exv10w52






Exhibit 10.52




AMENDED AND RESTATED 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
amends and restates the employment agreement dated as of August 31, 2007 in its entirety.



     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 Penalties. 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 the stock is listed for



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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 Paragraph 2.1)
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 Paragraph 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 circumstances 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;



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(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 code; 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) days 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



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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 an amount not
less than a pro rated $2,000,000 as his bonus for the year 2007, payable no earlier than
January 2, 2008 and 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



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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.



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     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 benefits 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 in 2007 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 defendant(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, which coverage shall run concurrently with
Executive’s entitlement to COBRA continuation benefits, and which coverage shall be reduced
or terminated, as applies, at such time as Executive obtains comparable benefits (determined
on a coverage-by-coverage and benefits-by-benefits basis) for himself, his spouse and other
covered dependents from a subsequent employer. The premium charge to Executive for each
month of such coverage will equal the Company’s monthly COBRA charge for such coverage in
which the Executive, his spouse and covered dependents (as applicable) is enrolled from time
to time (less the amount of any administrative charge typically assessed by the Company as
part of its COBRA charge), and Executive will be required to pay such monthly premium charge
in accordance with the Company’s standard COBRA premium payment requirements. On the date
of Executive’s termination of employment, the Company will pay Executive a lump sum in cash
equal to an initial multiple that is increased by a percentage. For this purpose, the
initial multiple is 24 times the difference that results from calculating (i) the



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Company’s monthly COBRA charge on Executive’s separation date for family coverage with
respect to the highest value health coverage provided to salaried employees, minus (ii) the
amount the Company charges active salaried employees for such coverage on Executive’s
separation date. In addition, for this purpose, the percentage is the sum of (I) 1% for
each month in the 24-month period that will fall in the calendar year following Executive’s
separation date, plus (II) 2% for each month in the 24-month period that will fall in the
second calendar year following Executive’s date of termination.




     (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 in 2007 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



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miscellaneous cash allowance that will be paid in 2007, 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). Any such gross-up will be paid to Executive, or
remitted by the Company to the appropriate tax authorities to the extent subject to
withholding, on the date that the related taxes are due (through withholding or otherwise).




     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 these 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 to any reduction of either
such amount constituting Good Reason), subject to Executive’s satisfaction of the
release requirement of Paragraph 4.2 and 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) the date specified in Paragraph
4.2 that applies following satisfaction of Paragraph 4.2’s release requirement, 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



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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 during the fiscal year of termination when bonuses for such completed fiscal
year are paid to senior executives (but not later than two and one-half (21/2) months
after such completed fiscal year), (y) unreimbursed expenses which shall be payable
in accordance with Company policy (subject to compliance with Section 4.1(h)), 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, but
such payment is subject to (I) Executive’s satisfaction of the release requirement of
Paragraph 4.2 and (II) the payment terms of 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 (A) one (1) year following the
date of termination of employment, or (B) 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), but such payment is subject to (I)
Executive’s satisfaction of the release requirement of Paragraph 4.2 and (II) the
payment terms of Paragraph 4.2, and the Severance Limitation Policy;




     (ii) subject to Paragraph 4.1(h) in the case of any benefits that are not
exempt from Section 409A of the Internal Revenue Code of 1986, as amended



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(“Code”), 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, and accident 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. (In the event benefits are
payable under Paragraph 4.1(c), Paragraph 3.4(a) shall be applied with respect to
the health coverage or Executive’s related cost (or both), which is in effect
immediately prior to the first occurrence of an event or circumstance constituting
Good Reason, if such coverage or cost would be more favorable to Executive than the
coverage or cost (or both) that would otherwise apply under Paragraph 3.4(a).)
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) an amount equal to the unvested portion (if any) of Executive’s account
balance under the Company ’s 401(k) Plan that is forfeited by reason of the
Executive’s termination of employment, but such payment is subject to (I)
Executive’s satisfaction of the release requirement of Paragraph 4.2 and (II) the
payment terms of 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 (A) the Company or
any affiliate, (B) any person whose actions result in a change of ownership or effective
control of the Company covered by Section 280G(b)(2) of the “Code”, or any successor
provision thereof, or (C) 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,



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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.





     (i) 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 payments or benefit shall be
determined by the Auditor in accordance with the principles of sections 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment
that is to be made, state and local income taxes shall be calculated at the highest
marginal rate of taxation that is applicable 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 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. If the
Company is obligated to make a Gross-Up Payment, it will be paid to Executive, or
remitted by the Company to the appropriate tax authorities to the extent subject to
withholding, on the date that the Excise Tax is due (through withholding or
otherwise).




     (ii) In the event that the Excise Tax is finally determined to be 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 related 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 result 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



11









 




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,



12









 






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) Approved by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.



     (f) This Agreement will be construed and administered to preserve the exemption from
Section 409A of the Code (“Section 409A”) of payments that qualify for exemption. With
respect to other amounts that are subject to Section 409A, it is intended, and this
Agreement will be so construed, that any such amounts payable under this Agreement and the
Company’s and Executive’s exercise of authority or discretion hereunder shall comply with
the provisions of Section 409A and the treasury regulations relating thereto so as not to
subject Executive to the payment of interest and additional tax that may be imposed under
Section 409A. As a result and notwithstanding any other provision of this Agreement, in the
event Executive is a “specified employee” on the date of Executive’s termination of
employment (with such status determined by the Company in accordance with rules established
by the Company in writing in advance of the “specified employee identification date” that
relates to the date of Executive’s termination of employment or, if later, by December 31,
2008, or in the absence of such rules established by the Company, under the default rules
for identifying specified employees under Section 409A), any payment that is subject to
Section 409A, that is payable to Executive in connection with Executive’s termination of
employment, shall not be paid earlier than six months after such termination of employment
(if Executive dies after the date of Executive’s termination of employment but before any
payment has been made, such remaining payments that were or could have been delayed will be
paid to Executive’s estate without regard to such six-month delay).



13









 






     (g) “Termination of employment,” “employment termination,” or “terminates employment”
shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of
the Code in any instance where such term or terms appears in this Agreement and affects the
time of payment of compensation that is covered by Section 409A, or where this definition is
specifically referenced, but without changing any vesting that is tied to such term or
terms.




     (h) To the extent that any expense reimbursement provided for by this Agreement does
not qualify for exclusion from Federal income taxation, except as specified otherwise in
this Agreement, the Company will make the reimbursement only if Executive incurs the
corresponding expense during the term of this Agreement (or, with respect to Paragraph 6.1
below, during the Executive’s lifetime) and submits the request for reimbursement no later
than two months prior to the last day of the calendar year following the calendar year in
which the expense was incurred so that the Company can (and it thereby will) make the
reimbursement on or before the last day of the calendar year following the calendar year in
which the expense was incurred. In the case of any such expense reimbursement and any
in-kind benefit provided for by this Agreement that does not qualify for exclusion from
Federal income taxation, the amount of expenses eligible for such reimbursement (and the
amount of in-kind benefits provided) during a calendar year will not affect the amount of
expenses eligible for such reimbursement (or benefits provided) in another calendar year;
and the right to such reimbursement or in-kind benefit is not subject to liquidation or
exchange for another benefit from the Company. Any gross-up authorized under the Agreement
shall be paid at the time specified in the Agreement.



     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 agrees to
execute a release of all then existing claims against the Company, its subsidiaries, affiliates,
shareholders, directors, officers, employees and agents in relation to claims relating to or
arising out of his employment or the business of the Company, and Executive shall not receive any
payments or benefits to which he may be entitled hereunder that are subject to the execution of a
release unless Executive satisfies the release requirements of this Paragraph 4.2. The release
required by this Paragraph 4.2 shall be provided to the Executive not later than the Termination
Date and shall be in the form attached hereto as Exhibit 4.2 (adjusted as necessary to confirm
to then existing legal requirements). To comply with this Paragraph 4.2, Executive must sign
and return the release within 21 days after the Termination Date if Executive’s employment
termination is not part of a group termination program within the meaning Section 7(f)(1)(F)(ii) of
the Age Discrimination



14









 




in Employment Act of 1967, as amended, and within 45 days after the Termination Date if
Executive’s termination is part of such a group termination program, and Executive must not revoke
it during the seven-day revocation period that begins when the release is signed and returned to
the Company. The Company will pay the severance benefits that are conditioned on satisfying the
release requirement of this Paragraph 4.2 on the 53rd day following the date of employment
termination).  




     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
this 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



15









 




“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 employment 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. Notwithstanding, 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 the 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 assist 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.



16









 





     5.3 Confidentiality. Executive shall not, at anytime 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 so 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 designate, 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 is 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



17









 




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).



18









 





     (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 performance 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.



19









 






     (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 so 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
provision 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



20









 




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 insure 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 requires 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.



21









 





     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, sharing the term of Executive’s employment hereunder



     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.



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     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/ Jeffrey Cava
 	 
	 	 	Name:  	Jeffrey Cava 	 
	 	 	Its:          EVP – Human Resources 	 
	 



	 	 	 	 	 
	 	FRITS VAN PAASSCHEN

 	 
	 	/s/ Frits Van Paasschen
 	 
	 	 	 
	 	 	 
	 



Dated: December 30, 2008





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