exv10w3



 








Exhibit 10.3




SEVERANCE AGREEMENT




     THIS AGREEMENT, dated August 2, 2006, is made by and between Starwood Hotels and Resorts
Worldwide, Inc., a Maryland corporation (the “Company”), and                      (the “Executive”).



     WHEREAS, the Executive is employed by the Company as                                         ; and




     WHEREAS, the Company considers it essential to the best interests of its stockholders to
foster the continued employment of key management personnel; and



     WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or distraction of senior
management personnel to the detriment of the Company and its stockholders; and



     WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s senior management,
including the Executive, to their assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change in Control.



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Executive hereby agree as follows:




	 	1.	 	Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in Section 16 hereof.
	 
	 	2.	 	Term of Agreement. The Term of this Agreement shall commence on the
Effective Date and shall continue in effect through the third anniversary of the
Effective Date; provided, however, that on each anniversary of the Effective Date
during the Term of this Agreement, the Term shall automatically be extended for one
additional year unless, not later than 90 days prior to any such anniversary, the
Company or the Executive shall have given notice not to extend the Term; and further
provided, however, that if a Change in Control or a Potential Change in Control shall
have occurred during the Term, the Term shall expire no earlier than twenty-four (24)
months beyond the month in which such Change in Control or a Potential Change in
Control occurred.
	 
	 	3.	 	Company’s Covenants. In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive’s covenants set forth in
Section 4 hereof, the Company agrees, under the conditions described herein, to pay the
Executive the Severance Payments and the other payments and benefits described herein.
Except as provided in Section 10 hereof, no Severance Payments shall be payable under
this Agreement unless during the Term there shall have been (or, under the terms of the
second sentence of Section 6 hereof, there shall be deemed to have been) a termination
of the Executive’s employment with the Company following a Change in Control. This




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	 	 	 	Agreement shall not be construed as creating an express or implied contract of
employment and, except as otherwise agreed in writing between the Executive and the
Company, the Executive shall not have any right to be retained in the employ of the
Company.
	 
	 	4.	 	The Executive’s Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event a Potential Change in Control
occurs during the Term, the Executive will remain in the employ of the Company until
the earliest of (i) a date which is six (6) months from the date of such Potential
Change of Control, (ii) the date of a Change in Control, (iii) the date of termination
by the Executive of the Executive’s employment for Good Reason or by reason of death,
Disability or Retirement, or (iv) the termination by the Company of the Executive’s
employment for any reason.
	 
	 	5.	 	Compensation Other Than Severance Payments.






	 	a.	 	Payment of Salary During Disability. Following a Change in
Control and during the Term, during any period that the Executive is unable to
perform the Executive’s full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Company shall pay to the Executive the full
salary to which the Executive is entitled at the rate in effect at the commencement
of any such period, together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company during such period, until the Executive’s
employment is terminated by the Company for Disability.
	 
	 	b.	 	Accrued Salary. If the Executive’s employment shall be
terminated for any reason following a Change in Control and during the Term, the
Company shall pay the Executive such Executive’s full salary through the Date of
Termination at the rate in effect immediately prior to the Date of Termination or,
if higher, the rate in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the terms
of the Company’s compensation and benefit plans, programs or arrangements as in
effect immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
	 
	 	c.	 	Post-Termination Benefits. If the Executive’s employment shall
be terminated for any reason following a Change in Control and during the Term, the
Company shall pay to the Executive the Executive’s normal post-termination
compensation and benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance with,
the Company’s retirement, insurance and other compensation or benefit plans,
programs and arrangements as in effect immediately prior to the Date of Termination
or, if more favorable to the Executive, as in effect immediately prior to the
occurrence of the first event or circumstance constituting Good Reason.




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	 	6.	 	Severance Payments.






	 	a.	 	If the Executive’s employment is terminated following a Change in
Control and during the Term, other than (A) by the Company for Cause, (B) by reason
of death or Disability, or (C) by the Executive without Good Reason, then, the
Company shall pay the Executive the amounts, and provide the Executive the
benefits, described in this Section 6 (“Severance Payments”) and Section 7, in
addition to any payments and benefits to which the Executive is entitled under
Section 5 hereof. For purposes of this Agreement, the Executive’s employment shall
be deemed to have been terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason, if (i) the Executive’s
employment is terminated by the Company without Cause prior to a Change in Control
(whether or not a Change in Control ever occurs) and such termination was at the
request or direction of a Person who has entered into an agreement with the Company
the consummation of which would constitute a Change in Control (an “Acquiring
Person”), (ii) the Executive terminates his employment for Good Reason prior to a
Change in Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of an Acquiring Person, or (iii) the Executive’s employment is terminated
by the Company without Cause or by the Executive for Good Reason and such
termination or the circumstance or event which constitutes Good Reason is otherwise
in connection with or in anticipation of a Change in Control (whether or not a
Change in Control ever occurs). For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the
Executive shall be presumed to be correct unless the Company establishes to the
Board by clear and convincing evidence that such position is not correct.






	 	1.	 	Lump Sum Payment. In lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination and in lieu of any severance benefit otherwise payable
to the Executive, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two times the sum of (i) the
Executive’s base salary as in effect immediately prior to the Date
of Termination or, if higher, in effect immediately prior to the
first occurrence of an event or circumstance
constituting Good Reason, and (ii) the average of the annual bonuses
earned by the Executive in the three fiscal years ending immediately
prior to the fiscal year in which occurs the Date of Termination or,
if higher, immediately prior to the fiscal year in which occurs the
first event or circumstance constituting Good Reason. For purposes
of the preceding sentence, in determining any bonus amount for any
fiscal year, bonuses paid with respect to any year in which
employment of the Executive commenced shall be annualized based on
the number of days employed by the Company during such year.
	 
	 	2.	 	Continuation of Welfare Benefits. For
the twenty-four (24) month period immediately following the Date of
Termination, the Company




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	 	 	 	shall arrange to provide the Executive and
his dependents life, disability, accident and health insurance
benefits and other benefits and perquisites (including employee stay
rates) substantially similar to those provided to the Executive and
his dependents immediately prior to the Date of Termination or, if
more favorable to the Executive, those provided to the Executive and
his dependents immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, at no greater cost to the
Executive than the cost to the Executive immediately prior to such
date or occurrence. Benefits otherwise receivable by the Executive
pursuant to this Section 6(a)(2) 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.
	 
	 	3.	 	Incentive Compensation. Notwithstanding
any provision of any annual or long-term incentive plan to the
contrary, the Company shall pay to the Executive a lump sum amount,
in cash, equal to the sum of (i) any unpaid incentive compensation
which has been allocated or awarded to the Executive for a completed
fiscal year or other measuring period preceding the Date of
Termination under any such plan and which, as of the Date of
Termination, is contingent only upon the continued employment of the
Executive to a subsequent date, and (ii) the aggregate value of all
contingent incentive compensation awards allocated or awarded to the
Executive for all then uncompleted periods under any such plan that
the Executive would have earned on the last day of the performance
award period, assuming the achievement, at the target level, of the
individual and corporate performance goals established with respect
to such award. Awards for uncompleted periods shall be prorated
based upon the number of days the Executive is employed by the
Company during such year.
	 
	 	4.	 	Accelerated Vesting of Stock Options. All
stock options and restricted stock held by the Executive under any
stock option or incentive plan maintained by the Company (including
the Company’s 1999, 2001 and 2004 Long-Term Incentive Plans) shall
immediately vest and become exercisable as of the Date of
Termination, to be exercised in accordance with the terms of the
applicable plan.
	 
	 	5.	 	Outplacement Services. The Company shall
provide the Executive with outplacement services suitable to the
Executive’s position for a




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	 	 	 	period of two (2) years or, if earlier,
until the first acceptance by the Executive of an offer of
employment. The cost of such outplacement services shall not exceed
twenty percent (20%) of the Executive’s base salary.
	 
	 	6.	 	Deferred Compensation. The Company shall
pay the Executive a lump sum payment of any of the Executive’s
deferred compensation.
	 
	 	7.	 	401(k) Contributions. All unvested 401(k)
contributions in the Executive’s 401(k) account shall immediately
vest or the Company shall pay the Executive an amount equal to any
such unvested amounts that are forfeited by reason of the
Executive’s termination of employment.






	 	7.	 	280G Gross Up Payments.






	 	a.	 	Whether or not the Executive becomes entitled to the Severance
Payments, if any of the payments or benefits received or to be received by the
Executive in connection with a Change in Control or the Executive’s termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person)(such
payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to
as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay
to the 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 Total
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.
	 
	 	b.	 	For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of any such Excise Tax, (i) all of the
Total 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 the 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, (ii) 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 (iii) 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




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	 	 	 	marginal rate of taxation in the state and
locality of the Executive’s residence on the Date of 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 Section 7), net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.
	 
	 	c.	 	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, the
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 the 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.
	 
	 	d.	 	Timing of Payments. The payments provided in subsections (1)
and (3) of Section 6 hereof and in Section 7 hereof shall be made not later than
the fifth day following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined in good
faith by the Executive or, in the case of payments under Section 7 hereof, in
accordance with Section 7 hereof, of the minimum amount of such payments to which
the Executive is clearly entitled and shall pay the remainder of such payments
(together with interest on the unpaid remainder (or on all such payments to the
extent the Company fails to make such payments when due) at 120% of the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the Date of
Termination. At the time that payments are made under this Agreement the Company
shall provide the Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such calculations including,
without limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).




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	 	e.	 	Legal Fees. The Company also shall pay to the Executive, as
incurred, all legal fees and expenses incurred by the Executive in disputing in
good faith any issue hereunder relating to the termination of the Executive’s
employment, in seeking to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder, unless it is determined that any such dispute or other
action is frivolous and not in good faith. Such payments shall be made within five
(5) business days after delivery of the Executive’s written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.






	 	8.	 	Termination Procedures and Compensation During Dispute.






	 	a.	 	Notice of Termination. After a Change in Control and during the
Term, any purported termination of the Executive’s employment (other than by reason
of death) shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 12 hereof. For purposes
of this Agreement, a “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provisions indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together with
Executive’s counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, the Executive was guilty of conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
	 
	 	b.	 	Date of Termination. “Date of Termination,” with respect to any
purported termination of the Executive’s employment after a Change in Control and
during the Term, shall mean (i) if the Executive’s employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that
the Executive shall not have returned to the full-time performance of the
Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s
employment is terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the Company, shall not be less
than thirty (30) days (except in the case of a termination for Cause) and, in the
case of a termination by the Executive, shall not be less than fifteen (15) days
nor more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
	 
	 	c.	 	Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 8(c)), the party
receiving such Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be extended until the
earlier of (i) the date on which the Term ends




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	 	 	 	or (ii) the date on which the
dispute is finally resolved, either by mutual written agreement of the parties or
by a final judgment, order or decree of an arbitrator or a court of competent
jurisdiction (which is not appealable or with respect to which the time for appeal
therefrom has expired and no appeal has been perfected); provided, however, that
the Date of Termination shall be extended by a notice of dispute given by the
Executive only if such notice is given in good faith and the Executive pursues the
resolution of such dispute with reasonable diligence.
	 
	 	d.	 	Compensation During Dispute. If a purported termination occurs
following a Change in Control and during the Term and the Date of Termination is
extended in accordance with Section 8(c) hereof, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Executive as a participate in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, as determined in accordance with Section
8(c) hereof. Amounts paid under this Section 8(d) are in addition to all other
amounts due under this Agreement (other than those due under Section (b) hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement.






	 	9.	 	No Mitigation. The Company agrees that, if the Executive’s employment
with the Company terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 hereof or Section 8(d) hereof. Further,
the amount of any payment or benefit provided for in this Agreement (other than Section
6(a)(2) hereof) shall not be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
	 
	 	10.	 	Successors; Binding Agreement.






	 	a.	 	In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of the Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were to terminate the
Executive’s employment for Good Reason after a Change in Control, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
	 
	 	b.	 	This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs,




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	 	 	 	distributees, devisees and legatees. If the Executive shall die
while any amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise provided herein
shall be paid in accordance with the terms of this Agreement to the executors,
personal representatives or administrators of the Executive’s estate.






	 	11.	 	Indemnification. The Company shall indemnify and hold Executive
harmless for acts and omissions in his capacity as an officer, director or employee of
the Company to the maximum extent permitted under applicable law. The Company shall
maintain a Director’s and Officer’s Liability Insurance Policy, which shall provide
liability coverage for Executive’s benefit, and the Executive shall remain covered
under such
policy for a period of at least six (6) years following the earlier of termination of
employment or the occurrence of a Change in Control.
	 
	 	12.	 	Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed, if to the Executive, to the address
inserted below the Executive’s signature on the final page hereof and, if to the
Company, to the address set forth below, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:




To
the Company:



Starwood Hotels and Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

Attention: General Counsel

Attention: Chief Executive Officer





	 	13.	 	Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other party
hereto of, or of any lack of compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent time.
This Agreement supersedes any other agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof which have been made by
either party; provided, however, that this Agreement shall supersede any agreement
setting forth the terms and conditions of the Executive’s employment with the Company
only in the event that the Executive’s employment with the Company is terminated on or
following a Change in Control, by the Company other than for Cause or by the Executive
other than for Good Reason. The validity, interpretation, construction and performance
of this Agreement shall de governed by the laws of the State of New York. All
references to sections of the




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	 	 	 	Exchange Act or the Code shall be deemed also to refer to
any successor provisions to such sections. Any payments provided for hereunder shall be
paid net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The obligations of the
Company and the Executive under this Agreement which by their nature may require either
partial or total performance after the expiration of the Term (including, without
limitation, those under Sections 6, 7, 8, and 9 hereof) shall survive such expiration.
	 
	 	14.	 	Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
	 
	 	15.	 	Settlement of Disputes: Arbitration.






	 	a.	 	All claims by the Executive for benefits under this Agreement shall de
directed to and determined by the Board and shall be in writing. Any denial by the
Board of a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the denial and
the specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to the Executive for a review of the decision denying a
claim and shall further allow the Executive to appeal to the board a decision of
the Board within sixty (60) days after notification by the Board that the
Executive’s claim has been denied.
	 
	 	b.	 	Any further dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in New York, in
accordance with the rules of the American Arbitration Association then in effect;
provided, however, that the evidentiary standards set forth in this Agreement shall
apply. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the
Executive shall be entitled to seek specific performance of the Executive’s right to
be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.






	 	16.	 	Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:






	 	a.	 	“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.
	 
	 	b.	 	“Auditor” shall have the meaning set forth in Section 7 hereof.
	 
	 	c.	 	“Base Amount” shall have the meaning set forth in section 280G(b)(3) of the
Code.
	 
	 	d.	 	“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
	 
	 	e.	 	“Board” shall mean the Board of Directors of the Company.




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	 	f.	 	“Cause” for termination by the Company of the Executive’s employment shall
mean (i) the willful and continued failure by the Executive to substantially perform
the Executive’s duties with the Company after a written demand for substantial
performance is delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed the Executive’s duties, and Executive has not cured any such
failure that is capable of being cured in all material respects within ten (10) days
of receiving such written demand, or (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, (x) no act, or failure to act on the Executive’s part shall be deemed
“willful” unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive’s act or failure to act, was in the best
interest of the Company and (y) in the event of a dispute concerning the application
of this provision, no claim by the Company that Cause exists shall be given effect
unless the Company establishes to the Board by clear and convincing evidence that
Cause exists.
	 
	 	g.	 	A “Change in Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:





	 	 	(1)   any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its affiliates)
representing 25% or more of the combined voting power of the Company’s then
outstanding securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph (3) below; or
	 
	 	 	(2)   the following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date hereof, constitute the
Board and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously so
approved or recommended; or
	 
	 	 	(3)   there is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, at least 70% of the combined voting power of
the securities of the Company or such surviving entity or any parent thereof




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	 	 	outstanding immediately after such merger or consolidation and in proportion to their
relative voting power immediately prior to such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 25% or more of the combined
voting power of the Company’s then outstanding securities; or
	 
	 	 	(4)   the stockholders of the Company approve a plan of complete liquidation or
dissolution by the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets, other
than a sale or disposition by the Company of all or substantially all of the Company’s
assets to an entity, at least 70% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common stock of the
Company immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following such transaction
or series of transactions.





	 	h.	 	“Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time.
	 
	 	i.	 	“Company” shall mean Starwood Hotels and Resorts Worldwide, Inc., and,
except in determining under Section 17(g) hereof whether or not any Change in Control
of the Company has occurred, shall include any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
	 
	 	j.	 	“Date of Termination” shall have the meaning set forth in Section 8 hereof.
	 
	 	k.	 	“Disability” shall be deemed the reason for the termination by the Company
of the Executive’s employment, if, as a result of the Executive’s incapacity due to
physical or mental illness, the Executive shall have been absent from the full-time
performance of the Executive’s duties with the Company for a period of six (6)
consecutive months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days after such Notice of
Termination is given, the Executive shall not have returned to the full-time
performance of the Executive’s duties.
	 
	 	l.	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.
	 
	 	m.	 	“Excise Tax” shall mean any excise tax imposed under Section 4999 of the
Code.
	 
	 	n.	 	“Executive” shall mean the individual named in the first paragraph of this
Agreement.




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	 	o.	 	 “Good Reason” for termination by the Executive of the Executive’s
employment shall mean the occurrence (without the Executive’s express written
consent) after any Change in Control, or prior to a Change in Control under the
circumstances described in clauses (ii) and (iii) of the second sentence of Section
6(a) hereof (treating all references in paragraphs (1) through (7) below to a “Change
of Control” as references to a “Potential Change in Control”), of any one of the
following acts by the Company, or failures by the Company to act, unless, in the case
of any act or failure to act described in paragraph (1), (5), (6) or (7) below, such
act or failure to act is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof:






(1) the assignment to the Executive of any duties inconsistent with the
Executive’s status as a senior executive officer of the Company or a
substantial adverse alteration in the nature or
status of the Executive’s responsibilities from those in effect immediately
prior to the Change in Control;




(2) a reduction by the Company in the Executive’s annual base salary as in
effect on the date hereof or as the same may be increased from time to time;




(3) the relocation of the Executive’s principal place of employment to
a location more than 35 miles from the Executive’s principal place of
employment immediately prior to the Change in Control or the Company’s
requiring the Executive to be based anywhere other than such principal place
of employment (or permitted relocation thereof) except for required travel on
the Company’s business to an extent substantially consistent with the
Executive’s present business travel obligations;




(4) the failure by the Company to pay to the Executive any portion of the
Executive’s current compensation, or to pay to the Executive any portion of
an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such compensation
is due;




(5) the failure by the Company to continue in effect any compensation plan
in which the Executive participates immediately prior to the Change in
Control which is material to the Executive’s total compensation, including
but not limited to the Company’s stock option, bonus and other plans or any
substitute plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue the
Executive’s participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the Executive’s
participation relative to other participants, as existed immediately prior to
the Change in Control;



13









 






(6) the failure by the Company to continue to provide the Executive
with benefits substantially similar to those enjoyed by the Executive under
any of the Company’s pension, savings, life insurance, medical, health and
accident, or disability plans in which the Executive was participating
immediately prior to the Change in Control, the taking of any other action by
the Company which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit enjoyed by
the Executive at the time of the Change in Control, or the failure by the
Company to provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service with the
Company in accordance with the Company’s normal vacation policy or any
employment agreement in effect at the time of the Change in Control; or




(7) any purported termination of the Executive’s employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 8(a) hereof; for purposes of this Agreement, no such purported
termination shall be effective.



          The Executive’s right to terminate the Executive’s employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness. The Executive’s
continued employment shall not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder. For purposes of any determination
regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company establishes to the Board by clear and convincing evidence
that Good Reason does not exist.





	 	p.	 	“Gross-Up Payment” shall have the meaning set forth in Section 7 hereof.
	 
	 	q.	 	“Notice of Termination” shall have the meaning set forth in Section 8
hereof.
	 
	 	r.	 	“Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any of
its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
	 
	 	s.	 	“Potential Change in Control” shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:






(1) the Company enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;



14









 






(2) the Company or any Person publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change in Control;




(3) any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 15% or more of either the then
outstanding shares of common stock of the Company or the combined voting power of the Company’s
then outstanding securities (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its affiliates); or




(4) the Board adopts a resolution to the effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.




	 	t.	 	“Retirement” shall be deemed the reason for the termination by the
Executive of the Executive’s employment if such employment is terminated in
accordance with the Company’s retirement policy, including early retirement,
generally applicable to its salaried employees.
	 
	 	u.	 	“Severance Payments” shall have the meaning set forth in Section 6 hereof.
	 
	 	v.	 	“Tax Counsel” shall have the meaning set forth in Section 7 hereof.
	 
	 	w.	 	“Term” shall mean the period of time described in Section 2 hereof
(including any extension, continuation or termination described therein).
	 
	 	x.	 	“Total Payments” shall mean those payments so described in Section 7
hereof.





[Signature Page Follows]




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     IN WITNESS WHEREOF, the parties have caused this Supplement to be duly executed as of the date
first written above.



	 	 	 	 	 	 	 
	 	 	STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 
Name:	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 







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