EX-10.1






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 December 30, 2008 (“2008 Agreement”), in its
entirety effective April 18, 2013 (the “Effective Date”).



WHEREAS, the Company wishes to continue to employ Executive, and Executive wishes to continue
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 Agreement Effective. This Agreement is effective on and after the Effective Date,
subject to Paragraph 2.1. Effective as of the Effective Date, this Agreement shall supersede the
2008 Agreement, but all equity and cash-based incentive compensation awards that are outstanding on
the Effective Date shall continue to be governed by the agreements for such awards, except that if
any agreement term of an award granted prior to January 1, 2013 is less favorable to Executive than
provided by the 2008 Agreement, the 2008 Agreement shall govern with respect to that term.



1.2 Position. From and after the Effective Date, the Company shall employ Executive in
the position of Chief Executive Officer and President and in such other positions as the parties
mutually may agree. Executive acknowledges that his employment will be subject to all policies and
practices of the Company as may currently exist or as 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 Stamford,
Connecticut offices (hereinafter “Company Headquarters”) and to be regularly and consistently
present at Company’s Headquarters during business hours. Additionally, on and after 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 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.



ARTICLE 2

TERM AND TERMINATION OF EMPLOYMENT




2.1 Term. The term of this Agreement shall commence on the Effective Date and shall
continue, subject to earlier termination of Executive’s employment pursuant to the terms of this
Agreement, until December 31, 2016 (the “Initial Term”) and thereafter for successive 12-month
periods each ending on the anniversary of the last day of the Initial Term, unless at least 180
days in advance of the last day of the Initial Term or anniversary thereof, as applicable, either
party provides written notice to the other party that the term of this Agreement will end on such
Initial Term end date or anniversary thereof. The resulting aggregate period under this Paragraph
2.1 is referred to in this Agreement as the “Term”. Upon the expiration of the Term, Executive’s
employment shall end unless the parties shall otherwise agree.



2.2 Company’s Right to Terminate.



(a) Notwithstanding the provisions of Paragraph 2.1 and subject to Article 4, the Company
shall have the right to terminate Executive’s employment under this Agreement at any time for any
of the following reasons (and the Term shall end at the time the Executive terminates employment):




(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; or




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



(b) As used in this Agreement, the term “Cause” shall mean the occurrence of any of the
following events during the Term: (i) fraud, misappropriation or embezzlement with respect to the
Company (or any subsidiary); (ii) sexual (or other forms of) harassment in connection with
Executive’s duties; (iii) Executive’s refusal to follow the reasonable directions of the Board;
(iv) intoxication with alcohol or due to unlawful consumption of drugs while on the Employer’s
premises or while performing services on behalf of the Company at any other place; (v) a conviction
or plea of guilty or nolo contendere to a felony (other than one arising from the operation of a
motor vehicle that does not involve an accident involving injury to a third party); (vi) engaging
in an act of willful gross misconduct or willful gross negligence in connection with the Company’s
business; (vii) Executive’s material breach of the Agreement, including the confidentiality,
nonsolicitation, noncompetition and other covenants contained herein; (viii) Executive’s failure to
observe and comply with the Company’s Code of Conduct and ethics codes; and/or (ix) Executive’s
breach of a material Company policy or code; provided, however, in the case of clauses (iii),
(vii), (viii), and (ix), 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. To the extent that awards granted
under Section 3.2 include a definition of “Cause”, the definition applied to Executive under such
awards may not be less favorable to Executive than the definition in this Paragraph 2.2(b).



2.3 Executive’s Right to Terminate. Notwithstanding the provisions of Paragraph 2.1
and subject to Article 4, Executive shall have the right to terminate his employment under this
Agreement:



(a) For “Good Reason,” which under this Agreement shall mean, without Executive’s consent, (i)
a reduction in (x) 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. To the extent that awards granted under Section 3.2 include a definition of “Good
Reason”, the definition applied to Executive under such awards may not be less favorable to
Executive than the definition in this Paragraph 2.3(a).



(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 last day of the Term) 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. During the Term, Executive shall receive an annual base salary
(“Base Salary”) equal to $1,250,000 (partial years prorated), which shall be subject to annual
review, commencing with executive salary reviews occurring in 2014, and increase (but not decrease)
in the discretion of the Board, and any such increase shall be Executive’s “Base Salary” for all
purposes under this Agreement thereafter. 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.



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, or a similar successor program, maintained by the
Company for senior executive officers (“AIPCE”), at a level that is not less than the maximum
participation level made available to any Company senior executive officer but consistent with the
terms hereof. Executive shall be entitled to annual bonus opportunities under the AIPCE in amounts
that shall range from 0% to 400% of Base Salary based on performance relative to objectives set by
the Compensation and Option Committee of the Board of Directors (the “Committee”). Executive’s
target bonus each year shall be 200% of Base Salary (hereinafter, “Target Bonus”). An annual bonus
shall not be deemed earned by Executive until the Committee has determined Executive’s entitlement
to such bonus in accordance with the AIPCE and Committee procedures and practice then in effect.



(b) Long Term Incentive Compensation. Executive shall be eligible for annual long-term
incentive grants pursuant to the Company’s 2013 Long-Term Incentive Compensation Plan or any
successor plan (the “LTIP”), commencing with grants made in 2014 and continuing each year
thereafter during the Term. Such grants shall be made at the same time as annual grants are made to
other senior executives of the Company (which is currently in February of each year). The
composition and size of Executive’s grants are subject to the Committee’s discretion, but
Executive’s minimum annual long-term incentive grant opportunity shall not be less than $5,500,000,
his target annual long-term incentive grant opportunity shall not be less than $7,500,000, and his
maximum annual long-term incentive grant opportunity shall be $9,500,000 (in each case such value
is to be determined in accordance with the Committee’s methodologies for valuing such awards at the
time of making any such award, which shall be consistent with methodologies for valuing awards to
other senior executives). Executive hereby agrees and acknowledges that the actual value of the
performance-based components of his annual long-term incentive grants, if any, will be based upon
Executive’s and the Company’s performance (generally in relation to the metrics used for other
senior executives of the Company). Each annual long-term incentive grant that is not
performance-based, if any, shall be subject to the time-based vesting schedule used for similar
grants to other senior executives of the Company.



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



3.3 Vacation and Sick Leave. During each year of his employment, Executive shall be
entitled to sick leave benefits in accordance with the Company’s policies equal to the maximum
available to any Company senior executive. Executive shall also be entitled to annual vacation
benefits of not less than 4 weeks per calendar year (or if greater, the maximum available to any
Company senior executive) to be used as he shall reasonably determine, but subject to standard
Company policies regarding carryover of unused vacation from year to year.



3.4 Other Benefits.



(a) Other Company Benefits.




(i) Executive shall participate in, and be eligible to receive, all other benefits,
including 401(k), defined contribution restoration, medical, dental and disability plans
coverage, as may be provided by the Company to other senior executives from time to time,
pursuant to the terms and conditions of such benefit plans, programs and/or policies and per
Executive’s coverage elections. These benefits shall include eligibility for coverage of
Executive and his eligible dependents under the Company’s “StarShare” (or successor) employee
benefit programs. The Company shall not be obligated to institute, maintain, or refrain from
changing, amending or discontinuing any such benefit plan or program of the Company, so long as
such changes are similarly applicable to other senior executives of the Company. Executive
shall also be entitled, at Company expense, to an annual executive physical conducted by a
premier health provider (for example, the Mayo Clinic) selected by Executive in his discretion.
Except as set forth herein, Executive shall not be entitled to receive any other benefits during
the Term, unless expressly agreed to by the Company.




(ii) Following Executive’s separation from the Company, other than a separation initiated
by the Company for Cause, Executive shall receive notification from the Company regarding
Executive’s and Executive’s dependent(s)’ right to continue participation in any group health
care benefit plan sponsored by the Company at Executive’s and/or Executive’s dependent(s)’ own
expense under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). In general, this
continued coverage is subject to the ordinary requirements of COBRA, except that – (A) a
24-month period shall apply in lieu of the 18-month periods that ordinarily apply under Section
4980B(f)(2)(B)(i)(I) and (II) of Internal Revenue Code of 1986, as amended (“Code”), and (B) the
administrative charge (currently two percent) typically assessed by the Company as part of its
charge for COBRA coverage shall not apply. In the case of a separation initiated by the Company
for Cause, Executive and Executive’s dependents shall be provided the right to extend health
coverage solely as required by COBRA or other applicable law.




(iii) Subject to Paragraph 4.1(c)(iii)(A) if applicable to such separation, on the date of
Executive’s separation from the Company, other than a separation initiated by the Company for
Cause, the Company will pay Executive a lump sum in cash. The amount of the lump sum is
determined by taking an “initial multiple” (expressed as a U.S. dollar amount) and increasing it
by a “percentage” of such initial multiple, with each of these determined as follows.




(A) The “initial multiple” is 24 times the difference that results from calculating (I)
the 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.




(B) 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 separation date. For this purpose, the 24-month period is the period of 24
months that begins on the day following Executive’s separation date.



(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). Consistent
with established practice in effect immediately prior to the Effective Date, or in accordance with
arrangements that the Company and Executive agree to in writing as of the applicable time, any such
use of a Company-provided driver for non-business purposes shall be charged to Executive, and the
value of such use, to the extent it exceeds the amount Executive pays to the Company, 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 executives 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
expenses for business-related travel on Company business. Executive shall be entitled to use
first-class travel accommodations for such business-related travel. In addition, the Company shall
pay in 2013 Executive’s reasonable professional fees, up to a maximum of $30,000, incurred to
negotiate and prepare this Agreement and all related agreements. No tax gross-ups shall be payable
to Executive with respect to any of these costs or expenses.



(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 valued and imputed to Executive as income consistently with
established practice in effect immediately prior to the Effective Date, except as otherwise agreed
by the Company and Executive in writing.



(e) Hot Rates. The Company shall provide Executive with a Lifetime VIP Platinum “Hot Rates”
card once Executive – (i) attains age 55, (ii) completes five years of service with the Company,
and (iii) has age and service that total 65, in accordance with the Company’s grandfathered
conditions for entitlement to this benefit for members of its senior leadership team.



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



ARTICLE 4

EFFECT OF TERMINATION ON COMPENSATION




4.1 Separation Package.



(a) Termination Without Cause or for Good Reason. In the event Executive’s employment is
terminated at any time during the Term either (I) by the Company without Cause under Paragraph
2.2(a)(iv), or (II) by Executive for Good Reason under Paragraph 2.3(a), then subject to Paragraph
4.2, the Company shall provide Executive the payments and benefits in this Paragraph 4.1(a) as a
separation package.




(i) A lump sum severance payment equal to two (2) times the sum of Executive’s Base Salary
and Target Bonus in effect on the date of Executive’s employment termination (determined without
regard to any reduction of either such amount constituting Good Reason), subject to (A)
Executive’s satisfaction of the release requirement of Paragraph 4.2, (B) the payment terms of
Paragraph 4.2, and (C) 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) (the “Severance
Limitation Policy”).




(ii) A prorated 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). This prorated portion shall be paid on the later of (A)
the date specified in Paragraph 4.2 that applies following satisfaction of Paragraph 4.2’s
release requirement, or (B) the date such bonuses are paid to other senior executives for such
fiscal year (but not later than two and one-half (21/2) months after the last day of such fiscal
year).




(iii) Executive’s equity and other long-term incentive compensation grants shall vest or
not vest in accordance with the LTIP provisions and terms and conditions applicable to such
equity award agreements; provided that Executive’s long-term performance-based incentive grants
shall pro rata vest with respect to any service-based vesting requirement, and then shall be
paid at end of the full performance period subject to (and based on) the performance attainment
for such full period.




(iv) The following payments and benefits (collectively, the “Accrued Benefits”): (A) an
amount equal to Executive’s 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, (B) 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), (C) unreimbursed expenses, which shall
be payable in accordance with Company policy (subject to compliance with Paragraph 4.1(g)), and
(D) 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) Termination for Death or Disability. In the event Executive’s employment under this
Agreement is terminated during the Term 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, the Company shall provide to
Executive or, if he is deceased, the legal representative of his estate the benefits under this
Paragraph 4.1(b) as a separation package.




(i) Executive’s Accrued Benefits.




(ii) Executive’s Target Bonus amount in effect on the date of Executive’s employment
termination, prorated based on the number of days employed during the fiscal year through his
date of termination, and otherwise 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 (A) satisfaction of the release requirement of Paragraph
4.2 by Executive or Executive’s legal representative, and (B) the payment terms of Paragraph
4.2.




(iii) The unvested portion of Executive’s equity and other long-term incentive grants that
are only subject to service-based vesting (and that have been outstanding for at least six
months) shall immediately and fully vest on the date of Executive’s employment termination, and
his stock options shall be exercisable until the earlier of (A) one (1) year following the date
of employment termination, or (B) the original expiration date of the relevant option.




(iv) Executive’s long-term performance-based incentive grants that were granted in a
calendar year preceding death or disability (or have been outstanding for longer than the
applicable performance period) shall pro rata vest (based on the number of days employed during
the applicable service period) with respect to any service-based vesting requirement, and then
shall be paid following the end of the full performance period subject to (and based on)
performance attainment for such full period, at the time applicable to senior executives who are
actively employed.



(c) Eligible Termination after Change in Control. In the event Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason (I) within twenty-four (24)
months after a Change in Control (as defined below), or (II) 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, the Company shall provide Executive the payments and benefits under this
Paragraph 4.1(c) as a separation package. An employment termination may only qualify under clause
(II) of the preceding sentence if, not later than the date of the Executive’s employment
termination, the Company enters into a binding, written agreement, the consummation of which would
result in the occurrence of a Change in Control, with payment and benefit commencement based on
such employment termination and not the occurrence of the Change in Control.




(i) A lump sum severance payment equal to two (2) times the sum of Executive’s Base Salary
and Target Bonus in effect on the date of Executive’s employment termination (determined without
regard to any reduction of either such amount constituting Good Reason), subject to (A)
Executive’s satisfaction of the release requirement of Paragraph 4.2, (B) the payment terms of
Paragraph 4.2, and (C) the Severance Limitation Policy.




(ii) Executive’s Target Bonus amount in effect on the date of Executive’s employment
termination, prorated based on the number of days employed during the fiscal year through the
date of termination, but such payment is subject to (A) Executive’s satisfaction of the release
requirement of Paragraph 4.2, (B) the payment terms of Paragraph 4.2, and (C) the Severance
Limitation Policy.




(iii) Subject to Paragraph 4.1(g) in the case of any benefits that are not exempt from
Section 409A of the 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
insurance, disability, and non-health accident insurance coverages that are substantially
similar to those provided to Executive and his dependents immediately prior to the date of
termination (or if more favorable to 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 Executive immediately prior to such date or
occurrence.




(A) In the event benefits are payable under this Paragraph 4.1(c), Paragraph 3.4(a)
shall be applied based on Executive’s health coverage (“Coverage”), his related
out-of-pocket cost for Coverage (“Cost”), or both such Coverage and Cost, as each 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).




(B) Benefits otherwise receivable by Executive pursuant to this Paragraph 4.1(c)(iii)
shall be reduced to the extent coverage of the same type is received by Executive from
another employer during the twenty-four (24) month period following Executive’s termination
of employment; provided, however, that the Company shall reimburse Executive for the excess,
if any, of the cost of such coverage to Executive over such cost immediately prior to the
date of termination or, if more favorable to Executive, the first occurrence of an event or
circumstance constituting Good Reason.




(C) Notwithstanding the preceding provisions of this Paragraph 4.1(c)(iii), in the
case of life insurance coverage, if, notwithstanding the Company’s best efforts, the terms
of the life insurance coverage provided to Executive immediately prior to both Executive’s
termination date and the first occurrence of an event or circumstance constituting Good
Reason) do not authorize extending all such life insurance coverage for some or all of the
twenty-four (24) month period following Executive’s termination date, the Company shall
proceed as follows:




(I) the Company shall provide such extended coverage for any portion of the
twenty-four (24) month period that is authorized for extension;




(II) on the Executive’s termination date, the Company shall pay Executive a lump
sum in cash equal, in the aggregate, to the Company’s share of monthly premiums for the
number of months during the twenty-four (24) month period with respect to which
extending coverage is not authorized; and




(III) to the extent that it is permissible under the terms of such coverage to
assign to Executive a contract of life insurance that after the assignment covers only
Executive, the Company shall assign such contract to Executive if Executive so elects.




(iv) The unvested portions of all restricted stock, stock option and other long-term
incentive awards outstanding prior to January 1, 2013, 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.




(v) All long-term incentive awards granted on or after January 1, 2013, shall be treated in
accordance with the terms of the LTIP and the award agreements applicable to such awards, which
treatment shall be consistent with that applied to other senior executives of the Company.




(vi) 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 Executive’s termination of employment,
but such payment is subject to (A) Executive’s satisfaction of the release requirement of
Paragraph 4.2, and (B) the payment terms of Paragraph 4.2.




(vii) Outplacement services suitable to Executive’s position for a period of two years
following the date of Executive’s termination of employment or, if earlier, until the first
acceptance by Executive of an offer of employment. The cost of such outplacement services shall
not exceed $50,000.




(viii) Executive’s Accrued Benefits.



If any of the above items is (1) covered by Code Section 409A, (2) also payable under Paragraph
4.1(a), and (3) either payable because of clause (II) of the first sentence of this Paragraph
4.1(c), or because of clause (I) of such first sentence if the applicable circumstances of the
Change in Control would not constitute an event described in Treasury Regulation § 1.409A-3(i)(5),
then under such circumstances the time and form of payment of the item shall be in accordance with
the time and form of payment specified for the item under Paragraph 4.1(a).



(d) Maximum After-Tax Benefit Following a Change in Control.




(i) In the event that part or all of the consideration, compensation or benefits to be paid
to Executive under this Agreement together with the aggregate present value of payments,
consideration, compensation and benefits under all other plans, arrangements and agreements
applicable to Executive, constitute “excess parachute payments” under Section 280G(b) of the
Code subject to an excise tax under Section 4999 of the Code (collectively, the “Parachute
Amount”) the amount of excess parachute payments which would otherwise be payable to Executive
or for Executive’s benefit under this Agreement shall be reduced to the extent necessary so that
no amount of the Parachute Amount is subject to an excise tax under Section 4999 (the “Reduced
Amount”); provided that such amounts shall not be so reduced if, without such reduction,
Executive would be entitled to receive and retain, on a net after-tax basis (including, without
limitation, after any excise taxes payable under Section 4999), an amount of the Parachute
Amount which is greater than the amount, on a net after-tax basis, that Executive would be
entitled to retain upon receipt of the Reduced Amount. For purposes of determining such net
after-tax amount, all taxes as would be imposed on Executive with respect thereto under Sections
1, 3101 and 4999 of the Code and under applicable state and local laws, shall be taken into
account and determined by applying the highest marginal rate under Section 1 of the Code and
under state and local laws that applied to Executive. The determination of such net after-tax
amount shall be made by a nationally recognized certified public accounting firm that is
selected by the Company and reasonably acceptable to Executive, which firm shall not, without
Executive’s consent, be a firm serving as accountant or auditor for the individual, entity or
group effecting the Change of Control.




(ii) If the determination made pursuant to Paragraph 4.1(d)(i) results in a reduction of
the payments (to the Reduced Amount) that would otherwise be paid to Executive except for the
application of Paragraph 4.1(d)(i), such payments due under this Agreement shall be reduced in
the order in which they appear in Paragraph 4.1(c) (except that the benefits provided by
Paragraph 4.1(c)(iii) shall be treated as if they were second last in order for this purpose).
Accordingly, the cash severance payments payable under Paragraph 4.1(c) shall be reduced first
(if necessary, to zero), and then each other category of severance payments and benefits payable
under Paragraph 4.1(c) shall be reduced as necessary, with each being reduced in order (if
necessary, to zero) before reducing a subsequent category. Within ten days following such
determination, but not later than thirty days following the date of the event under Section
280G(b)(2)(A)(i), the Company shall pay or distribute to Executive or for Executive’s benefit
such amounts as are then due to Executive under this Agreement (in accordance with the
provisions of Paragraph 4.1(c) above) and shall promptly pay or distribute to Executive or for
his benefit in the future such amounts as become due to Executive under this Agreement.



(e) Definition of Change in Control. For purposes of this Agreement (and subject to Paragraph
1.1 in the case of equity and cash-based incentive compensation awards that are outstanding on the
Effective Date), “Change in Control” shall mean:




(i) Any Person (as defined below in this Paragraph 4.1(e)) is or becomes the beneficial
owner within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
in effect at the time (the “Act”), but without regard to any time period specified in Rule
13d-3(d)(1)(i), of twenty-five percent (25%) or more of either – (A) the then outstanding shares
of stock of the Company (the “Outstanding Shares”), or (B) the combined voting power of then
outstanding securities of the Company entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”), but excluding – (1) any acquisition by the Company, or
(2) 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 – (A) all or substantially all of the
individuals or entities who are the beneficial owners, respectively, of the Outstanding Shares
and the Outstanding Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than seventy-five percent (75%) of, respectively,
the outstanding shares of common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which, as a result of such Corporate 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 Voting Securities, as the
case may be, (B) 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 twenty-five percent
(25%) or more of the Outstanding Shares or the Outstanding Company Voting Securities, as the
case may be) will beneficially own, directly or indirectly, twenty-five percent (25%) 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 (C) individuals who
were members of the Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate Transaction; or




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




(v) Any other event, not otherwise constituting a Change in Control as provided above, that
a majority of the members of the Company’s Board of Directors (as constituted immediately prior
to the effective date of such other event) declares in a good faith vote shall constitute a
“Change in Control”, and this shall apply to Executive to the extent specified by the Board of
Directors with respect to long-term incentive awards and/or compensation items authorized by
this Agreement; however, any such declaration shall not serve as precedent for other officers or
employees of the Company.



For purposes of this Paragraph 4.1(e), the meaning of “Person” shall be based on the definition of
person in Section 3(a)(9) of the Act, as modified and used in Section 13(d) and 14(d) of the Act.



(f) Section 409A. 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. For this
purpose, each discrete payment provided in Paragraph 4.1(a) through (c) above is a separate payment
for purposes of Section 409A. 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 Department of Treasury regulations and other
guidance thereunder (collectively, “409A and Related Guidance”) so as not to subject Executive to
the payment of interest and additional tax that may be imposed under Section 409A. Compliance with
409A and Related Guidance shall include the following: (i) references to “termination of
employment,” “employment termination,” or “terminates employment” shall have the same meaning as
“separation from service” under Treasury Regulation §1.409A-1(h) (a “409A Separation from Service”)
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 rights that are tied to such term or terms, and (ii)
in the event Executive is a “specified employee” within the meaning of Treasury Regulation
§1.409A-1(i) on the date of his 409A Separation from Service (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 409A Separation from Service,
or in the absence of such rules established by the Company, under the default rules for identifying
specified employees under Treasury Regulation § 1.409A-1(i)), such compensation shall not be paid
earlier than six months after such 409A Separation from Service (provided, however, that if
Executive dies after the date of Executive’s 409A Separation from Service 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).



(g) Reimbursements and In-Kind Benefits. 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 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.



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 (except as expressly provided in Paragraph 4.1 with respect to certain
continued welfare benefit coverages) 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 (or to the execution by Executive’s legal representative of 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 Executive not later than the Termination Date and shall be in the form
attached hereto as Exhibit 4.2 (but 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 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 day provided therefor under Paragraph 4.1, subject to such
release having been entered into and not revoked hereunder; provided (i) if any such payment may be
made in one of two taxable years of Executive depending on when such release becomes effective, the
payment will be delayed to the later of (A) January 15 of the later such taxable year, or (B) the
date otherwise provided therefor under Paragraph 4.1, upon such release becoming effective; and
(ii) all such payments shall be subject to any delay required by Paragraph 4.1(f) above.



4.3 Rights on Termination for Cause or Without Good Reason. No severance payments
under Paragraphs 4.1(a), (b) or (c) or otherwise 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 (and not due to Disability); 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 has and will become familiar with trade secrets and other confidential
information concerning the Company and its subsidiaries and that Executive’s services have been and
will be of special, unique and extraordinary value to the Company and its subsidiaries.



(b) Noncompetition. Executive agrees that during the period of Executive’s employment with the
Company and for a period of 24 months thereafter (the “Noncompetition Period”), Executive shall
not, without the express written consent of the Board of Directors of the Company, directly or
indirectly, whether for his own account or for the account of any other person or entity, engage,
participate or make any financial investment in, become employed by or render advisory services to
or otherwise assist or be interested in any Competitive Business in any geographic area in which,
as of the date of termination of Executive’s employment, the Company or any of its subsidiaries is
engaged or planning to be engaged. As used herein, “Competitive Business” shall mean any business
engaged in the hotel, hospitality or timeshare businesses, as well as any corporation, partnership
or other entity that derives 33% or more of its total earnings before interest, taxes, depreciation
and amortization (determined, as of the Effective Date, in accordance with generally accepted
accounting principles 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 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 asset hotels.



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



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



5.4 Non-Disparagement. Executive shall not make any verbal or written statements to
any person or organization (including, but not limited to, members of the press and media, present
and former officers and directors, employees, contractors, customers and agents of Company, any
future employers of Executive and/or other members of the public) which materially denigrate,
disparage, defame or otherwise adversely affect the Company, its directors, officers, employees
and/or agents. The Company shall not make any verbal or written statements to any person or
organization (including, but not limited to, members of the press and media, present and former
officers and directors, employees, contractors, customers and agents of Company, any future
employers of Executive and/or other members of the public) which materially 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 in any trade name, patent, trademark, copyright, trade secret, intellectual
property, methodologies, technologies or other similar rights relating to the Company’s business
(collectively, “Intellectual Property”) belonging to the Company or any of its affiliates and shall
not have or claim any right, title or interest in or to any material or matter of any kind prepared
for or used in connection with the business or promotion of the Company or any of its affiliates,
whether produced, prepared or published in whole or in part by Executive or by the Company or any
of its affiliates. All Intellectual Property that is conceived, devised, made, developed or
perfected by Executive, alone or with others, during Executive’s employment that is related in any
way to the Company’s or any of its affiliates’ business or is devised, made, developed or perfected
utilizing equipment or facilities of the Company or its affiliates shall be promptly disclosed to
the Board, are works for hire and become the sole, absolute and exclusive property of the Company.
If and to the extent that any of such Intellectual Property should be determined for any reason not
to be a work for hire, Executive hereby assigns to the Company all of Executive’s right, title and
interest in and to such Intellectual Property. At the reasonable request and expense of the Company
but without charge to the Company, whether during or at any time after Executive’s employment with
the Company, Executive shall cooperate fully with the Company and its affiliates in the securing of
any trade name, patent, trademark, copyright or intellectual property protection or other similar
rights in the United States and in foreign countries, including without limitation, the execution
and delivery of assignments, patent applications and other documents or papers.



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



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



ARTICLE 6

ARBITRATION




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



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



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



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



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



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



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



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


One StarPoint


Stamford, Connecticut 06902


Attention: Chief Administrative Officer and General Counsel


Facsimile: (203) 351-2401



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



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



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



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



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



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



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



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



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



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



7.11 Indemnification.



(a) In addition to any additional benefits provided under applicable state law, as an officer
and/or director of the company, Executive shall be entitled to the benefits of: (1) those
provisions of the Articles of Incorporation of the Company, as amended, and of the by-laws of the
Company as amended, which provide for indemnification of officers and directors of the Company (and
no such provision shall be amended in any way to limit or reduce the extent of indemnification
available to Executive as an officer and/or director of the Company), (ii) the Indemnification
Agreement between the Company and Executive (the “Indemnification Agreement”) dated as of September
24,2007.



(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.



7.13 Inconsistency. In the event of any inconsistency between this Agreement and any
other plan, program, practice or agreement in which Executive is a participant or a party, this
Agreement shall control unless such other plan, program, practice or agreement either specifically
refers to this Agreement as not so controlling or would provide for more favorable treatment of
Executive.



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 Effective Date.



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,


a Maryland corporation



By: /s/ Bruce W. Duncan

Name: Bruce W. Duncan

Chairman of the Board of Directors




FRITS VAN PAASSCHEN



/s/ Frits van Paasschen



1



EXHIBIT 4.2

to

Employment Agreement dated in April of 2013

between Executive

and

Starwood Hotels & Resorts Worldwide, Inc.




GENERAL RELEASE




This General Release (this “Release”) is executed by        (“Executive”)
pursuant to Paragraph 4.2 of the Employment Agreement between Starwood Hotels & Resorts Worldwide,
Inc. dated in April of 2013 (the “Employment Agreement”).



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



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



WHEREAS, Executive has been given the opportunity to consider this Release for 21 [45] days;



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



WHEREAS, Executive acknowledges that the separation benefits to be provided to Executive under
the Employment Agreement are sufficient to support this Release; and constitutes consideration to
which Executive would not otherwise be entitled;



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



EXECUTIVE THEREFORE AGREES AS FOLLOWS:



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



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



The “covenant not to sue” contained in the first sentence above does not prevent or prohibit
Executive from filing any administrative complaint or charge against the Released Parties with any
federal, state, or local agency, including for instance, the U.S. Equal Employment Opportunity
Commission or the U.S. Department of Labor, but Executive understands that by signing this
Agreement, he will have no right to recover monetary damages or obtain individual relief of any
kind in such proceeding with respect to claims released or waived by this Agreement. Similarly,
the “covenant not to sue” does not prevent Executive from seeking a judicial determination of
the validity of his release of claims under the ADEA. 



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



4. ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS RELEASE, EXECUTIVE EXPRESSLY
ACKNOWLEDGES THAT HE HAS READ THIS RELEASE CAREFULLY, THAT HE FULLY UNDERSTANDS ITS TERMS AND
CONDITIONS, THAT HE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE,
THAT HE HAS BEEN ADVISED THAT HE HAS 21 [45] DAYS WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE
THIS RELEASE AND THAT HE INTENDS TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF SEVEN DAYS
FOLLOWING THE DATE OF HIS EXECUTION OF THIS RELEASE, EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE THE
RELEASE OF CLAIMS UNDER THE ADEA BY SERVING WITHIN SUCH PERIOD WRITTEN NOTICE OF REVOCATION IN THE
MANNER PROVIDED IN PARAGRAPH 7.1 OF THE EMPLOYMENT AGREEMENT. IF EXECUTIVE EXERCISES HIS RIGHTS
UNDER THE PRECEDING SENTENCE, HE SHALL NOT BE ENTITLED TO RECEIVE THE AMOUNT PAYABLE TO HIM
PURSUANT TO PARAGRAPH 4.1 OF THE EMPLOYMENT AGREEMENT OTHER THAN (a) HIS ACCRUED BENEFITS, AND (b)
$10,000, WHICH EXECUTIVE ACKNOWLEDGES IS ADEQUATE CONSIDERATION TO SUPPORT THE RELEASE OF HIS
NON-ADEA CLAIMS. THIS AGREEMENT WILL BE EFFECTIVE, WITH RESPECT TO ADEA CLAIMS, ON THE EIGHTH DAY
AFTER IT IS SIGNED BY EXECUTIVE, AND WITH RESPECT TO OTHER CLAIMS, AT THE TIME IT IS SIGNED BY
EXECUTIVE.



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



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



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



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



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



	 	 	 
	Date:       , 20      .

	 	EXECUTIVE

     

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