Document:

EX-10.01

EMPLOYMENT AGREEMENT

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

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

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

ARTICLE 1:

EMPLOYMENT AND DUTIES

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

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

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

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

ARTICLE 2:

TERM AND TERMINATION OF EMPLOYMENT

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

2.2 Company’s Right to Terminate.

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

(i) upon Executive’s death;

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

(iii) for Cause;

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

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

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

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

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

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

ARTICLE 3:

COMPENSATION AND BENEFITS

3.1 Base Salary; Sign-On Bonus.

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

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

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

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

(b) Long Term Incentive Compensation.

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

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

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

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

3.4 Other Benefits.

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

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

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

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

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

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

ARTICLE 4:

EFFECT OF TERMINATION ON COMPENSATION

4.1 Separation Package.

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

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

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

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

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

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

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

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

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

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

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

(v) Executive’s Accrued Benefits.

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 5:

REPRESENTATIONS AND WARRANTIES; 

NON-COMPETE AND NON-SOLICITATION

5.1 Representations and Warranties.

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

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

5.2 Non-Compete and Non-Solicitation.

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

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

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

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

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

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

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

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

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

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

ARTICLE 6:

ARBITRATION

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 7:

MISCELLANEOUS

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

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

Robert F. Simon

Vedder, Price, Kaufman & Kammholz, P.C.

222 North LaSalle Street

Suite 2600

Chicago, Illinois 60601

Facsimile: (312) 609-5005

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

Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, New York 10604

Attention: Chief Administrative Officer and General Counsel

Facsimile: (914) 640-8240

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

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

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

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

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

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

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

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

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

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

7.11 Indemnification.

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

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

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

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

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

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

By: /s/ Bruce Duncan

	 	 	Name: Bruce Duncan

Its:Chairman of the Board

FRITS VAN PAASSCHEN

/s/ Frits Van Paasschen

1

Frits Van PaasschenEXHIBIT 4.2

to

Employment Agreement dated August 31, 2007

between Frits Van Paasschen

and

Starwood Hotels & Resorts Worldwide, Inc.

GENERAL RELEASE

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

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

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

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

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

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

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

EXECUTIVE THEREFORE AGREES AS FOLLOWS:

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

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

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

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

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

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

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

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

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

	 	 	 	 	 
	   FRITS VAN PAASSCHEN

	Date: _______________
	 	 	—	 

2

APPENDIX I

[Insert applicable Article 4 separation payments and benefits]

3EX-10.1

MMA FINANCIAL, INC.

EMPLOYMENT AGREEMENT

Charles M. Pinckney

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 28th day of
August 2007 by and between MMA Financial, Inc., a Maryland corporation (“Employer”) and
Charles M. Pinckney (“Employee”).

WHEREAS, Employer and Employee desire to modify the current employment relationship to the
terms set forth herein effective as of July 10, 2007 (the “Effective Date”); and

WHEREAS, this Agreement supersedes a previous agreement between Employer and Employee dated
March 4, 2004 (the “Prior Agreement”) and there is a need for a new agreement because Employee is
assuming the position of Chief Operating Officer and interim Chief Financial Officer of Employer as
of the Effective Date.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree as follows:

1. Employment, Duties, Etc. Employer agrees to continue to employ Employee, and
Employee agrees to continue to be employed by Employer, on the terms and conditions provided in
this Agreement.

(a) Position(s), Duties and Responsibilities. Employee is engaged to serve as
Employer’s Chief Operating Officer. Employee is also engaged to serve on an interim basis as
Employer’s Chief Financial Officer until March 3, 2008 or such earlier date on which the parties
mutually agree Employee’s service as interim Chief Financial Officer shall terminate. In his
capacity as Chief Operating Officer, Employee shall report directly to the Chief Executive Officer
of Municipal Mortgage & Equity, LLC, Employer’s parent company (the “Company”). In his
capacity as interim Chief Financial Officer, the Employee shall report directly to the Company’s
Chief Executive Officer. The Employee’s duties, powers and responsibilities shall be commensurate
with those customarily associated with the chief operating officer of a corporation comparable to
the Company, with Employee’s specific duties, powers and responsibilities set forth on the attached
Exhibit A.

(b) Extent of Services. Employee agrees to devote Employee’s full time energy,
attention and skill in performing his duties under this Agreement. Provided that such activity
shall not violate any provision of this Agreement (including the noncompetition provisions of
Section 8 below) or materially interfere with the performance of Employee’s duties
hereunder, nothing herein shall prohibit Employee (1) from participating in any other business
activities approved in advance by Employer in accordance with any terms and conditions of such
approval, such approval not to be unreasonably withheld or delayed, (2) from engaging in
charitable, civic, religious, fraternal or trade group activities, or (3) from investing in other
entities or business ventures.

(c) Tampa Residence.

(i) The parties acknowledge that the Employee and his family make their principal residence in
Tampa, Florida and that the Employee’s office from which he will render services under this
Agreement is located in Tampa. Except for temporary service in Baltimore, Maryland as provided in
this Agreement, the Employer may not require the Employee to locate his office and render services
under this Agreement at any location more than 25 miles from downtown Tampa.

(ii) The Employee has agreed for a limited period of time, not to exceed eight months from the
Effective Date, to provide services under this Agreement at the Employer’s offices in Baltimore,
Maryland for between three-and-four days per week, the selection of specific days to be mutually
agreeable to the Employee and the Employer’s Chief Executive Officer. Neither the Employee nor the
Chief Executive Officer shall unreasonably withhold his agreement to the selection of days on which
the Employee will provide services in Baltimore, Maryland. During the period of time the Employee
is traveling to Baltimore to provide services hereunder, the Employer shall provide the Employee
with an office in Baltimore and full staff support, both of which shall be in addition to the
facilities and staff support provided for the Employee at his Tampa office. Employee shall also
be permitted by the Company and the Employer to travel to and from New England to Baltimore to
fulfill his obligations under this subsection, and need not travel to and from Tampa, Florida. All
such travel and associated expenses shall be fully reimbursable by the Employer under Section 5
hereof.

2. Compensation. As compensation for performing the services required by this
Agreement, and during the term of this Agreement, Employee shall be compensated as follows:

(a) Base Compensation. From the Effective Date through the Expiration date, Employer
shall pay to Employee a salary (“Base Compensation”) of $450,000 per annum payable in
accordance with the general policies and procedures of Employer, but in any event no less
frequently than every two weeks, in substantially equal installments, subject to withholding for
applicable federal, state and local taxes. Assuming that notice of termination has not been given
under Section 7, each January 1st during the effectiveness of this Agreement, Employee’s
Base Compensation shall increase (“minimum annual increase”) by an amount equal to 5% of the Base
Compensation in effect on such date. The Compensation Committee of the Company’s Board of
Directors, based on periodic reviews of Employee’s performance and the recommendation of the Chief
Executive Officer, shall determine additional increases, if any, in Base compensation. The
Employer may not reduce per annum Base Compensation below the sum of $450,000 plus the cumulative
amount of all increases in Base Compensation during the term of this Agreement. As used elsewhere
in this Agreement, the term “Base Compensation” means the sum of $450,000 plus all increases
thereto. Termination of Employee’s service as interim Chief Financial Officer shall not be a basis
for any reduction in Employee’s Base Compensation.

(b) Incentive Compensation.

In addition to Employee’s Base Compensation in effect from time to time, Employee shall be
eligible to earn additional annual compensation (“Incentive Compensation”) in the amount of
300% (based on maximum performance) of Base Compensation in effect from time to time. The amount
of the annual cash bonus will be based on Employee’s performance and Employer’s company-wide
performance. The amount of the long-term incentive payment will be based on a formula weighted
among achievement of strategic objectives, absolute total shareholder return (“TSR”) and
any supplemental performance measures approved by the Board of Directors or the Compensation
Committee of the Company for purposes of assessing management performance. Standards for evaluation
of Employee’s performance and the nature and amount of Incentive Compensation awards will be on
bases and criteria comparable to and no less favorable to Employee than those applied to the Chief
Executive Officer and other executive officers of the Company, having due regard for the
differences in duties among the executive officers.

Incentive Compensation may, at the election of Employer, take the form of cash or equity or
equity-based awards in the Company. To the extent Employee’s Incentive Compensation consists of
such equity awards, such awards may be granted under Employer’s employee share incentive plans as
in effect from time to time, and may be subject to the approval of the Company’s Compensation
Committee. Employee understands and agrees that the equity component of Incentive Compensation may
be awarded on a deferred and/or restricted basis and may vest and be issued over time in up to four
equal installments, with the first payable at or about the time of the award and the remainder on
each of the next three anniversaries of the award. Incentive Compensation for any given calendar
year shall be determined no later than 60 days after the last day of Employer’s calendar year and
paid on March 5 of the following calendar year. In the case of awards with delayed vesting, each
installment shall be paid within thirty days of the vesting date. Incentive Compensation shall be
pro-rated for any partial calendar years except for the calendar year in which the Effective Date
falls, in which year Incentive Compensation shall not be reduced by pro ration. Other than as
specifically set forth herein, if this Agreement is terminated for any reason during any fiscal
year for which Employee is eligible for Incentive Compensation, no Incentive Compensation shall be
payable to Employee for that calendar year.

3. Employee Benefits. During the Term (as defined in Section 6), Employee and
Employee’s eligible dependents shall have the right to participate to the same extent as other
senior officers in any retirement, pension, insurance, health or other benefit plan or program
adopted by Employer (or in which Employer participates) subject, in the case of a plan or program
(other than any severance plan), to all of the terms and conditions thereof, and to any limitations
imposed by law. To the extent that Employee has similar benefits under a plan or program
established by any other entity, Employee shall nonetheless have the right to the benefits provided
by Employer’s plan or program; provided, however, that where by the terms of any
plan or program, or under applicable law, Employee may only participate in one such plan or
program, Employee shall have the option to limit participation to the plan or program sponsored by
Employer, or to such other plan or program. Employee shall have the right, to the extent permitted
under any applicable law, to participate concurrently in plans or programs sponsored by others
(including self-employment plans or programs) and in plans or programs sponsored by Employer.

4. Vacation, Sickness and Leaves of Absence.

(a) Vacation and Sick Leave. Employee shall be entitled to five (5) weeks paid
vacation during each fiscal year. Employee shall provide Employer with reasonable notice of
anticipated vacation dates. Employee shall be entitled to such sick leave, with pay, as Employer
provides to other similarly situated senior officers of the Company.

(b) Carry-Forward/Pay Out of Vacation and Sick Leave. Vacation or sick days that are
not taken in a given fiscal year may be carried over to the next fiscal year; provided, however,
that no more than a total of ten vacation days and ten sick days may be carried forward. In the
event of the expiration of the Term or the termination of this Agreement for any reason, Employer
agrees to compensate Employee for all unused vacation and sick days carried forward, plus all
unused vacation and sick days for the year of expiration or termination (assuming proportionate
accrual of such vacation and sick days during such year), such compensation not to exceed, however,
a total of ten vacation days and ten sick days.

(c) Leaves of Absence. Employee may also be granted leaves of absence with or without
pay for such valid and legitimate reasons as the Board of Directors of the Company, in its
reasonable discretion, may determine.

5. Expenses. Employee shall be entitled to receive, within a reasonable period of
time after Employee has delivered to Employer an itemized statement thereof, and after presentation
of such invoices or similar records as Employer may reasonably require, reimbursement for all
necessary and reasonable expenses incurred by Employee in connection with the performance of the
duties described in Section 1 hereof. To the extent necessary to avoid characterizing any
reimbursement to Employee as deferred compensation under Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), such reimbursements shall be submitted no later than
March 1 following the close of the calendar year in which the expense was incurred by Employee and
paid on or before March 15th following the close of such calendar year. Amounts which
are not submitted within the required timeframe shall not be eligible for reimbursement hereunder.

6. Term. The term of this Agreement shall commence on the Effective Date and end on
July 9, 2010. Unless otherwise superseded, this Agreement shall automatically renew for successive
one-year periods after the end of the Term, unless at least ninety (90) days prior to the
commencement of any such extension period either party shall give the other party written notice of
its intention to terminate this Agreement. This Agreement may also be terminated at the times and
under the circumstances set forth in section 7 below. The term of this Agreement in effect at any
given time is herein referred to as the “Term,” and the last day of the then current Term is
referred to herein as the Expiration Date. Any termination of this Agreement shall be subject to
Section 8 below.

7. Termination and Termination Benefits.

(a) Termination by Employer.

(i) With Cause. Employer may terminate this Agreement for Cause (defined below) upon
ten days prior written notice to Employee. In the event that Employer terminates this Agreement
pursuant to this Section 7(a)(i), Employee shall be entitled to receive the Base
Compensation and the benefits to which Employee is entitled under this Agreement through the
Termination Date (defined in Section 7(f) below), payable within 30 days of the Termination
Date. As used in this Agreement, “Cause” shall mean (A) acts or omissions by Employee with
respect to Employer which constitute intentional misconduct or a knowing violation of law; (B)
receipt by Employee of money, property or services from Employer or from another person dealing
with Employer in violation of law or this Agreement, (C) breach by Employee of the provisions of
Section 8 below, (D) breach by Employee of the duty of loyalty to Employer, (E) repeated
failure by Employee to perform the duties assigned pursuant to Section 1 hereof, which
failure has continued for a period of 30 days following delivery of written notice from Employer
specifying in reasonable detail the nature of such failure without Employee taking such actions as
in the opinion of the Company are reasonably likely to remedy such failure; provided that
such cure period shall be available to Employee on only two occasions, (F) violation of Employer’s
policies with respect to alcohol or drug use or abuse, or (G) Employee pleaded guilty or no contest
to or is convicted of any criminal offense (other than traffic violations). The parties agree that
Employee’s failure to achieve objective performance goals or similar criteria shall not, in and of
itself, be deemed to constitute a failure to substantially perform the duties assigned to Employee.

(ii) Without Cause. Employer may terminate this Agreement without Cause upon 90 days
prior written notice to Employee. In the event that Employer terminates this Agreement pursuant to
this Section 7(a)(ii) or Employer terminates Employee’s employment upon expiration of the
Term following Employer’s failure to renew the Term of this Agreement at any point pursuant to
Section 6 hereof, Employee shall be entitled to receive (x) Employee’s Base Compensation
and the benefits to which Employee is entitled under this Agreement through the Termination Date
(as defined in Section 7(f)), plus (y) the Proportionate Share (as defined in Section
7(f)) of Employee’s Incentive Compensation, plus (z) severance payments in an aggregate amount
of twenty four (24) months’ Base Compensation; provided, however, that in the event of a
termination without Cause or due to the Employer’s terminating Employee’s employment upon
expiration of the Term following Employer’s failure, without Cause, to renew the Term within three
(3) months preceding a Change in Control, or at any time following a Change in Control, in lieu of
the amounts described in clauses (y) and (z), Employee shall be entitled to a severance payment
equal to the total amount of Base Compensation and the total maximum value of Incentive
Compensation that Employee would have been eligible to earn through the remainder of the Term had
Employee’s employment not terminated but rather continued until the Expiration Date.

(iii) Disability. If a Disability (defined below) prevents the Employee from
performing the duties assigned to Employee under Section 1 hereof, Employer may terminate
this Agreement upon 30 days prior written notice to Employee. In the event that Employer
terminates Employee pursuant this Section 7(a)(iii), Employee shall be entitled to receive
(x) Employee’s Base Compensation and the benefits to which Employee is entitled under this
Agreement through the Termination Date, plus (y) the Proportionate Share (as defined in Section
7(e)) of Employee’s Incentive Compensation, plus (z) severance payments in an aggregate amount
equal to the greater of (A) twelve (12) months’ Base Compensation and (B) the Base Compensation
that Employee would have received from the Termination Date through the Expiration Date. Nothing
in this Section 7(a)(iii) shall be construed to limit Employee’s rights under or vary the
terms of any disability insurance policy provided by Employer in any manner adverse to Employee.
Employee shall be considered to have a “Disability” if Employee is unable to perform the
duties assigned to Employee under Section 1 hereof due to illness, physical or mental
disability or other incapacity for a total of 120 or more business days during any twelve-month
period.

(b) Termination by Employee. Employee may terminate this Agreement for Good Reason
(defined below) upon 30 days prior written notice to Employer. In the event that Employee
terminates this Agreement pursuant to this Section 7(b), Employee shall be entitled to
receive (x) Employee’s Base Compensation and the benefits to which Employee is entitled under this
Agreement through the Termination Date, plus (y) the Proportionate Share (as defined in Section
7(f)) of Employee’s Incentive Compensation, plus (z) severance payments in an aggregate amount of
twenty four (24) months’ Base Compensation; provided, however, that if Employee terminates his
employment for Good Reason within the three (3) months preceding a Change in Control or at any
time following a Change in Control, in lieu of the amounts described in clauses (y) and (z),
Employee shall be entitled to a severance payment equal to the total amount of Base Compensation
and the total maximum value of Incentive Compensation that Employee would have been eligible to
earn through the remainder of the Term had Employee’s employment not terminated but rather
continued until the Expiration Date . As used in this Agreement, “Good Reason” shall mean
(i) the reduction by Employer of Employee’s Base Compensation without Employee’s consent, (ii) the
failure by the Company or Employer to provide in any material respect any of the payments, benefits
or conditions of employment to which Employee is entitled under this Agreement or the establishment
by Employer of any material impediment to Employee’s opportunity to earn Incentive Compensation;
(iii) a material reduction or alteration in Employee’s authority, title, duties or responsibilities
as provided in Section 1 (and Exhibit A) by the Company or Employer, without Employee’s consent;
provided that Employee shall be deemed to have consented to such reduction or alteration
if Employee does not object to such reduction or alteration in writing within 60 days of the
implementation of such reduction or alteration, (iv) a situation where the Company or Employer,
through a formal assignment of duties or otherwise, requires Employee to take any act which would
be a violation of federal, state or local law or the Company’s Charter or bylaws, (v) any
requirement that Employee relocate his office more than 25 miles from downtown Tampa, (vi) failure
by the Employer, following a Change in Control, to (A) set in writing, at the outset of any given
period, reasonably achievable individual (as opposed to Company wide) performance goals that are
consistent with Employee’s position and authority and which, if achieved, would entitle Employee
to receive in cash an amount of Incentive Compensation for such period equal to at least 70% of
the maximum amount of Incentive Compensation that Employee would be eligible to earn in such
period under Section 2(b), or (B) to pay such amount to Employee if the goals are achieved, or more
(up to 100%) in the event of superior performance by Employee as measured against such goals, or
(vii) Employer gives Employee timely notice of nonrenewal of this Agreement and Employer and
Employee do not execute a new employment agreement; provided, however, Employee must exercise his
rights under this clause (vii) on or before the Expiration Date. With respect to clause (vi), it
shall not constitute Good Reason for Employer to pay Employee less than the 70% target if Employer
has complied with clause (vi)(A) and Employee’s performance has been below expectations as measured
against the written goals. In the event of a dispute as to the level of Employee’s performance
(whether at, below, or above expectations), either party may by written notice to the other given
within 30 days after the determination of Employee’s Incentive Compensation for any given period,
submit the dispute to binding arbitration before a single mutually agreed arbitrator having at
least ten years experience in the management of a financial services business (or such other
relevant experience as the parties may mutually agree).

(c) Death Benefit. Notwithstanding any other provision of this Agreement, this
Agreement shall terminate on the date of Employee’s death. In such event, Employee’s estate or
such other beneficiary as employee shall provide in writing shall be entitled to receive an amount
equal to twenty four (24) months’ Base Compensation (the “Death Benefit”) payable in accordance
with Employer’s usual payroll practices, except that if Employer receives any insurance proceeds
with respect to the Employee’s death, an amount equal to the lesser of such proceeds or any unpaid
Death Benefit shall be paid to Employee’s estate in a lump sum within five (5) business days of
receipt by Employer.

(d) Severance Payments. Except as otherwise expressly provided for herein, severance
payments owing to the Employee under this Section 7 shall be payable in a lump sum
severance payment to Employee on the Termination Date; provided, that any such severance
payments shall be delayed in the event that Employee is a Specified Employee and such payments
constitute Deferred Compensation to the extent necessary to comply with the requirements of Section
409A of the Code for compliant Deferred Compensation and avoid the imposition of excise tax
thereunder.

(e) Vesting of Deferred Awards. In the event of a termination under Section
7(a)(ii) (Without Cause), 7(a)(iii) (Disability), 7(b) (Good Reason), or
7(c) (Death), or in the event this Agreement shall expire on the Expiration Date, without
renewal, within the three (3) months preceding a Change in Control or within the Term of this
Agreement following a Change in Control, Employee shall become fully vested in any and all
outstanding deferred share awards, options, or other compensation previously awarded to Employee
but not yet vested at the time of such termination. Awards which become vested under this
paragraph shall be paid to Employee within thirty days of the Termination Date, but only to the
extent that making such payments would not result in the imposition of excise tax on such payments
under Section 409A of the Code. In the event that accelerating such payment would result in the
imposition of excise tax on the payments under Section 409A of the Code, the payments will be
delayed until the earliest time (which time may be the originally scheduled date of payment) at
which payment would be permissible under Section 409A of the Code without resulting in the
imposition of excise tax thereunder.

(f) Certain Definitions

(i) “Proportionate Share” shall mean the dollar amount of Employee’s Incentive
Compensation (determined in good faith in accordance with Employer’s usual and customary practices)
that would have been payable for the year in which the Termination Date occurs multiplied by a
fraction, the numerator of which shall be the number of days elapsed, as of the Termination Date,
in the year of termination, and the denominator of which shall be 365. Proportionate Share amounts
shall be payable as and when provided in Section 2(b)(ii).

(ii) “Termination Date” shall mean the effective date of termination of Employee’s
employment as specified in the written notice described in this Section 7.

(iii) Change in Control” means:

(A) Any “Person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as Amended (the “Act), or Persons acting in concert (other than
the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of shares of the Company),
is or becomes the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding voting securities;

(B) during any period of two consecutive years, individuals who at the beginning of such
period constitute the Company’s Board of Directors (the “Board) and any new director (other than a
director designated by a person who has entered into an agreement with the Company to effect a
transaction described in clause (A) or (C) of this Section 7(f)(iii)) whose election by the
Board or nomination for election by the Company’s shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;

(C) the shareholders of the Company approve a merger, consolidation, recapitalization, or
reorganization of the Company, or a reverse share split of any class of voting securities of the
Company, or the consummation of any such transaction if shareholder approval is not obtained, other
than any such transaction which would result in at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons who together beneficially
owned at least fifty percent (50%) of the combined voting power of the voting securities of the
Company outstanding immediately prior to such transaction, with the relative voting power of each
such continuing holder compared to the voting power of each such continuing holder not
substantially altered as a result of the transaction; provided that, for purposes of this paragraph
(C), such continuity of ownership (and preservation of relative voting power) shall be deemed to be
satisfied if the failure to meet such fifty percent (50%) threshold (or to substantially preserve
such relative voting power) is due solely to the acquisition of voting securities by an employee
benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such
surviving entity;

(D) the shareholders of the Company approve a sale of all or substantially all of the assets
of the Company; or

(E) the Company ceases to own directly or indirectly a majority of the voting interests in the
Employer; or there is an assignment of this Agreement in connection with a sale of all or
substantially all of the assets of Employer.

Notwithstanding anything herein to the contrary, it shall not be a Change in Control if
following a transaction or series of related transactions described in Section 7(f)(iii),
twenty-five percent (25%) or more of the Company’s then outstanding voting securities are
beneficially owned by a group (as defined in Section 13(d)(3) of the Act) which group includes
Employee and Persons who were members of the Company’s Section 16 reporting group immediately prior
thereto.

(iv) “Deferred Compensation” means any amount that is deemed to be deferred
compensation under (and subject to) Section 409A of the Code and the regulations promulgated
thereunder.

(v) “Specified Employee” has the meaning given to such term by Section 409A of the
Code and the regulations promulgated thereunder.

8. Covenant Not to Compete.

(a) Noncompetition.

(i) Except as provided below, from and after the Effective Date and continuing until the date
that is twelve (12) months following Employee’s last day of employment, Employee shall not without
the prior written consent of Employer become employed by, or undertake to work for, directly or
indirectly, whether as an advisor, principal, agent, partner, officer, director, employee,
shareholder, associate or consultant of or to, any person, partnership, corporation or other
business entity which is a Major Competitor of Employer. As used herein, (x) “Major
Competitor” shall mean Centerline and its Affiliates, and any other person or entity whose
primary business lines include business lines in which the Company or its subsidiaries are engaged,
and (y) “Affiliate” shall mean any person or entity controlled by or under common control
with any other person or entity, whether by the ownership of, or the right to control the voting
of, voting securities, by contract, or otherwise. Notwithstanding the foregoing, if Employer
terminates Employee’s employment pursuant to Section 7(a)(ii) of this Agreement, or
Employee resigns pursuant to Section 7(b) (i)-(vi), or if Employee resigns pursuant to
Section 7(b)(vii) within the three (3) months preceding, or at any time following, a Change in
Control, this Section 8(a)(i) shall not apply.

(ii) From and after the Effective date and continuing until the date that is twenty-four (24)
months following Employee’s last day of employment, Employee shall not (w) solicit any employee of
Employer to change employment; (x) solicit any client, customer or investor of Employer or any of
its subsidiaries which closed (in any capacity) a transaction with Employer or any of its
subsidiaries during the last twenty-four (24) months of Employee’s employment; (y) disclose
proprietary or confidential information of Employer or its subsidiaries, including without
limitation, tax structures and solutions, deal structures, pricing, customer or client lists or
information, revenues, expenses, or other similar information; or (z) knowingly or intentionally
disparage the Company, its products, partners, officers, directors, employees, affiliates
subsidiaries or agents in a manner that Employee could reasonably anticipate would have a direct,
materially adverse effect on the Company (in consideration for which the Company covenants and
agrees that it, through a director, officer, or employee, will not intentionally or knowingly take
any action that would cause Employee embarrassment, humiliation, or otherwise directly contribute
to him being held in disrepute by the public, or his past, current, or prospective clients,
customers, employees, employers, or vendors). For purposes of the foregoing restrictive covenant,
“confidential information” does not include information which in accordance with applicable law (a)
is or becomes generally available to the public other than as a result of a disclosure in violation
of this Agreement, (b) was available on a nonconfidential basis prior to its disclosure, (c)
becomes available on a nonconfidential basis from a person other than Employee or (d) was
independently and lawfully developed by Employee or a third party. The foregoing nonsolicitation
covenant shall not prohibit (x) Employee’s new employer from making employment advertisements in
newspapers, on the Internet or using other similar mass media general advertising solicitations or
(y) Employee or his new employer from soliciting persons whose employment with Employer was
terminated by Employer. The parties intend for the covenants and agreements of this paragraph and
Employer’s obligation to provide benefits under this Agreement that become vested or payable before
or upon expiration of this Agreement to survive the expiration of this Agreement.

(b) Reasonable Restrictions. Employee acknowledges that the restrictions of
Section 8(a) above are reasonable, fair and equitable in scope, term and duration, are
necessary to protect the legitimate business interests of Employer, and are a material inducement
to Employer to enter into this Agreement. Employer and Employee both agree that in the event a
court shall determine any portion of the restrictions in Section 8(a) are not reasonable,
the court may change such restrictions, including without limitation the geographical restrictions
and the duration restrictions, to reflect a restriction which the court will enforce as reasonable.

(c) Specific Performance. Employee acknowledges that the obligations undertaken by
him/her pursuant to this Agreement are unique and that if Employee shall fail to abide by any of
the restrictions set forth in Section 8(a), Employer will suffer harm for which there is no
adequate remedy at law. Employee therefore confirms that Employer shall have the right, in the
event of a violation of Section 8(a), to injunctive relief to enforce the terms of this
Section 8 in addition to any other remedies available at law or in equity.

9. Indemnification. The Company and Employer jointly and severally hereby agree to
defend, indemnify and hold Employee harmless, to the maximum extent allowed by law, from any and
all liability for acts or omissions of Employee performed in any capacity in the course of
Employee’s employment (or reasonably believed by Employee to be within the scope of his/her
employment), or at the request of Employer or the Company; provided that such acts or
omissions do not constitute (a) criminal conduct, (b) willful misconduct, or (c) fraud. Such
indemnity shall include any and all cost, expense and damages incurred by reason of Employee being
made a party to or being a witness or otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative. Employer shall promptly pay as incurred all
Employee’s expenses (including the reasonable fees and expenses of counsel of Employee’s choosing)
incurred in any matter as to which Employee is entitled to be indemnified under this Agreement or
otherwise and neither Employer nor the Company shall amend, alter or rescind the indemnification
provisions of the Company and Employer’s articles of incorporation or bylaws that would have the
direct or indirect effect of diminishing or reducing the potential or actual protection or
benefits.So long as the Company or Employer maintains any policy of directors and officers’
liability insurance (or any similar or successor policy), for a period of three years after the
termination of Employee’s employment, the Company and Employer shall include Employee as a named
insured on each such policy with coverage and benefits no less favorable than those provided to
then current senior officers and directors. Employer shall at all times during the Term of this
Agreement carry Director and Officer liability insurance in commercially reasonable amounts but in
any event not less than ten million dollars ($10,000,000).

10. Miscellaneous.

(a) Complete Agreement. This Agreement constitutes the entire agreement among the
parties with respect to the matters set forth herein and supersedes all prior understandings and
agreements between the parties as to such matters. No amendments or modifications shall be binding
unless set forth in writing and signed by both parties.

(b) Successors and Assigns. Neither party may assign its rights or interest under
this Agreement without the prior written consent of the other party, except that Employer’s
interest in this Agreement may be assigned to a successor by operation of law or to a purchaser
purchasing substantially all of Employer’s business, and Employee’s benefits under this Agreement
may be assigned by operation of law to Employee’s heirs, devisees and personal representatives.
This Agreement shall be binding upon and shall inure to the benefit of each of the parties and
their respective permitted successors and assigns.

(c) Severability. Each provision of this Agreement is severable, such that if any
part of this Agreement shall be deemed invalid or unenforceable, the balance of this Agreement
shall be enforced so as to give effect as to the intent of the parties.

(d) Representations. Employer represents and warrants to Employee that it has the
requisite corporate power to enter into this Agreement and perform the terms hereof and that the
execution, delivery and performance of this Agreement have been duly authorized by all appropriate
company action. Employee represents that Employee is not a party to any agreement that would be
violated by this Agreement or by Employee continuing employment with Employer as provided herein.

(e) Construction and Venue. This Agreement shall be governed in all respects by the
internal laws of the State of Maryland (excluding reference to principles of conflicts of law). As
used herein, the singular shall include the plural, the plural shall include the singular, and the
use of any pronoun shall be construed to refer to the masculine, feminine or neuter, all as the
context may require. The parties to this Agreement agree that jurisdiction and venue in any action
brought pursuant to this Agreement to enforce its terms or otherwise with respect to the
relationships between the parties shall properly lie in and state or federal court within the State
of Maryland and in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida in
and for Hillsborough County or the United States District Court for the Middle District of Florida,
Tampa Division. The parties agree that such jurisdiction and venue are intended to be exclusive
and that jurisdiction shall not properly lie in any other jurisdiction. The parties agree that
they will not object that any action commenced in the foregoing jurisdictions is commenced in a
forum non-conveniens.

(f) Legal Fees and Expenses. The Company shall pay all reasonable legal fees and
related expenses (including the costs of experts, evidence, counsel and tax advisors) incurred by
Employee as a result of or in connection with (i) the negotiation of this Agreement (in an amount
not to exceed $8500) (ii) Employee contesting any termination by Employer of Employee’s employment
occurring within the three (3) months preceding a Change in Control or within the Term of this
Contract following a Change in Control, (iii) Employee seeking to obtain or enforce any right or
benefit provided by this Agreement (including any such fees and expenses incurred in connection
therewith) or by any other plan or arrangement maintained by the Company under which Employee is or
may be entitled to receive benefits, but only if an arbitrator, court or other tribunal of
competent jurisdiction shall find in Employee’s favor in a final, unappealable decision with
respect to such right or benefit.

(g) No Duty to Mitigate. Employee shall be under no duty to mitigate any loss of
income as result of the termination of his employment hereunder and any payments due Employee upon
termination of employment shall not be reduced in respect of any other employment compensation
received by Employee following such termination.

(h) Compliance with Section 409A. To the extent that Section 409A of the Code applies
to any election or payment required under this Agreement, such payment or election shall be made in
conformance with the provisions of Section 409A of the Code.

(i) Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed given on the date sent if delivered by hand or by facsimile (with
electronic confirmation of delivery), and on the next business day if sent by overnight courier or
by United States mail, postage prepaid, to each party at the following address (or at such other
address as a party may specify by notice under this section):

If to Employer:

MMA Financial, Inc.

621 East Pratt Street

Suite 300

Baltimore, Maryland 21202

Facsimile: (410) 727-5387

Attention: Chief Executive Officer

If to Employee:

Charles M. Pinckney

825 South Orleans Avenue

Tampa, Florida 33606

Home: (813) 258-6247

(j) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original and all of which together shall constitute one instrument.

IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this
Agreement as of the date and year first above written.

EMPLOYER:

MMA FINANCIAL, INC.

By: /s/ Michael L. Falcone

Name: Michael L. Falcone

Title: CEO & President

COMPANY:

MUNICIPAL MORTGAGE & EQUITY, LLC

By: /s/ Michael L. Falcone

Name: Michael L. Falcone

Title: CEO & President

EMPLOYEE:

/s/ Charles M. Pinckney

Charles M. Pinckney

1

Exhibit A

Job Description

TITLE: Chief Operating Officer and Interim Chief Financial Officer

DUTIES AND RESPONSIBILITIES:

Chief Operating Officer:

In addition to his general duties, powers and responsibilities as Chief Operating Officer, and
without in any way intending to diminish the Employee’s duties, powers and responsibilities
inherent in the position of Chief Operating Officer, as Chief Operating Officer the Employee’s
duties, responsibilities and authority shall include but not be limited to (1) having day to day
operational and supervisory authority over the business units of the Company and its subsidiaries
and affiliates, with the head of each such operating unit (currently the Company’s MMA Financial,
MMA Realty Capital and MMA Renewable Ventures units) reporting directly to the Chief Operating
Officer; (2) having access to and attending all meetings of the Board of Directors of the Company
and the Employer and receiving the same documents and other communications that are provided to
such directors (other than executive sessions and documents and communications reserved for
executive sessions, which shall be at the discretion of the Board); (3) with and at the direction
of the Chief Executive Officer and the Board of Directors, setting the strategic direction and
goals of the Company’s business units, and together with all executive officers, at the direction
of the Chief Executive Officer and the Board of Directors, helping to determine the strategic
direction and annual planning for the Company, (4) hiring, terminating and setting compensation,
incentive compensation and other terms of employment, in consultation with the Chief Executive
Officer, the Director of Human Relations and the Compensation Committee, for all of the employees
of the business units whose heads report to the Chief Operating Officer and consulting as needed
with respect to other employees (subject, however, to the specific provisions of bonus and
incentive plans and performance metrics adopted by the Company), and (5) retaining, in
consultation with the Chief Executive Officer, Chief Financial Officer, and/or the General Counsel,
as appropriate, consultants, professionals and other independent contractors for the Company’s
business (other than the Company’s independent certified pubic accountants and the Company’s
general counsel).

Chief Financial Officer:

In addition to his general duties, powers and responsibilities as interim Chief Financial
Officer, and without in any way intending to diminish the Employee’s duties, powers and
responsibilities inherent in the position of interim Chief Financial Officer, as Chief Financial
Officer the Employee’s duties, responsibilities and authority shall include but not be limited to
(1) coordinating in a leadership role completion of the currently ongoing financial statement
restatement; (2) coordinating in a leadership role efforts to improve operations and organizational
risk management and financial and internal control environment of the company process; and (3)
attending all meetings of the Audit Committee of the Company’s Board of Directors (other than
executive sessions, which shall be at the discretion of the Committee); and (4) retaining
consultants, professionals and other independent contractors for the Company’s business (other than
the Company’s independent certified pubic accountants and the Company’s general counsel) including
but not limited to advising the Chief Financial Officer in his official capacity.

2

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