the deferred dividends that would
have been paid to Employee upon the vesting of his restricted stock awards on or
about the dates specified, had he remained employed by the Company.

EIGHTEEN: Injunctive Relief

Employee acknowledges and agrees that Paragraphs THIRTEEN, FOURTEEN, FIFTEEN and
SEVENTEEN hereof relate to special, unique and extraordinary matters and that a
violation of any of the terms of such Paragraphs will cause the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, Employee agrees that the Company shall be entitled to seek any
available equitable relief (without the requirement to post bond if otherwise
required) in a court of law restraining Employee from committing any violation
of the covenants and obligations contained in Paragraphs THIRTEEN, FOURTEEN,
FIFTEEN and SEVENTEEN. These remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity.

NINETEEN: Return of Company Property.

Employee represents that within 1 week after the Termination Date, he will
return to the Company all Company property in his possession or over which he
has retained control such as printers, scanners and accessories, disks, keys,
cell phones, credit cards, access cards, Company records, documents and files
and all copies and recordings thereof. To the extent Employee subsequently
discovers Company property in his possession or within his control, he shall
immediately return such property and all copies, recordings or duplicates
thereof to the Company.

TWENTY: Severability.

If any portion of this Agreement is declared unlawful or unenforceable, the
remaining parts will remain enforceable.

TWENTY-ONE: Public Announcement

Employee is required to request and receive approval of the Company of the
content of any voluntary statements, whether oral or written, to be made by
Employee to any third party or parties regarding Employee’s separation from
employment with the Company, including, without limitation, any press release or
other statements to the press, except that this Paragraph TWENTY-ONE shall not
apply to any statements required to be made by reason of law, regulation, or any
judicial or other similar proceeding or order. Employee hereby covenants and
agrees not to make any public statements (either directly or by or through
another person) to any third party, including, without limitation, to any
representative of any news organization, which are inconsistent in any material
respect with the aforementioned agreed upon statements to the public.

TWENTY-TWO: Entire Agreement.

This Agreement, including Appendices A, B and C, is the entire agreement between
Employee and the Company regarding the subjects addressed in this document and
this Agreement supersedes any other agreements between the parties, other than
agreements relating to confidentiality, non-disclosure, non-solicitation and
non-competition. The Company has made no promises to Employee other than those
in this Agreement.

[Signature Page Follows]

EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT, HAS TAKEN
SUFFICIENT TIME TO CONSIDER IT AND IS VOLUNTARILY ENTERING INTO IT.

EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS AND A RESTRICTION ON RELEASE OF CONFIDENTIAL INFORMATION.

THEODORE W. DARNALL

Signed:     

Dated:     

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

By:     
Name:
Title:

Dated: