EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between STARWOOD HOTELS &
RESORTS WORLDWIDE, INC., a Maryland corporation (the “Company”), and FRITS VAN
PAASSCHEN (“Executive”), and is dated as of August 31, 2007.

WHEREAS, the Company wishes to employ Executive, and Executive wishes to be
employed by the Company on the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, the Company and Executive agree as follows:

ARTICLE 1:

EMPLOYMENT AND DUTIES

1.1 Employment; Effective Date. Executive’s employment with the Company shall
begin as soon as practicable but no later than September 24, 2007. The date
Executive’s employment commences shall be known as the Effective Date.

1.2 Position. From and after the Effective Date, the Company shall employ
Executive in the position of Chief Executive Officer and President and in such
other positions as the parties mutually may agree. Executive acknowledges that
his prospective employment will be subject to all policies and practices of the
Company as may currently exist or as may be curtailed, modified or implemented
from time to time. As Chief Executive Officer and President, Executive shall be
the senior-most executive officer of the Company, reporting directly to the
Board, with the duties, responsibilities and authority customarily associated
with and consistent with such position.

1.3 Duties and Services. Executive agrees to serve in the positions referred to
in Paragraph 1.2 and to perform diligently and to the best of his abilities the
duties and services appertaining to such positions as well as such additional
duties and services appropriate to such positions which the parties mutually may
agree upon from time to time. Except due to periods of business-related travel,
Executive agrees to perform his duties from the Company’s White Plains, New York
offices (hereinafter “Company Headquarters”) and to be regularly and
consistently present at Company’s Headquarters during business hours.
Additionally, commencing as of the Effective Date Executive shall be nominated,
appointed and shall serve on the Company’s Board of Directors, subject to the
Company’s customary procedures and conditions to Board membership, including
shareholder re-election.

1.4 Executive Obligations. Executive shall devote his full business time,
attention and best efforts to the performance of his duties under this Agreement
and shall not engage in any other business activities except with the prior
written approval of the Board; provided, however, that Executive may engage in
other activities that do not conflict with or interfere with the performance of
his duties and responsibilities hereunder, including, without limitation, (a)
investing his assets and funds, so long as the business of any such entity in
which he shall make his investments shall not be in direct competition with that
of the Company (except that Executive may invest in an entity in competition
with the Company if its stock is listed for trading on a national stock exchange
or traded in the over-the-counter market and Executive’s holdings have an
original cost less than $5,000,000 and represent less than five percent of its
outstanding stock) and (b) being involved in educational, civic and charitable
activities which do not unreasonably interfere with the services to be rendered
by Executive hereunder. It is acknowledged and agreed that Executive may not
serve during the Term (as defined in Section 2) as a director of any board of
which he is not already a member without the prior written approval of the
Board; however, Executive may continue to serve on any board of which he was
already a member as of the Effective Date of this Agreement.

ARTICLE 2:

TERM AND TERMINATION OF EMPLOYMENT

2.1 Term. Unless sooner terminated, the term of this Agreement shall commence on
the Effective Date and shall continue, subject to earlier termination of such
employment pursuant to the terms of this Employment Agreement (hereinafter
“Agreement”), from year to year thereafter (the “Term”), unless either party
provides 180 days written notice of his or its desire to cancel this Agreement.

2.2 Company’s Right to Terminate.

(a) Notwithstanding the provisions of Paragraphs 2.1 and 4.1, the Company shall
have the right to terminate Executive’s employment under this Agreement at any
time for any of the following reasons:

(i) upon Executive’s death;

(ii) upon Executive’s becoming incapacitated for a period of at least 180
consecutive days by accident, sickness or other circumstance which renders him
mentally or physically incapable of performing the essential functions of the
duties and services required of him hereunder, with reasonable accommodation, on
a full-time basis during such period (“Disability”);

(iii) for Cause;

(iv) without Cause in the sole discretion of the Board.

(b) As used in this Agreement, the term “Cause” shall mean the occurrence of any
of the following events during the Term: (i) fraud, misappropriation or
embezzlement with respect to the Company (or any subsidiary); (ii) sexual (or
other forms of) harassment in connection with Executive’s duties;
(iii) Executive’s refusal to follow the reasonable directions of the Board;
(iv) intoxication with alcohol or due to unlawful consumption of drugs while on
the Employer’s premises or while performing services on behalf of the Company at
any other place; (v) a conviction or plea of guilty or nolo contendere to a
felony (other than one arising from the operation of a motor vehicle that does
not involve an accident involving injury to a third party); (vi) engaging in an
act of willful gross misconduct or willful gross negligence in connection with
the Company’s business; (vii) Executive’s material breach of the Agreement,
including the confidentiality, nonsolicitation, noncompetition and other
covenants contained herein; (viii) Executive’s failure to observe and comply
with the Company’s Code of Conduct and ethics codes; (ix) Executive’s
substantial or continuous failure to observe and comply with the Company’s
policies or codes; and/or (x) Executive’s breach of a material Company policy or
code; provided, however, in the case of clauses (iii), (vii), (viii), (ix), and
(x), no action(s) or inaction(s) will constitute Cause unless (1) a resolution
finding that Cause exists has been approved by a majority of all of the members
of the Board and (2) where remedial action is feasible, Executive fails to
remedy the action(s) or inaction(s) within 10 days after receiving a written
notice (“Cause Notice”) identifying in reasonable detail the nature of such
Cause. If Executive so effects a cure to the satisfaction of the Board, the
Cause Notice shall be deemed rescinded and of no force or effect.

2.3 Executive’s Right to Terminate. Notwithstanding the provisions of
Paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement:

(a) for “Good Reason”, which shall mean, without Executive’s consent, (i) a
reduction (x) in Executive’s Base Salary as provided for under this Agreement,
(y) target annual bonus opportunity percentage or (z) target long-term incentive
opportunity award value; (ii) the assignment to Executive of any duties
inconsistent in any material respect with Executive’s position (including titles
and reporting relationships), authority, duties or responsibilities as
contemplated by this Agreement, or any other action by the Company which results
in a significant diminution in such position, authority, duties or
responsibilities (for the avoidance of doubt, including Executive’s serving as
Chief Executive Officer of the Company (or its successor) at any time during
which the common stock of the Company is not publicly listed for trading on a
United States national stock exchange or NASDAQ national market);
(iii) Executive being required to relocate to a principal place of employment
more than thirty-five (35) miles from the Company’s principal offices as of the
Effective Date; (iv) the Company’s material breach of the Agreement; or (v) the
failure of the Company to obtain a satisfactory agreement from any successor to
all or substantially all of the assets or business of the Company to assume and
agree to perform this Agreement within fifteen (15) days after a merger,
consolidation, sale or similar transaction; provided, that in the case of
clauses (i) or (ii), Good Reason shall not include an inadvertent and isolated
act in good faith which is cured by the Company within 30 days after receipt by
the Company of written notice from Executive identifying in reasonable detail
the acts or failures allegedly constituting Good Reason hereunder; provided
further, that if Executive does not deliver to the Company a notice of
termination within the sixty (60) day period after Executive has knowledge that
an event constituting Good Reason has occurred, such event will no longer
constitute Good Reason.

(b) without Good Reason, in the sole discretion of Executive.

2.4 Notice of Termination. If the Company or Executive desires to terminate
Executive’s employment hereunder at any time, it or he shall do so by giving no
less than 15 days written notice to the other party that it or he has elected to
terminate Executive’s employment hereunder and stating the effective date (which
shall not be December 31 of any year) and reason for such termination, provided
that no such action shall alter or amend any other provisions hereof or rights
arising hereunder.

ARTICLE 3:

COMPENSATION AND BENEFITS

3.1 Base Salary; Sign-On Bonus.

(a) Commencing on the Effective Date, during the period of this Agreement,
Executive shall receive an annual base salary (“Base Salary”) equal to
$1,000,000 (partial years pro rated), which shall be subject to annual review,
commencing with executive salary reviews occurring in 2008, and increase (but
not decrease) in the discretion of the Board. Executive’s annual Base Salary
shall be paid in equal installments in accordance with the Company’s standard
policy regarding payment of compensation to executives but no less frequently
than semi-monthly.

(b) On the Effective Date, as a one-time sign-on bonus, (i) the Company shall
pay to Executive $1,500,000 in cash and (ii) award to Executive restricted stock
units under the Company’s 2004 Long-Term Incentive Plan (“2004 LTIP”) having a
face value on the Effective Date equal to $1,500,000, which shall fully vest on
the grant date (subject to forfeiture as provided below) and be payable in
shares of common stock of the Company (one share for each such unit), subject to
share withholding for applicable withholding tax, within ten (10) days after the
earliest of (x) the third anniversary of the Effective Date, (y) the date of
termination of Executive’s employment for any reason and (z) the date of a
“change in the ownership or effective control” of the Company (within the
meaning of Treasury Regulation Section 1.409A-3(i)(5)). If Executive’s
employment with the Company and all subsidiaries terminates for any reason
during the first full calendar year of Executive’s employment and prior to the
occurrence of a Change in Control (as defined below) of the Company, other than
due to his death, Disability, involuntary termination by the Company without
Cause or voluntary termination for Good Reason, Executive shall be obligated to
repay the full amount of the foregoing cash sign-on bonus and he shall forfeit
the award of restricted stock units, above.

3.2 Annual Incentive Program, Restricted Stock Awards and Stock Option Grants.

(a) Annual Incentive Plan. During the Term of the Agreement, Executive shall
participate in the Annual Incentive Plan for Certain Executives (“AIPCE”)
maintained by the Company for senior executive officers at a level that is not
less than the maximum participation level made available to any Company senior
executive but consistent with the terms hereof. Such bonuses shall range from 0%
to 300% of base salary based on performance versus objectives as set by the
Board of Directors. Executive’s target bonus shall be 200% of base salary
(hereinafter, “Target Bonus”). Executive shall be guaranteed in an amount not
less than a pro rated $2,000,000 bonus for the year 2007, payable no later than
March 31, 2008. An annual bonus shall not be deemed earned by Executive until
the Company has determined Executive’s entitlement to such bonus in accordance
with the AIPCE and Company procedures and practice then in effect. As of the
date of this Agreement, the AIPCE provides that a portion of Executive’s annual
bonus will be deferred and payable in Starwood stock or stock units. The current
deferral portion of the bonus is 25% and is payable in Starwood stock having a
value on the date of deferral equal to 133% of the amount deferred.

(b) Long Term Incentive Compensation.

(i) On the Effective Date, the Company shall award Executive, pursuant to the
2004 LTIP, a restricted stock award having a face value on the Effective Date of
$3,750,000 and a stock option award having a value on the Effective Date of
$1,250,000 (such value to be determined in accordance with the Company’s current
methodologies for valuing stock option awards). Executive’s stock options shall
have an exercise price equal to the Fair Market Value (as defined under the 2004
LTIP) of Company common stock on the Effective Date, an eight (8)-year exercise
period, and shall vest at the rate of 25% per year commencing on the first
anniversary of the Effective Date and on each of the succeeding three (3)
anniversaries thereafter. Executive’s restricted stock shall vest as to 50% of
the award on the third anniversary of the Effective Date and the remaining 50%
of the award on the fourth anniversary of the Effective Date, provided that
Executive is employed by the Company or a subsidiary at such time for such
respective installment to so vest, except as otherwise provided herein. Share
withholding shall apply to satisfy withholding tax on vested restricted stock,
based on the Fair Market Value of Company common stock on the date of vesting.
The stock option and restricted stock awards shall have such other terms and
conditions as are set forth in the forms of stock option award and restricted
stock award provided to Executive. Target grants shall be in the same proportion
of restricted stock to stock options as to other senior executives of the
Company.

(ii) Executive shall be eligible for long-term incentive grants pursuant to the
2004 LTIP (or successor plan) commencing with grants to other senior executives
awarded in February 2008 and each year thereafter in the discretion of the Board
(or a Committee thereof). Executive’s target-level annual long-term incentive
grant opportunity in February 2008 shall not be less than $1,666,667 and in each
year thereafter shall be not less than $5,000,000 (in each case such value is to
be determined in accordance with the Company’s methodologies for valuing such
awards at the time of any such award). Executive hereby agrees and acknowledges
that the actual value of awards, if any, will be based upon Executive’s
performance and the metrics used for other senior executives of the Company.
Target grants shall be in the same proportion of restricted stock to stock
options as to other senior executives of the Company.

(c) Nothing in the foregoing provisions of this Paragraph 3.2 shall be deemed to
prevent the Board in its sole discretion from awarding any additional or other
amounts of cash, restricted stock or options or other equity based awards in
respect of any whole or partial year during the Term.

3.3 Vacation and Sick Leave. During each year of his employment, Executive shall
be entitled to vacation and sick leave benefits under the Company’s policies
equal to the maximum available to any Company senior executive, but in any event
not less than 4 weeks per calendar year, determined without regard to the period
of service that might otherwise be necessary to entitle Executive to such
vacation or sick leave in accordance with standard Company policy.

3.4 Other Benefits.

(a) Other Company Benefits. Executive shall participate in, and be eligible to
receive, all other benefits, including 401(k), medical, dental and disability
plans coverage, as may be provided by the Company to other senior Executive
employees from time to time pursuant to the terms and conditions of such benefit
plans, programs and/or policies. Except as set forth herein, Executive shall not
be entitled to receive any other benefits during the Term, unless expressly
provided for and agreed to by the Company. The Executive shall be eligible to
participate in the Company’s “StarShare” employee benefit programs and the
Company 401(k) plan on the first day of the month following 90 days of
employment. The Executive and his eligible dependents will be covered by these
benefits as per the Executive’s coverage elections. The Company agrees to
reimburse the Executive for any COBRA payments until the date the Executive
becomes eligible for the Company’s health benefits. The Company will reimburse
the Executive the difference between the applicable normal contribution rate
with the Company and the Executive’s COBRA amount. The Company shall not be
obligated to institute, maintain, or refrain from changing, amending or
discontinuing any benefit plan or program of the Company, so long as such
changes are similarly applicable to other senior executive employees. Following
Executive’s separation from the Company, Executive shall receive notification
from the Company regarding Executive’s and Executive’s dependent(s)’ right to
continue participation in any group health care benefit plan sponsored by the
Company at Executive’s and/or Executive’s dependent(s)’ own expense under the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”) subject to any
applicable requirements for continuation of coverage as set forth by COBRA. The
Company agrees to continue Executive’s participation in the Company’s health,
dental and vision benefit plans for Executive and his spouse and other covered
dependents for a period of two years following Executive’s employment, at a
premium cost to Executive equal to the amount charged to active senior
executives of the Company for like coverage, which coverage shall run
concurrently with Executive’s entitlement to COBRA continuation benefits, and
which coverage shall be earlier reduced or terminated, as applies, at such time
as Executive obtains comparable benefits (determined on a coverage-by-coverage
and benefit-by-benefit basis) for himself, his spouse and other covered
dependents from a subsequent employer.

(b) Driver and Car Service. The Company will provide Executive the use of a
driver and car service in the New York metropolitan area for business purposes
(including commuting). Any such use of a Company-provided driver for
non-business purposes shall be charged to Executive at the Company’s operating
cost and shall be imputed to Executive as income and no other amounts will be
imputed to Executive.

(c) Business and Entertainment Expenses. Subject to the Company’s standard
policies and procedures with respect to expense reimbursement as applied to its
senior executive employees generally, the Company shall reimburse Executive for,
or pay on behalf of Executive, reasonable and appropriate expenses incurred by
Executive for business-related purposes, including reasonable dues and fees to
industry and professional organizations, costs of entertainment and business
development and business-related travel and to other locations on Company
business. Executive shall be entitled to use first-class travel accommodations
for such business-related travel. The Company shall pay Executive’s professional
fees, up to a maximum of $50,000, incurred to negotiate and prepare this
Agreement and all related agreements hereto.

(d) Company Aircraft. The Company shall make available to Executive a
Company-owned or leased private aircraft for business-related travel and, when
such aircraft is available, for personal use. The use by Executive of any
Company aircraft shall at all times be subject to Company policies and
procedures and to the availability of such aircraft. Executive shall generally
have first priority among Company employees for business usage of Company
aircraft. Executive’s use of Company aircraft for personal use shall be charged
to Executive at the Company’s operating cost, except as otherwise agreed by the
Company and Executive in writing; provided, however, the Company shall provide
Executive up to $500,000 as a credit for personal use of aircraft during the
first twelve (12) months of this Agreement, which shall be imputed to Executive
as income in accordance with the Standard Industry Fare Level formula amount
applicable under Treasury Regulation Section 1.61-21(g)(5).

(e) Relocation: On or within thirty (30) days after the Effective Date,
Executive shall relocate himself to housing in the New York/Connecticut area.
The Company shall reimburse Executive the reasonable costs of relocating his
household from their current home in Denver, Colorado to a new residence by
December 31, 2007 (or such later date that is on or before July 15, 2008 as may
reasonably be required, notwithstanding Executive’s reasonable best efforts, to
avoid unreasonable disruption with due regard for his family’s particular needs
and considerations) in the New York/Connecticut area, including all physical
relocation, househunting travel, real estate sale and purchase expenses
(including brokers’ commissions), a $75,000 unitemized miscellaneous cash
allowance, and a full gross-up for all taxes incurred in connection with such
relocation (other than taxes on any gain on Executive’s sale of his residence).

3.5 Withholding. The Base Salary and all other payments, grants and awards to
Executive for his services to the Company shall be subject to all withholding
and deductions required by federal, state or other law (including those
authorized by Executive but not otherwise required by law), including but not
limited to state, federal and local income taxes, unemployment tax, Medicare and
FICA, together with such deductions as Executive may from time to time
specifically authorize under any employee benefit program which may be adopted
by the Company for the benefit of its senior executives or Executive.

ARTICLE 4:

EFFECT OF TERMINATION ON COMPENSATION

4.1 Separation Package.

(a) In the event Executive’s employment is terminated at any time either (A) by
the Company without Cause under Paragraph 2.2(a)(iv) or (B) by Executive for
Good Reason under Paragraph 2.3(a), then, subject to Paragraph 4.2, as and for a
separation package the Company, Executive shall be entitled to:

(i) a lump sum severance payment equal to two (2) times the sum of Executive’s
Base Salary and Target Bonus (determined without regard for any reduction of
either such amount constituting Good Reason), which shall be paid within ten
(10) days after the effectiveness of the release of claims provided under
Paragraph 4.2, subject to the limitations under Item 32 (Policy on Severance
Agreements with Certain Senior Executives) of the Starwood Hotels & Resorts
Worldwide, Inc. Corporate Governance Guidelines as in effect on the date hereof
(while such policy is in effect) (“Severance Limitation Policy”);

(ii) a pro rated portion of Executive’s annual bonus through the date of
termination, earned and payable in accordance with, and subject to, the terms of
the AIPCE based on actual results for the fiscal year of such termination
(determined without regard for any exercise of negative discretion by the Board
or applicable Committee thereof under the AIPCE that is applied
disproportionately to Executive) as well as payroll policies in effect at the
Company as if Executive were employed at the time, which shall be paid on the
later of (x) ten (10) days after the effectiveness of the release of claims
provided under Paragraph 4.2 or (y) the date such bonuses are paid to other
senior executives for such fiscal year (but not later than two and one-half
months after the last day of such fiscal year);

(iii) Executive’s stock options and restricted stock grants shall vest or not
vest in accordance with the plan provisions and terms and conditions applicable
to such equity award agreements; provided it is agreed by the parties that any
unvested portion of Executive’s stock option and restricted stock grants awarded
on the Effective Date shall not vest and shall be forfeited; and

(iv) the following payments and benefits (collectively, “Accrued Benefits”):
(w) an amount equal to his unpaid Base Salary and any accrued and unpaid
vacation pay through the date of termination which shall be paid on the next
payroll date occurring on or following the date of termination, (x) any unpaid
bonus earned for a completed fiscal year preceding the fiscal year of such
termination which shall be paid when bonuses for such completed fiscal year are
paid to senior executives, (y) unreimbursed expenses which shall be payable in
accordance with Company policy, and (z) such other benefits that may be owed to
Executive which shall be payable in accordance with the Company’s applicable
plans, programs or policies.

(b) In the event Executive’s employment under this Agreement is terminated
because of the death or Disability of Executive under Paragraph 2.2(a)(i) or
2.2(a)(ii), then, subject to Paragraph 4.2, as and for a severance package, then
the Company shall provide to Executive or, if he is deceased, the legal
representative of his estate: (i) Executive’s Accrued Benefits; (ii) a pro rated
portion of a Target Bonus through the date of termination, payable in accordance
with, and subject to, the terms of the AIPCE as well as payroll policies in
effect at the Company as if Executive were employed at the time, which shall be
paid within ten (10) days after the effectiveness of the release of claims
provided under Paragraph 4.2; and (iii) the unvested portion of Executive’s
stock options, restricted stock and other equity and long-term incentive grants
shall immediately fully vest as of the date of the termination of Executive’s
employment and his stock options shall be exercisable upon the earlier of
(i) one (1) year following the date of termination of employment or (ii) the
original expiration date of such option.

(c) In the event Executive’s employment is terminated at any time by the Company
without Cause or by Executive for Good Reason (A) within twelve (12) months
after a Change in Control (as defined below) or (B) at any time prior to but in
contemplation of, or at the direction of a third-party respecting, a Change in
Control, then, subject to Paragraph 4.2, as and for a separation package, the
Company shall provide to Executive:

(i) a lump sum severance payment equal to two (2) times the sum of Executive’s
Base Salary and Target Bonus (determined without regard for any reduction of
either such amount constituting Good Reason), which shall be paid within ten
(10) days after the effectiveness of the release of claims provided under
Paragraph 4.2, subject to the Severance Limitation Policy;

(ii) for the twenty-four (24) month period immediately following the date of
termination, the Company shall arrange to provide Executive and his dependents
life, disability, accident and health insurance benefits substantially similar
to those provided to Executive and his dependents immediately prior to the date
of termination or, if more favorable to the Executive, those provided to
Executive and his dependents immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, at no greater cost to Executive
than the cost to the Executive immediately prior to such date or occurrence.
Benefits otherwise receivable by the Executive pursuant to this
Paragraph 4.1(c)(ii) shall be reduced to the extent benefits of the same type
are received by the Executive from another employer during the twenty-four
(24) month period following the Executive’s termination of employment; provided,
however, that the Company shall reimburse the Executive for the excess, if any,
of the cost of such benefits to the Executive over such cost immediately prior
to the date of termination or, if more favorable to the Executive, the first
occurrence of an event or circumstance constituting Good Reason;

(iii) the unvested portions of all other restricted stock, stock options and
other long-term incentive awards will become immediately fully vested upon such
termination and all such awards then subject to performance conditions over a
performance period that had not then concluded shall be deemed earned, vested
and payable at the maximum level of performance thereunder;

(iv) all unvested 401(k) contributions in Executive’s 401(k) account shall
immediately vest or the Company shall pay Executive an amount equal to any such
unvested amounts that are forfeited by reason of the Executive’s termination of
employment and paid within ten (10) days after the effectiveness of the release
of claims provided under Paragraph 4.2; and

(v) Executive’s Accrued Benefits.

(d) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that Executive shall become entitled to payments and/or
benefits provided by this Agreement or any other amounts in the “nature of
compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company or any affiliate, any person
whose actions result in a change of ownership or effective control of the
Company covered by Section 280G(b)(2) of the Internal Revenue Code of 1986, as
amended (“Code”), or any successor provision thereof, or any person affiliated
with the Company or such person) as a result of such change in ownership or
effective control of the Company (a “Payment”) would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the “Excise Tax”), the Company shall pay to Executive an additional amount
(the “Gross-Up Payment”) such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Payments and any federal, state and
local income and employment taxes and Excise Tax upon the Gross-Up Payment,
shall be equal to the Total Payments.

(ii) For purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of any such Excise Tax, (A) all of the Payments
shall be treated as “parachute payments” (within the meaning of section
280G(b)(2) of the Code) unless tax counsel (“Tax Counsel”) reasonably acceptable
to the Executive and selected by the accounting firm which was, immediately
prior to the Change in Control, the Company’s independent auditor (the
“Auditor”), delivers an opinion to Executive that such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (B) all “excess parachute payments” within
the meaning of section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax unless Tax Counsel delivers an opinion to the Executive that such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of section
280G(b)(4)(B) of the Code) in excess of the Base Amount allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and
(C) the value of all noncash benefits or any deferred payment or benefit shall
be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purpose of determining the amount of the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive’s residence
on the date of employment termination (or if there is no date of termination,
then the date on which the Gross-Up Payment is calculated Date for purposes of
this Paragraph 4.1(d)), net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.

(iii) In the event that the Excise Tax is finally determined to the less than
the amount taken into account hereunder in calculating the Gross-Up Payment,
Executive shall repay to the Company, within five (5) business days following
the time that the amount of such reduction in the Excise Tax is finally
determined, the portion of the Gross-Up payment to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and employment taxes imposed on the Gross-Up Payment
being repaid by Executive), to the extent that such repayments results in a
reduction in the Excise Tax and a dollar for dollar reduction in the Executive’s
taxable income and wages for purposes of federal, state and local income and
employment taxes, plus interest on the amount of such repayment at 120% of the
rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise
Tax is determined, pursuant to an administrative or judicial proceeding, to
exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to such
excess) within five (5) business days following the time that the amount of such
excess is finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Total Payments.

(e) As used in this Agreement, “Change in Control” means:

(i) Any individual, entity or group (a “Person”), including any “person” within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Act”), is or becomes the beneficial owner within the
meaning of Rule 13d-3 promulgated under the Act (but without regard to any time
period specified in Rule 13d-3(d)(1)(i)), of 33-1/3 percent or more of either
(i) then outstanding shares of common stock, par value $.01 per share, of the
Company (“Common Stock”), the “Outstanding Shares”) or (ii) the combined voting
power of then outstanding securities of the Company entitled to vote generally
in the election of Directors (the “Outstanding Company Voting Securities”);
excluding, however, (A) any acquisition by the Company or (B) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company;

(ii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a Director of the Company
subsequent to the Effective Date whose election, or nomination for election by
the Company’s stockholders, was approved by the vote of at least a majority of
the Directors then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; and provided further, that any individual who was initially
elected as a Director of the Company as a result of an actual or threatened
solicitation by a Person other than the Board for the purpose of opposing a
solicitation by any other Person with respect to the election or removal of
directors, or any other actual or threatened solicitation of proxies or consents
by or on behalf of any Person other than the Board shall not be deemed a member
of the Incumbent Board;

(iii) Consummation by the Company of a reorganization, merger, or consolidation
or sale of all or substantially all of the assets of the Company (a “Corporate
Transaction”); excluding, however, a Corporate Transaction pursuant to which
(1) all or substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Shares and the Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 66-2/3 percent of,
respectively, the outstanding             shares of common stock, and the
combined voting power of the outstanding securities of such corporation entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Shares and the Outstanding Company Voting Securities, as the case
may be, (2) no Person (other than: the Company, any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, the corporation resulting from such Corporate
Transaction, and any Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 33-1/3 percent or more of the
Outstanding Shares or the Outstanding Company Voting Securities, as the case may
be) will beneficially own, directly or indirectly, 33-1/3 percent or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the
election of directors and (3) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or

(iv) Approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.

(f) Anything herein to the contrary notwithstanding, it is intended that this
Agreement shall comply with the provisions of Section 409A of the Code, and this
Agreement shall be construed and applied in a manner consistent with this intent
including, without limitation, any required postponement of up to six (6) months
of any payment (excluding payments that do not constitute a “deferral of
compensation”) to Executive upon a “separation from service” while he is a
“specified employee” (within the meanings of such terms under Treasury
Regulation Section 1.409A-1) as may be required pursuant to Section
409A(a)(2)(B)(i) of the Code. In the event that any payment or benefit under
this Agreement is determined by the Company to be in the nature of a “deferral
of compensation” under Section 409A of the Code, the Company and Executive
hereby agree to take such actions, not otherwise provided herein, as may be
mutually agreed between the parties to ensure that such payments comply with the
applicable provisions of Section 409A of the Code and the Treasury Regulations
thereunder. To the extent that any payment or benefit under this Agreement is
modified by reason of this Paragraph 4.1(f), it shall be modified in a manner
that complies with Section 409A and preserves to the maximum possible extent the
economic costs or value thereof (as applies) to the respective parties
(determined on a pre-tax basis).

4.2 Liquidated Damages. The parties agree that the above severance package shall
be Executive’s sole and exclusive monetary remedy under this Agreement by reason
of termination of Executive’s employment by the Company without Cause or by
Executive for Good Reason, it being agreed that as his actual damages under this
Agreement would be difficult to measure or quantify and would be impracticable
to determine, such amount shall constitute liquidated damages under this
Agreement for Executive by reason of such termination by Executive or the
Company. Any such payments shall not be reduced or limited by amounts Executive
might earn or be able to earn from other employment or ventures and Executive
shall not be obligated to mitigate any amounts or benefits owed to him by
seeking other employment or ventures. Notwithstanding the foregoing, upon any
termination of Executive’s employment and the Company’s payment to Executive of
the amounts required to be paid under Paragraph 4.1 (other than his Accrued
Benefits), Executive shall execute a release of claims arising out of
Executive’s employment with, and termination of employment from, the Company in
the form attached hereto as Exhibit 4.2 (adjusted as necessary to conform to
then existing legal requirements); and all payments and benefits provided under
the above Paragraph 4.1 (other than Executive’s Accrued Benefits) shall be
subject to Executive’s execution and non-revocation of such a release.

4.3 Rights on Termination for Cause or Without Good Reason. No severance
payments shall be due or owing to Executive in the event that the Company shall
fully terminate Executive’s employment for Cause or Executive shall terminate
his employment without Good Reason; provided, however, that Executive shall be
paid his Accrued Benefits, specifically excluding for purposes of Paragraph 4.3
any unpaid bonus earned for a completed fiscal year preceding the fiscal year of
such termination.

ARTICLE 5:

REPRESENTATIONS AND WARRANTIES;

NON-COMPETE AND NON-SOLICITATION

5.1 Representations and Warranties.

(a) Representation and Warranty of Executive. Executive hereby represents and
warrants to the Company that he is not aware of any presently existing fact,
circumstance or event (including, but without limitation, any health condition
or legal constraint) which is not known to the Company which would preclude or
restrict him from providing to the Company the services contemplated by this
Agreement, or which would give rise to any breach of any term or provision
hereof, or which could otherwise result in the termination of his employment
hereunder for Cause (as such term is herein defined).

(b) Representation and Warranty of the Company. The Company hereby represents
and warrants to Executive that (i) it is not aware of any fact, circumstance or
event which is not known to Executive which would give rise to any breach of any
term or provision of this Agreement, or which would form the basis for any claim
or allegation that Executive’s employment hereunder could be terminated for
Cause hereunder; and (ii) it has received all authorizations and has taken all
actions, necessary or appropriate for the due execution, delivery and
performance of this Agreement, and all options, restricted stock and restricted
stock units described in Article 3.

5.2 Non-Compete and Non-Solicitation.

(a) General. Executive acknowledges that in the course of Executive’s employment
with the Company Executive will become familiar with trade secrets and other
confidential information concerning the Company and its subsidiaries and that
Executive’s services will be of special, unique and extraordinary value to the
Company and its subsidiaries.

(b) Noncompetition. Executive agrees that during the period of Executive’s
employment with the Company and for a period of 24 months thereafter (the
“Noncompetition Period”), Executive shall not, without the express written
consent of the Board of Directors of the Company, directly or indirectly,
whether for his own account or for the account of any other person or entity,
engage, participate or make any financial investment in, become employed by or
render advisory services to or otherwise assist or be interested in any
Competitive Business in any geographic area in which, as of the date of
termination of Executive’s employment, the Company or any of its subsidiaries is
engaged or planning to be engaged. As used herein, “Competitive Business” shall
mean any business engaged in the hotel, hospitality or timeshare businesses, as
well as any corporation, partnership or other entity that derives 33% or more of
its total earnings before interest, taxes, depreciation and amortization
(determined, as of the Effective Date, in accordance with generally accepted
accounting principals consistently applied) from the hotel, hospitality or
timeshare businesses. Nothwithstanding, Executive may invest in a Competitive
Business if its stock is listed for trading on a national stock exchange or
traded in the over-the-counter market and Executive’s holdings have an original
cost less than $5,000,000 and represent less than five percent of its
outstanding stock.

(c) Nonsolicitation. Executive further agrees that during the Noncompetition
Period, Executive shall not, without the express written consent of the Board of
Directors of the Company, directly or indirectly, whether for his own account or
for the account of any other person or entity, other than the Company, hire,
employ, retain or solicit the hire, employment or retention of any managerial
level employee of the Company or its affiliates (including, without limitation,
for this purpose any director level employee of the Company and any General
Manager of any hotel owned (in whole or in part) or managed by the Company), or
any person who was such an employee at any time during the twelve (12) month
period preceding Executive’s termination of employment with the Company or its
affiliates, or otherwise persuade, induce or encourage, or attempt to persuade,
induce or encourage any such person or consultant to the Company to terminate
his, her or its relationship with the Company; provided, that the foregoing
shall not be violated by general advertising not targeted at Company employees
nor by serving as a reference for an employee with regard to an entity with
which the Executive is not affiliated.

(d) Exceptions. Nothing in this Paragraph 5.2 shall prohibit Executive from
being (i) a stockholder in a mutual fund or a diversified investment company;
(ii) an owner of not more than five percent of the outstanding stock of any
class of a corporation whose securities are publicly traded so long as Executive
has no active participation in the business of such corporation; and (iii) an
owner of any single asset hotels.

(e) Reformation. If, at any time of enforcement of this Paragraph 5.2 the
Arbitrator (as defined in Paragraph 6.1(a)) holds that the restrictions stated
herein are unreasonable under circumstances then existing, the parties hereto
agree that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the Arbitrator shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law. This Agreement shall
not authorize the Arbitrator to increase or broaden any of the restrictions in
this Paragraph 5.2.

5.3 Confidentiality. Executive shall not, at any time during the Term or
thereafter, make use of or disclose, directly or indirectly, any (i) trade
secret or other confidential or secret information of the Company or of any of
its subsidiaries or (ii) other technical, business, proprietary or financial
information of the Company or of any of its subsidiaries not available to the
public generally or to the competitors of the Company or to the competitors of
any of its subsidiaries (“Confidential Information”), except to the extent that
such Confidential Information (a) becomes a matter of public record or is
published in a newspaper, magazine or other periodical or on electronic or other
media available to the general public, other than as a result of any act or
omission of Executive, (b) is required to be disclosed by any law, regulation or
order of any court or regulatory commission, department or agency, provided that
Executive gives prompt notice of such requirement to the Company to enable the
Company to seek an appropriate protective order, or (c) is required to be used
or disclosed by Executive to perform properly Executive’s duties under this
Agreement. Promptly following the end of the Term, Executive shall surrender to
the Company all records, memoranda, notes, plans, reports, computer tapes and
software and other documents and data which constitute Confidential Information
which Executive may then possess or have under Executive’s control (together
with all copies thereof). Subject to the Company’s right of inspection to ensure
that no Confidential Information is contained therein, Executive’s rolodex or
other tangible or electronic address book shall be deemed Executive’s personal
property.

5.4 Non-Disparagement: Executive shall not make any verbal or written statements
to any person or organization (including, but not limited to, members of the
press and media, present and former officers and directors, employees,
contractors, customers and agents of Company, any future employers of Executive
and/or other members of the public) which materially denigrate, disparage,
defame or otherwise adversely affect the Company, its directors, officers,
employees and/or agents. The Company shall not make any verbal or written
statements to any person or organization (including, but not limited to, members
of the press and media, present and former officers and directors, employees,
contractors, customers and agents of Company, any future employers of Executive
and/or other members of the public) which materially denigrate, disparage,
defame or otherwise adversely affect Executive.

5.5 Intellectual Property. Executive shall not, at any time, have or claim any
right, title or interest in any trade name, patent, trademark, copyright, trade
secret, intellectual property, methodologies, technologies or other similar
rights relating to the Company’s business (collectively, “Intellectual
Property”) belonging to the Company or any of its affiliates and shall not have
or claim any right, title or interest in or to any material or matter of any
kind prepared for or used in connection with the business or promotion of the
Company or any of its affiliates, whether produced, prepared or published in
whole or in part by Executive or by the Company or any of its affiliates. All
Intellectual Property that is conceived, devised, made, developed or perfected
by Executive, alone or with others, during Executive’s employment that is
related in any way to the Company’s or any of its affiliates’ business or is
devised, made, developed or perfected utilizing equipment or facilities of the
Company or its affiliates shall be promptly disclosed to the Board, are works
for hire and become the sole, absolute and exclusive property of the Company. If
and to the extent that any of such Intellectual Property should be determined
for any reason not to be a work for hire, Executive hereby assigns to the
Company all of Executive’s right, title and interest in and to such Intellectual
Property. At the reasonable request and expense of the Company but without
charge to the Company, whether during or at any time after Executive’s
employment with the Company, Executive shall cooperate fully with the Company
and its affiliates in the securing of any trade name, patent, trademark,
copyright or intellectual property protection or other similar rights in the
United States and in foreign countries, including without limitation, the
execution and delivery of assignments, patent applications and other documents
or papers.

5.6 Sale of Stock: Executive shall not sell any stock owned by Executive while
Executive serves as Chief Executive Officer, except (and only to the extent
permitted under applicable securities laws) as may be withheld for taxes,
(a) during the first 24 months of the Effective Date; (b) without consultation
with the Board of Directors following the first 24 months of the Effective Date,
and (c) without otherwise complying with all policies concerning the sale of
stock then in effect at the Company.

5.7 Enforcement. The parties hereto agree that the Company and its subsidiaries
would be damaged irreparably in the event that any provision of Paragraphs 5.2,
5.3, 5.4 or 5.5 of this Agreement were not performed in accordance with its
terms or were otherwise breached and that money damages would be an inadequate
remedy for any such nonperformance or breach. Accordingly, the Company and its
successors and permitted assigns shall be entitled, in addition to other rights
and remedies existing in their favor, to seek an injunction or injunctions to
prevent any breach or threatened breach of any of such provisions and to enforce
such provisions specifically (without posting a bond or other security).
Executive agrees that Executive will submit to the personal jurisdiction of the
courts of the State of New York in any action by the Company to enforce an
arbitration award against Executive or to obtain interim injunctive or other
relief pending an arbitration decision.

ARTICLE 6:

ARBITRATION

6.1 Arbitration. In the event of any controversy, dispute or claim arising out
of or related to this Agreement or Executive’s employment by the Company, the
parties shall negotiate in good faith in an attempt to reach a mutually
acceptable settlement of such dispute. If negotiations in good faith do not
result in a settlement of any such controversy, dispute or claim, it shall,
except as otherwise provided for herein be finally settled by expedited
arbitration conducted by a single arbitrator selected as hereinafter provided
(the “Arbitrator”) in accordance with the Employment Arbitration and Mediation
Rules and Procedures of the American Arbitration Association (“National Rules”),
subject to the following (the parties hereby agreeing that, notwithstanding the
provisions of Rule 1 of the National Rules, in the event that there is a
conflict between the provisions of the National Rules and the provisions of this
Agreement, the provisions of this Agreement shall control):

(a) The Arbitrator shall be determined from a list of names of five impartial
arbitrators each of whom shall be an attorney experienced in arbitration matters
concerning executive employment disputes, supplied by the AAA chosen by
Executive and the Company each in turn striking a name from the list until one
name remains (with the Company being the first to strike a name).

(b) The expenses of the arbitration shall be borne by the Company; and the
Company shall bear its own legal fees and expenses and pay, at least monthly,
all of Executive’s legal fees and expenses incurred in connection with such
arbitration, except that Executive shall reimburse the Company for his legal
fees and expenses paid by the Company if the arbitrator finds that Executive
brought an action in bad faith.

(c) The Arbitrator shall determine whether and to what extent any party shall be
entitled to damages under this Agreement; provided that no party shall be
entitled to punitive or consequential damages (including, in the case of the
Company, any claim for alleged lost profits or other damages that would have
been avoided had Executive remained an employee), and each party waives all such
rights, if any.

(d) The Arbitrator shall not have the power to add to nor modify any of the
terms or conditions of this Agreement. The Arbitrator’s decision shall not go
beyond what is necessary for the interpretation and application of the
provision(s) of this Agreement in respect of the issue before the Arbitrator.
The Arbitrator shall not substitute his or her judgment for that of the parties
in the exercise of rights granted or retained by this Agreement. The
Arbitrator’s award or other permitted remedy, if any, and the decision shall be
based upon the issue as drafted and submitted by the respective parties and the
relevant and competent evidence adduced at the hearing.

(e) The Arbitrator shall have the authority to award any remedy or relief
(including provisional remedies and relief) that a court of competent
jurisdiction could order or grant. The Arbitrator’s written decision shall be
rendered within sixty days of the closing of the hearing. The decision reached
by the Arbitrator shall be final and binding upon the parties as to the matter
in dispute. To the extent that the relief or remedy granted by the Arbitrator is
relief or remedy on which a court could enter judgment, a judgment upon the
award rendered by the Arbitrator shall be entered in any court having
jurisdiction thereof (unless in the case of an award of damages, the full amount
of the award is paid within 10 days of its determination by the Arbitrator).
Otherwise, the award shall be binding on the parties in connection with their
continuing performances of this Agreement and, in any subsequent arbitral or
judicial proceedings between the parties.

(f) The arbitration shall take place in New York, New York.

(g) The arbitration and all filing, testimony, documents and information
relating to or presented during the arbitration proceeding shall be disclosed
exclusively for the purpose of facilitating the arbitration process and in any
court proceeding relating to the arbitration, and for no other purpose, and
shall be deemed to be information subject to the confidentiality provisions of
this Agreement.

(h) The parties shall continue performing their respective obligations under
this Agreement notwithstanding the existence of a dispute while the dispute is
being resolved unless and until such obligations are terminated or expire in
accordance with the provisions hereof.

(i) The parties may obtain a pre-hearing exchange of information including
depositions, interrogatories, production of documents, exchange of summaries of
testimony or exchange of statements of position, and the Arbitrator shall limit
such disclosure to avoid unnecessary burden to the parties and shall schedule
promptly all discovery and other procedural steps and otherwise assume case
management initiative and control to effect an efficient and expeditious
resolution of the dispute. At any oral hearing of evidence in connection with an
arbitration proceeding, each party and its counsel shall have the right to
examine its witness and to cross-examine the witnesses of the other party. No
testimony of any witness, or any evidence, shall be introduced by affidavit,
except as the parties otherwise agree in writing.

(j) Notwithstanding the dispute resolution procedures contained in this
Paragraph 6.1, either party may apply to any court sitting in the County, City
and State of New York (i) to enforce this agreement to arbitrate, (ii) to seek
provisional injunctive relief so as to maintain the status quo until the
arbitration award is rendered or the dispute is otherwise resolved, (iii) to
confirm any arbitration award, or (iv) to challenge or vacate any final
judgment, award or decision of the Arbitrator that does not comport with the
express provisions of this Article 6.

ARTICLE 7:

MISCELLANEOUS

7.1 Notices. All notices, requests or other communications provided for in this
Agreement shall be made, if to the Company, to the Secretary of the Company at
the Company’s principal executive office, and if to Executive, to his address on
the books of the Company (or to such other address as the Company or Executive
may give to the other in writing for purposes of notice hereunder).

Copies of all notices given to Executive shall be sent to:

Robert F. Simon
Vedder, Price, Kaufman & Kammholz, P.C.
222 North LaSalle Street
Suite 2600
Chicago, Illinois 60601
Facsimile: (312) 609-5005

Copies of all notices given to the Company shall be sent to:

Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, New York 10604

Attention: Chief Administrative Officer and General Counsel

Facsimile: (914) 640-8240

All notices, requests or other communications required or permitted by this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by mailing via certified mail, postage prepaid, return
receipt requested, in the United States mails to the last known address of the
party entitled thereto, (c) by reputable overnight courier service, or (d) by
facsimile with confirmation or receipt. The notice, request or other
communication shall be deemed to be received upon actual receipt by the party
entitled thereto; provided, however, that if a notice, request or other
communication is received after regular business hours, it shall be deemed to be
received on the next succeeding business day of the Company.

7.2 Applicable Law. This contract is entered into under, and shall be governed
for all purposes by, the laws of the State of New York.

7.3 No Waiver. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

7.4 Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other provisions
shall remain in full force and effect.

7.5 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.

7.6 Headings. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

7.7 Gender and Plurals. Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely.

7.8 Successors. This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of the Company, including without limitation any
person, association or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of the Company by any means whether
direct or indirect, by purchase, merger, consolidation, or otherwise. The
Company shall require any such successor to the Company to expressly assume, in
writing, satisfaction in form and substance to Executive all of the Company’s
obligations to Executive hereunder and otherwise. Except as provided in the
preceding sentences, this Agreement and the rights and obligations of the
parties hereunder are personal, and neither this Agreement nor any right,
benefit or obligation of either party hereto shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law or
otherwise, without the prior written consent of the other party. In the event
that Executive dies before all amounts payable under this Agreement have been
paid, all remaining amounts shall be paid to the beneficiary specifically
designated by Executive in writing prior to his death, or, if no such
beneficiary was designated (or the Company is unable in good faith to determine
the beneficiary designated), to Executive’s personal representative or estate.

7.9 Entire Agreement. Any modification of this Agreement shall be effective only
if it is in writing and signed by the party to be charged.

7.10 Deemed Resignations. Any termination of Executive’s employment shall
constitute an automatic resignation of Executive as an officer of the Company
and each affiliate of the Company, and from the Board of Directors of the
Company and from the board of directors or any similar governing body of any
corporation, trust, limited liability company or other entity in which the
Company or any affiliate holds an equity interest and with respect to which
board or similar governing body Executive serves as the Company’s or such
affiliate’s designee or other representative. Executive shall cooperate with the
Company and execute all such formal resignations and other documents as the
Company may reasonably request in furtherance of the foregoing.

7.11 Indemnification.

(a) In addition to any additional benefits provided under applicable state law,
as an officer and/or director of the company, Executive shall be entitled to the
benefits of: (1) those provisions of the Articles of Incorporation of the
Company, as amended, and of the by-laws of the Company as amended, which provide
for indemnification of officers and directors of the Company (and no such
provision shall be amended in any way to limit or reduce the extent of
indemnification available to Executive as an officer and/or director of the
Company), (ii) the Indemnification Agreement between the Company and Executive
(the ‘Indemnification Agreement”) dated as of the Effective Date.

(b) The rights of Executive under such indemnification obligations shall survive
the termination of this Agreement and be applicable for so long as Executive may
be subject to any claim, demand, liability, cost or expense, which the
indemnification obligations referred to in this Paragraph 7.11 are intended to
protect and indemnify him against.

(c) The Company shall, at no cost to Executive, use its reasonable best efforts
to at all times include Executive, during the term of Executive’s employment
hereunder and for so long thereafter as Executive may be subject to any such
claim, as an insured under any directors’ and officers’ liability insurance
policy maintained by the Company, which policy shall provide such coverage in
such amounts as the Board shall deem appropriate for coverage for all directors
and officers of the Company.

7.12 Survival. The provisions of Articles 4, 5, and 6, and Paragraph 7.11, shall
survive a termination of this Agreement and a termination of Executive’s
employment, as well as such provisions of Article 7 as are necessary to
effectuate the intent of the parties thereunder.

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its
duly authorized officer and Executive has signed this Agreement as of the day
and year first above written.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation

By: /s/ Bruce Duncan

    Name: Bruce Duncan

Its:Chairman of the Board

FRITS VAN PAASSCHEN

/s/ Frits Van Paasschen

1

Frits Van PaasschenEXHIBIT 4.2

to

Employment Agreement dated August 31, 2007

between Frits Van Paasschen

and

Starwood Hotels & Resorts Worldwide, Inc.

GENERAL RELEASE

This General Release (this “Release”) is executed by Frits Van Paasschen
(“Executive”) pursuant to Paragraph 4.2 of the Employment Agreement between
Starwood Hotels & Resorts Worldwide, Inc., dated August 31, 2007 (the
“Employment Agreement”).

WHEREAS, Executive’s employment with the Company has terminated;

WHEREAS, the Company and Executive intend that the terms and conditions of the
Employment Agreement and this Release shall govern all issues relating to
Executive’s employment and termination of employment with the Company;

WHEREAS, Executive has been given the opportunity to consider this Release for
21 days;

WHEREAS, the Company advised Executive in writing to consult with an attorney
before signing this Release;

WHEREAS, Executive acknowledges that the consideration to be provided to
Executive under the Employment Agreement is sufficient to support this Release;
and

WHEREAS, Executive understands that the Company regards the representations by
Executive in the Employment Agreement and this Release as material and that the
Company is relying upon such representations in paying amounts to Executive
pursuant to the Employment Agreement.

EXECUTIVE THEREFORE AGREES AS FOLLOWS:

1. Executive’s employment with the Company terminated on      , and Executive
has and will receive the payments and benefits set forth in Paragraph [Insert
4.1 or 4.3 depending on the manner of termination] of the Employment Agreement
in accordance with the terms and subject to the conditions thereof, as more
particularly set forth on Appendix I hereto.

2. Executive, on behalf of himself and anyone claiming through him, hereby
agrees not to sue the Company or any of its divisions, subsidiaries, affiliates
or other related entities (whether or not such entities are wholly owned) or any
of the past, present or future directors, officers, administrators, trustees,
fiduciaries, employees, agents, and attorneys or any of such other entities, or
the predecessors, successors or assigns of any of them (hereinafter referred to
as the “Released Parties”), and agrees to release and discharge, fully, finally
and forever, the Released Parties from any and all claims, causes of action,
lawsuits, liabilities, debts, accounts, covenants, contracts, controversies,
agreements, promises, sums of money, damages, judgments and demands of any
nature whatsoever, in law or in equity, both known and unknown, asserted or not
asserted, foreseen or unforeseen, which Executive ever had or may presently have
against any of the Released Parties arising from the beginning of time up to and
including the effective date of this Release, including, without limitation, all
matters in any way related to the Employment Agreement, Executive’s employment
by the Company or any of its subsidiaries or affiliates, the terms and
conditions thereof, any failure to promote Executive and the termination or
cessation of Executive’s employment with the Company or any of its subsidiaries
or affiliates, and including, without limitation, any and all claims arising
under the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
the Civil Rights Act of 1866, the Age Discrimination in Employment Act, the
Older Workers’ Benefit Protection Act, the Family and Medical Leave Act, the
Americans With Disabilities Act, the Employee Retirement Income Security Act of
1974, the New York State Human Rights Law (Executive Law Art. 15, Sec. 290 et
seq.) or any other federal, state, local or foreign statute, regulation,
ordinance or order, or pursuant to any common law doctrine; provided, however,
that nothing contained in this Release shall apply to, or release the Company
from, any obligation of the Company contained in Article 4 or in Article 7 of
the Employment Agreement or any vested benefit pursuant to any employee benefit
plan of the Company. The consideration offered in the Employment Agreement is
accepted by Executive as being in full accord, satisfaction, compromise and
settlement of any and all claims or potential claims, and Executive expressly
agrees that he is not entitled to, and shall not receive, any further recovery
of any kind from the Company or any of the other Released Parties, and that in
the event of any further proceedings whatsoever based upon any matter released
herein, neither the Company nor any of the other Released Parties shall have any
further monetary or other obligation of any kind to Executive, including any
obligation for any costs, expenses or attorneys’ fees incurred by or on behalf
of Executive. Executive agrees that he has no present or future right to
employment with the Company or any of the other Released Parties and that he
will not apply for or otherwise seek employment with any of them.

3. Executive expressly represents and warrants that he is the sole owner of the
actual and alleged claims, demands, rights, causes of action and other matters
that are released herein; that the same have not been transferred or assigned or
caused to be transferred or assigned to any other person, firm, corporation or
other legal entity; and that he has the full right and power to grant, execute
and deliver the general release, undertakings and agreements contained herein.

4. ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS RELEASE, EXECUTIVE EXPRESSLY
ACKNOWLEDGES THAT HE HAS READ THIS RELEASE CAREFULLY, THAT HE FULLY UNDERSTANDS
ITS TERMS AND CONDITIONS, THAT HE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTING THIS RELEASE, THAT HE HAS BEEN ADVISED THAT HE HAS 21 DAYS
WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE THIS RELEASE AND THAT HE
INTENDS TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF SEVEN DAYS FOLLOWING THE
DATE OF HIS EXECUTION OF THIS RELEASE, EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE
THE RELEASE OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT BY SERVING
WITHIN SUCH PERIOD WRITTEN NOTICE OF REVOCATION IN THE MANNER PROVIDED IN
PARAGRAPH 7.1 OF THE EMPLOYMENT AGREEMENT. IF EXECUTIVE EXERCISES HIS RIGHTS
UNDER THE PRECEDING SENTENCE, HE SHALL NOT BE ENTITLED TO RECEIVE THE AMOUNT
PAYABLE TO HIM PURSUANT TO PARAGRAPHS 4.1(a) AND 4.1(b) OF THE EMPLOYMENT
AGREEMENT OTHER THAN HIS ACCRUED BENEFITS.

5. The Employment Agreement and this Release constitute the entire understanding
between the parties. Executive has not relied on any oral statements that are
not included in the Employment Agreement or this Release.

6. This Release shall be construed, interpreted and applied in accordance with
the internal laws of the State of New York without regard to the principle of
conflicts of laws.

7. In the event that any provision of this Release should be held to be invalid
or unenforceable, each and all of the other provisions of this Release shall
remain in full force and effect. If any provision of this Release is found to be
invalid or unenforceable, such provision shall be modified as necessary to
permit this Release to be upheld and enforced to the maximum extent permitted by
law.

8. This Release inures to the benefit of the Company and its successors and
assigns.

9. In the event of any dispute or controversy arising under this Release,
Article 6 of the Employment Agreement shall be applicable.

             FRITS VAN PAASSCHEN

Date: _______________
    —  

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APPENDIX I

[Insert applicable Article 4 separation payments and benefits]

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