Document:

EX-10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between STARWOOD HOTELS & RESORTS
WORLDWIDE, INC., a Maryland corporation (the “Company”), and STEVEN J. HEYER (“Executive”), and is
dated as of September 20, 2004.

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. The Company agrees to employ Executive and Executive
agrees to be employed by the Company, beginning on September 20, 2004 (the “Effective Date”) and
continuing for the period of time set forth in Article 2 of this Agreement, subject to the terms
and conditions of this Agreement.

1.2 Position. From and after the Effective Date, the Company shall employ Executive
in the position of Chief Executive Officer of the Company, or in such other position as the parties
mutually may agree, and shall, for the full term of Executive’s employment hereunder (the “Term”),
cause Executive to be elected a Director by the Board of Directors of the Company (the “Board”) as
of the Effective Date and thereafter annually to be nominated for re-election as a Director of the
Company and in connection with such nomination recommend his election as a Director by the
stockholders of the Company. So long as all Directors of the Company are also Trustees of Starwood
Hotels & Resorts, a Maryland real estate investment trust (the “Trust”), Executive shall also be
elected a Trustee of the Trust as of the Effective Date, and thereafter annually be nominated for
re-election as Trustee of the Trust and in connection with such nomination be recommended for
election as a Trustee of the Trust to the shareholders of the Trust. As Chief Executive Officer,
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; provided, however, that Executive acknowledges that Barry S. Sternlicht shall
be acting as the Executive Chairman of the Company pursuant to his Amended and Restated Employment
Agreement with the Company dated as of January 1, 2003, with the duties, responsibilities and
authority therein set forth.

1.3 Duties and Services. Executive agrees to serve in the position referred to in
paragraph 1.2 and, if elected, as a Director of the Company and a Trustee of the Trust, and to
perform diligently and to the best of his abilities the duties and services appertaining to such
offices as well as such additional duties and services appropriate to such offices which the
parties mutually may agree upon from time to time.

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 one percent of its outstanding stock);
(b) acting or continuing to act as a director of the entity identified by Executive in writing on
the date hereof, but any other directorships shall be subject to prior written approval of the
Board; and (c) being involved in educational, civic and charitable activities which do not
unreasonably interfere with the services to be rendered by Executive hereunder.

1.5 Atlanta Office. In addition to Executive’s office at the Company’s headquarters
in White Plains, New York (the “Company’s Headquarters Office”), the Company agrees to promptly
establish an office in the Atlanta area (the “Company’s Atlanta Office”), which office shall be in
a location reasonably acceptable to Executive. In addition to Executive, the Company’s Atlanta
Office shall be staffed with an executive secretary and such administrative personnel as necessary
to support Executive. Executive agrees and acknowledges that the headquarters of the Company shall
remain in White Plains, New York and that no corporate functions, other than those related to
Executive as provided herein, will be moved from the White Plains corporate headquarters, except as
may otherwise be approved by the Board. Executive’s duties and responsibilities will require a
significant amount of travel on Company business and Executive agrees that in order to properly
discharge those duties and responsibilities, he will spend at least a majority of Executive’s
business days, when measured over any two consecutive-month period, either in the Company’s
Headquarters Office or traveling on Company business away from the Company’s Atlanta Office.

ARTICLE 2:

TERM AND TERMINATION OF EMPLOYMENT

2.1 Term. Unless sooner terminated or extended pursuant to other provisions hereof,
the term of this Agreement shall commence on the Effective Date and shall end on the fourth
anniversary of the Effective Date (the “Initial Term”); provided that the term of this Agreement
shall be extended automatically for one additional year as of each anniversary of the Effective
Date, commencing with the fourth anniversary of the Effective Date, unless no later than six months
prior to any such renewal date either the Board, on behalf of the Company, or Executive gives
written notice to the other that the term of this Agreement shall not be so extended. The Initial
Term and any extension of the Initial Term pursuant to this paragraph 2.1 shall be referred to
herein as the “Term.”

2.2 Company’s Right to Terminate.

(a) Notwithstanding the provisions of paragraph 2.1, the Company, acting pursuant to an
express resolution of the Board, 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 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 or without reasonable accommodation, on a full-time basis
during such period;

(iii) for Cause;

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

(b) As used in this Agreement, the term “Cause “ shall mean any one or more of the
following:

(i) willful refusal by Executive to follow lawful directives of the Board which
are consistent with the scope and nature of Executive’s duties and responsibilities
as set forth herein. (For purposes of the foregoing, no act or failure to act on
the part of Executive shall be considered “willful” unless it is done or omitted to
be done by Executive without the reasonable belief that Executive’s act or omission
was in the best interests of the Company. Any act or failure to act that is
expressly authorized by the Board pursuant to a resolution duly adopted by the Board
shall be conclusively presumed to be done or omitted to be done by Executive in the
reasonable belief that it was in the best interests of the Company.);

(ii) Executive’s conviction of, or plea of guilty or nolo contendere to, a
felony or of any crime involving moral turpitude, fraud or embezzlement;

(iii) gross negligence or willful misconduct of Executive resulting in material
harm or loss to the Company or any of its subsidiaries or material damage to the
reputation of the Company or any of its subsidiaries;

(iv) material breach by Executive of any one or more of the covenants contained
in Article 5 hereof; or

(v) violation of Executive’s fiduciary duties to the Company or any of its
subsidiaries.

However, 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 as follows:

(a) for “Good Reason”, which shall mean any one or more of the following:

(i) the failure of the Company to elect and continue Executive as Chief
Executive Officer of the Company or the failure to elect or to nominate and
recommend the election of Executive as a member of the Board or the failure of the
Company’s shareholders to re-elect Executive to the Board (unless a Cause Notice
shall theretofore have been given to Executive);

(ii) the assignment to Executive of duties, authorities, responsibilities or
reporting requirements inconsistent with his position, or if the scope of any of
Executive’s material duties or responsibilities as Chief Executive Officer of the
Company is reduced to a significant degree without Executive’s prior written
consent, except solely due to Executive’s illness or disability or temporary
suspension of duties and responsibilities pending results of any Board-commissioned
investigation as to potential Cause for termination of Executive’s employment;

(iii) a reduction in or a substantial delay in the payment of Executive’s
compensation or benefits from those required to be provided in accordance with the
provisions of this Agreement;

(iv) a requirement by the Board, without Executive’s prior written consent,
that Executive, over any period of two consecutive months, spend more than a
majority of Executive’s business days (other than days involving travel on Company
business away from both the Company’s Headquarters Office and the Company’s Atlanta
Office) at the Company’s Headquarters Office (for purposes of this clause (iv) “more
than a majority” means a number of days constituting a majority of the number of
days being measured plus one);

(v) the failure of the Company to indemnify Executive, including without
limitation, the prompt advancement of expenses, to the fullest extent permitted by
applicable law, the Company’s Bylaws or the Indemnification Agreement (as defined in
paragraph 7.11 hereof) or if the Company maintains Directors and Officers liability
insurance coverage the failure to include Executive as an insured;

(vi) the Company’s purported termination of Executive’s employment for Cause
other than in accordance with the requirements of this Agreement;

(vii) the failure by any successor to the Company to assume this Agreement in
accordance with paragraph 7.8 hereof;

(viii) any other breach by the Company of any provision of this Agreement; and

(ix) if any individual other than Barry S. Sternlicht or the Executive is
elected or otherwise becomes the Executive Chairman of the Company (excluding,
however, such other individual’s becoming non-executive Chairman),

provided that Good Reason shall not include an act which is cured by the Company within 30
days after receipt by the Company of written notice from Executive (a “Preliminary Notice of
Good Reason”) identifying in reasonable detail the acts or failures allegedly constituting
Good Reason hereunder.

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

2.4 Effect of Change in Control.

(a) Notwithstanding any provision of this Agreement to the contrary, if Executive’s
employment is terminated by the Company without Cause or by Executive for Good Reason within
12 months after a Change in Control (as defined in paragraph 2.4(b)), or by Executive with
or without Good Reason by notice given or effective within the 30 day period commencing 12
months after such a Change in Control, such termination shall be deemed for purposes of
paragraph 4.1 as a termination by the Company without Cause.

(b) 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”), including for this purpose shares of Common Stock issuable in
respect of Partnership Units of SLT Realty Limited Partnership and SLC Operating
Limited Partnership (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) 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 and (B) a
Corporate Transaction which consists of or results in (1) the unpairing of equity
securities of the Company and equity securities of the Trust, including an unpairing
in which the Common Stock ceases to be attached to, and ceases to trade with, the
Class B shares of beneficial interest of the Trust or (2) a reorganization, merger,
consolidation, formation of a master limited partnership, initial public offering,
spin-off, split-off or a sale of all or substantially all the assets of the Trust or
Sheraton Holding Corporation, a Nevada corporation or an entity whose primary
business is owning or managing W Hotels, or the successor entity of any of the
foregoing; or

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

2.5 Notice of Termination. If the Company or Executive desires to terminate
Executive’s employment hereunder at any time prior to expiration of the Term as provided above in
this Article 2, it or he shall do so by giving no less than 30 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. Upon any termination of Executive’s employment hereunder for whatever reason Executive
shall, if and to the extent requested to do so by the Board, forthwith resign any and all positions
he may then be holding (including but not limited to as Director or Trustee) with the Company or
any subsidiary of the Company (including the Trust).

ARTICLE 3:

COMPENSATION AND BENEFITS

3.1 Base Salary. Commencing October 1, 2004, during the period of this Agreement,
Executive shall receive an annual base salary (“Base Salary”) equal to $1,000,000 (partial years
pro rated). 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. The Base Salary shall be subject to annual review commencing at the
end of 2004 and at the end of each calendar year thereafter during the Term, and may be increased
(but not decreased) for subsequent years (and such increased amount shall become the “Base Salary”
hereunder).

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

(a) Annual Incentive Plan. During the Term, Executive also shall be eligible
to receive cash incentive compensation (“Incentive Compensation” or “Bonus”) as follows:
Executive shall participate in the Annual Incentive Plan for Certain Executives (“AIP”)
maintained by the Company for senior executive officers on and after the Effective Date at a
level which is not less than the maximum participation level made available to any Company
senior executive excluding the Executive Chairman (determined without regard to period of
service or similar criteria that might otherwise be necessary to entitle Executive to such
level of participation); provided, however, that conditioned upon attainment of target
performance measure requirements based on one or more performance measures set forth in the
AIP, the target Bonus (“Target Bonus”) for each calendar year subsequent to 2004 during the
Term for which Executive shall be eligible shall be $2,000,000 (partial years pro rated).
The bonus payable to Executive with respect to 2004 shall be a pro rata portion (based on
the number of days in 2004 after the Effective Date compared to 365) of $2,000,000.

(b) The Company shall award to Executive shares of restricted stock units under the
Company’s 2004 Long-Term Incentive Compensation Plan (the “2004 LTICP”) (or successor plan)
as follows:

(i) Upon or as soon as practicable after the Effective Date, a pro rata portion
(based on the number of days in 2004 after the Effective Date compared to 365) of
45,000 shares of restricted stock units, subject to adjustment in accordance with
the 2004 LTICP (or successor plan);

(ii) (In lieu of an annual award during 2005) upon or as soon as practicable
after the Effective Date, 45,000 shares of restricted stock units, subject to
adjustment in accordance with the 2004 LTICP (or successor plan);

(iii) On or about the same time as annual restricted stock awards are made to
other senior executives (currently February of each year) in 2006 and in each
succeeding calendar year during the Term (in any year in which no such awards are
made to other senior executives, the award under this clause (iii) shall be made as
close as practicable to the same time during such year as such awards were made
during the prior year), an annual award of 45,000 shares of restricted stock units
(awards for partial years pro-rated), subject to adjustment in accordance with the
2004 LTICP (or successor plan); and

(iv) On or about the day which is one day less than six months prior to the
fourth anniversary of the Effective Date and on or about the day which is one day
less than six months prior to each succeeding anniversary of the Effective Date, but
in any case only if notice has not theretofore been given by the Executive or the
Company of his or its election not to extend the Term pursuant to paragraph 2.1, an
additional award of a pro rated portion of 45,000 shares of restricted stock units,
based on the number of days from the next ensuing anniversary of the Effective Date
to the end of that calendar year, compared to 365.

(v) The restricted stock units awarded pursuant to this paragraph 3.2(b) shall
vest in full on the third anniversary of their award, provided that such restricted
stock units shall be subject to accelerated vesting on each of the first and second
anniversaries of its award as to not more than one-third of the number of such
 shares of restricted stock of each such award and conditioned upon the attainment of
performance measure requirements for accelerated vesting based on one or more
performance measures set forth in the 2004 LTICP (or successor plan); and, provided
further, that delivery of shares of Common Stock and/or other property deliverable
upon the vesting of such awards (whether or not accelerated) shall be deferred until
the date which is thirty (30) days after the date of the termination of Executive’s
employment for any reason.

(c) The Company shall grant options (“Options”) under the Company’s 2004 LTICP (or
successor plan) to Executive as follows:

(i) Upon the Effective Date, an Option to purchase a pro rata portion (based on
the number of days in 2004 after the Effective Date compared to 365) of 485,000
shares of Common Stock, subject to adjustment in accordance with the 2004 LTICP (or
successor plan), shares of Common Stock;

(ii) (In lieu of an annual Option grant during 2005) upon the Effective Date an
Option to purchase 485,000 shares of Common Stock, subject to adjustment in
accordance with the 2004 LTICP (or successor plan); and

(iii) On or about the same time as annual Option grants are made to other
senior executives (currently February of each year) in 2006 and in each succeeding
calendar year during the Term (in any year in which no such grants are made to other
senior executives, the grant under this clause (iii) shall be made as close as
practicable to the same time during such year as such grants were made during the
prior year), an Option to purchase 485,000 shares (grants for partial years
pro-rated) of Common Stock, subject to adjustment in accordance with the 2004 LTICP
(or successor plan); and

(iv) On or about the day which is one day less than six months prior to the
fourth anniversary of the Effective Date and on or about the day which is one day
less than six months prior to each succeeding anniversary of the Effective Date, but
in any case only if notice has not theretofore been given by the Executive or the
Company of his or its election not to extend the Term pursuant to paragraph 2.1, an
additional grant of Option to purchase a pro rated portion of 485,000 shares of
Common Stock, based on the number of days from the next ensuing anniversary of the
Effective Date to the end of that calendar year, compared to 365.

(v) Each Option granted pursuant to this paragraph 3.2(c) shall have an
exercise price per share equal to the fair market value per share of Common Stock on
the date of its grant and shall become exercisable as to one-fourth of the number of
 shares subject thereto on each anniversary of the date of its grant.

(d) All awards of restricted stock units and grants of Options hereunder shall be made
to Executive during his employment by the Company pursuant to the Company’s 2004 LTICP (or
any successor plan) and, except as may be otherwise provided herein, on terms consistent
with (or to the extent determined by the Board in its sole discretion, more favorable than)
awards of restricted stock and grants of Options then being made to senior executives
pursuant to the Company’s 2004 LTICP (or any successor plan).

(e) 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 Life Insurance. During the Term, the Company shall pay the premiums on and
maintain in effect a whole life or universal life insurance policy (the “Executive Insurance
Policy”) on Executive’s life in the face amount of $10,000,000 the proceeds of which shall be
payable to Executive’s estate or such other person or persons as Executive shall designate. The
Executive shall cooperate with the Company in the procurement of such policy, including, submitting
to any physical examination which may be required by an insurer. The Executive Insurance Policy
shall be owned as directed by Executive. The Company shall not be required to maintain such
insurance after termination of Executive’s employment for any or no reason, but upon such
termination the Company shall take all actions reasonably requested by Executive necessary to
transfer any and all rights or interests it may have with respect to such policy as Executive
directs at no cost to Executive.

3.4 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, determined without regard to the period of service that
might otherwise be necessary to entitle Executive to such vacation or sick leave under standard
Company policy.

3.5 Other Benefits. During his employment hereunder, Executive shall be afforded the
following benefits as incidences of his employment:

(a) Driver and Car Service. The Company will provide Executive the use of a driver and
car service for business purposes.

(b) 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 monthly dues at a country club, dues and fees to industry and
professional organizations, costs of entertainment and business development and
business-related travel, including, but not limited to, travel away from the Company’s
Atlanta Office to the Company’s Headquarters Office (not exceeding an average of one round
trip per week) and to other locations on Company business. The Executive shall be entitled
to use first-class travel accommodations for such business-related travel (including
reasonable travel expenses incurred by Executive’s spouse when accompanying Executive on
business-related travel).

(c) Tax Preparation and Financial Planning. The Company shall provide tax preparation
and financial planning assistance up to a maximum cost of $25,000 per calendar year.

(d) Other Company Benefits. Executive and, to the extent applicable, Executive’s
family, dependents and beneficiaries, shall be allowed to participate in all benefits,
plans, programs and perquisites including without limitation disability insurance programs,
including improvements or modifications of the same, which are now, or may hereafter be,
available to similarly-situated Company senior executives (not including the Executive
Chairman) during the Term. The Company shall not, however, by reason of this paragraph
3.5(d) be obligated to institute, maintain, or refrain from changing, amending or
discontinuing any such benefit plan or program, so long as such changes are similarly
applicable to senior executive employees.

(e) Legal Fees. The Company shall reimburse Executive for all legal fees and related
expenses reasonably incurred by Executive (not exceeding $50,000) in connection with the
negotiation and execution of this Agreement.

(f) Company Aircraft. The Company shall make available to Executive a Company-owned or
leased private aircraft for business-related travel. Executive and his immediate family
will have access to a Company plane on an “as available” basis for other than business
travel, assuming all such planes are not needed for business purposes, with obligation to
reimburse for personal use based upon the Company’s usual methods for computing such charges
(which method is currently based on SIFL).

3.6 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 Severance Package. In the event Executive’s employment under this Agreement is
terminated by the Company without Cause under paragraph 2.2(a)(iv) (and a termination due to
Executive’s death or permanent disability shall be treated for purposes of this Agreement as a
termination by the Company without Cause) or is terminated by Executive for Good Reason under
paragraph 2.3(a), then, subject to paragraph 4.2, as and for a severance package (“Severance
Package”):

(a) Executive shall be paid all accrued but unpaid Base Salary, earned but unpaid
Incentive Compensation in respect of the Company’s fiscal year prior to the fiscal year in
which termination occurs, and other benefits through the date of Executive’s termination of
employment. (For purposes of this Agreement, Incentive Compensation shall be considered to
be earned if the cycle for which the Incentive Compensation is to be measured has been
completed, notwithstanding the fact that the amount may not have been calculated at the time
Executive’s employment is terminated and notwithstanding any requirement that Executive be
employed at the payment date of such Incentive Compensation);

(b) Executive shall be paid all unpaid Base Salary and all unpaid Incentive
Compensation and other benefits pro rated through the date of termination of employment.
For the purposes of this paragraph 4.1(b), unpaid Incentive Compensation for the calendar
year of termination of employment shall be deemed equal to the Target Bonus for such year
pro rated for the fractional year to the date of termination of employment.

(c) Executive shall be paid an amount equal to the product of three times the sum of
(i) $2,000,000, if such termination occurs prior to January 1, 2006, or the average of the
actual Bonuses for each of the full calendar years immediately prior to such termination
(treating for this purpose the partial year 2004 as a full-calendar year and the Bonus for
2004 as $2,000,000) if such termination occurs on or after January 1, 2006, plus (ii) the
annual Base Salary in effect on the date of such termination.

(d) All amounts payable to Executive under the above provisions of this paragraph 4.1
shall be paid in a lump sum as soon as practicable after Executive’s termination of
employment.

(e) Any outstanding options, restricted stock, restricted stock units or other equity
equivalents granted or required to be granted or paid to Executive by the Company from and
after the date of this Agreement through the date of termination of employment (but not
thereafter) shall, notwithstanding any provision to the contrary contained in this
Agreement, any option agreement(s), restricted stock agreement(s) or any other agreement,
immediately vest in full, and such options to the extent so vested shall immediately become
exercisable.

(f) Any such options granted to Executive by the Company, shall remain exercisable
until the earlier of (i) the third anniversary of the date of Executive’s termination of
employment, or (ii) the expiration of such option, and following Executive’s exercise of any
such option, Executive shall receive title to the shares issued upon exercise in respect
thereof free and clear of any lien, claim or encumbrance by, through or under the Company.

4.2 Liquidated Damages. The parties agree that the above Severance Package shall be
Executive’s sole and exclusive monetary remedy under this Agreement by reason of termination of
Executive’s employment by the Company other than for 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. 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 or paragraph 4.3, 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 a Exhibit 4.2 (adjusted as necessary to conform to then existing legal
requirements); and except with respect to payments and benefits under paragraphs 4.1(a) and 4.1(b),
all payments and benefits provided under the above paragraph 4.1 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; Termination of Employment
After Non-Renewal. No Severance Package 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 all accrued but
unpaid Base Salary through the date of such termination of employment and earned but unpaid
Incentive Compensation. Subject to the provisions of any subsequent agreement which may be entered
into between the Company and Executive, the provisions of paragraphs 4.1(e) and 4.1(f) shall apply
upon any termination of Executive’s employment (other than a termination by the Company which would
constitute a termination for Cause) upon or after the expiration of the Term of this Agreement
resulting from the Company’s giving notice under paragraph 2.1 of its election not to extend such
Term.

4.4 Certain Additional Payments by the Company. Notwithstanding anything to the
contrary in this Agreement, if any payment, distribution or provision of a benefit by the Company
to or for the benefit of Executive, whether paid or payable, distributed or distributable or
provided or to be provided pursuant to the terms of this Agreement or otherwise (a “Payment”),
would be subject to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended), or any interest or penalties with respect to such
excise or other additional tax (such excise or other additional tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company
shall pay to Executive an additional payment (a “Gross-up Payment”) in an amount such that after
payment by Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including any income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar gross-up payments to
Executive under any stock incentive or other benefit plan or program of the Company) equal to the
Excise Tax imposed upon the Payments. The Company and Executive shall make an initial
determination as to whether a Gross-up Payment is required and the amount of any such Gross-up
Payment. Executive shall notify the Company in writing of any claim by the Internal Revenue
Service which, if successful, would require the Company to make a Gross-up Payment (or a Gross-up
Payment in excess of that, if any, initially determined by the Company and Executive) within ten
business days after the receipt of such claim. The Company shall notify Executive in writing at
least ten business days prior to the due date of any response required with respect to such claim
if it plans to contest the claim. If the Company decides to contest such claim, Executive shall
cooperate fully with the Company in such action; provided, however, the Company shall bear and pay
directly or indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of the Company’s action. If Executive receives a refund of any amount
paid by the Company with respect to such claim, Executive shall promptly pay such refund to the
Company. If the Company fails to timely notify Executive whether it will contest such claim or the
Company determines not to contest such claim, then the Company shall immediately pay to Executive
the portion of such claim, if any, which it has not previously paid to Executive.

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 and restricted stock 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 the 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 two years thereafter (the “Noncompetition
Period”), Executive shall not in any manner, directly or indirectly (whether as an officer,
director, employee, investor, consultant, or otherwise), engage or be engaged, or assist any
other person, firm, corporation or enterprise in engaging or being engaged, in any business
(a “Competing Business”) in which Executive was involved or had knowledge was being
conducted or planned by the Company or any of its subsidiaries as of the termination of
Executive’s employment, in any geographic area in which the Company or any of its
subsidiaries is then conducting such business; provided, however, that after termination of
employment nothing in this paragraph 5.2(b) shall prevent Executive from being employed as
Chief Executive Officer of an enterprise which is engaged in a Competing Business if (i)
such enterprise is a diversified business enterprise and the revenues derived by such
enterprise from the Competing Business do not exceed 25% of the Company’s gross revenue for
the calendar year immediately preceding termination of Executive’s employment and (ii) such
enterprise is not one of those set forth in Exhibit 5.2.

(c) Nonsolicitation. Executive further agrees that during the Noncompetition
Period Executive shall not (i) in any manner, directly or indirectly, induce or attempt to
induce any employee of the Company or any of its subsidiaries to terminate or abandon his or
his employment for any purpose whatsoever or (ii) in connection with any business to which
the above paragraph 5.2(b) applies, call on, service, solicit or otherwise do business with
any customer of the Company or any of its subsidiaries.

(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 or (ii) an
owner of not more than one percent of the outstanding stock (at an original cost less than
$5 Million) 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.

(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).

5.4 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.

5.5 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 or 5.4 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 National Rules 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 have to reimburse the Company for his legal fees and expenses 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:

Steven J. Heyer

3565 Tuxedo Road, N.W.

Atlanta, GA 30305

And to:

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

222 North LaSalle Street

Suite 2600

Chicago, IL 60601

Attn: Thomas P. Desmond, Esq.

Fax: (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: Kenneth S. Siegel, Esq.

Executive Vice President, General Counsel and Secretary

Facsimile: (914) 640-8240

and to

Sidley Austin Brown & Wood llp

555 West 5th Street, 40th Floor

Los Angeles, California 90013

Attention: Sherwin L. Samuels, Esq.

Facsimile (213) 896-6600

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.

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 an automatic resignation of Executive from the Board and from the Board of Trustees of
the Trust 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 a
Director and officer 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 a Director or officer of the
Company), (ii) the Indemnification Agreement between the Company and Executive dated as of
the date hereof (the ‘Indemnification Agreement”).

(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.

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:

Name:

Its:

EXECUTIVE

/s/ Steven J. Heyer

	 	 	 	Steven J. Heyer

1

EXHIBIT 4.2

to

Employment Agreement dated September 20, 2004

between Steven J. Heyer

and

Starwood Hotels & Resorts Worldwide, Inc.

GENERAL RELEASE

This General Release (this “Release”) is executed by Steven J. Heyer (“Executive”) pursuant to
paragraph 4.2 of the Employment Agreement between Starwood Hotels & Resorts Worldwide, Inc. dated
   , 2004 (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 had 21 days to consider the form of this Release;

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.

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 or attorneys of the Company 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, 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(c) AND 4.1(e) OF THE EMPLOYMENT AGREEMENT.

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.

	 	 	 
	Date:    , 20   .

	 	EXECUTIVE

   

   

Steven J. Heyer

2

Exhibit 5.2

to

Employment Agreement dated September 20, 2004

between Steven J. Heyer

and

Starwood Hotels & Resorts Worldwide, Inc.

	 	 	 
	Accor

Cendant Corporation

Choice Hotels International

Club Med

Expedia, Inc.

Fairmont Hotels & Resorts Inc.

Four Seasons Hotels Inc.

Hilton Hotels Corporation

Hilton International

Hyatt Corporation

	 	Ian Schrager Hotels

Intercontinental Hotel Group

Kimpton Hotels & Restaurant Group, Inc.

Le Meridien Hotels

Mandarin Oriental

Marriott International, Inc.

Shangri-La Hotels & Resorts

Travelocity.com L.P.

TRT Holdings (owns Omni)

Wyndham International, Inc.
	 
	 	 

3EX-10.1

Exhibit 10.1

UNITEDHEALTH GROUP

Grant Number:    

	 	 	 	 	 	 	 
	Grant Date

	 	Option Shares
	 	Exercise Price
	 	Expiration Date
	 
	 	 	 	 	 	 
	   

	 	«Options»
	 	$   
	 	   
	
 
	 	 
	 	 
	 	

THIS CERTIFIES THAT UnitedHealth Group Incorporated (the “Company”) has on the Grant Date specified
above granted to

«Name»

(“Optionee”) the option (the “Option”) to purchase that number of shares of UnitedHealth Group
Incorporated Common Stock, $.01 par value per share (the “Common Stock”), indicated above (the
“Option Shares”). The Option that this Certificate represents will expire on the Expiration Date,
unless it is terminated prior to that time in accordance with this Certificate.

The Option Shares represented by this Certificate shall become exercisable as to 25% of the Option
Shares on each anniversary of the Grant Date, commencing with the first anniversary, unless this
Option shall have terminated or the vesting shall have accelerated as provided in this
certificate. Once this Option has become exercisable for all or a portion of the Option Shares, it
will remain exercisable for all or such portion of the Option Shares, as the case may be, until
the Option expires or is terminated as provided in this Certificate.

By accepting this Option the holder acknowledges that the holder of this Option will not have any
of the rights of a shareholder with respect to the Option Shares until the holder has duly
exercised the Option and paid the Exercise Price and applicable withholding taxes in accordance
with this Certificate. The holder further acknowledges and agrees that the Company may deliver, by
electronic mail, the use of the Internet or Company intranet web pages or otherwise, any
information concerning the Company, this Option, the UnitedHealth Group Incorporated 2002 Stock
Incentive Plan (the “Plan”), pursuant to which the Company granted this Option, and any information
required by the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

This Option is subject to the further terms and conditions set forth below and to the terms of the
Plan. A copy of the Plan is available upon request. In the event of any conflict between the
terms of the Plan and this Certificate, the terms of the Plan shall govern. Any terms not defined
herein shall have the meaning set forth in the Plan.

* * * * *

Nonqualified Option. The Company does not intend that the Option shall be an Incentive
Stock Option governed by the provisions of Section 422 of the Internal Revenue Code of 1986, as
amended.

Termination of Option. The Option shall terminate on the Expiration Date. The Option shall
terminate prior to such date if the Optionee ceases to be employed by the Company or its
subsidiaries, except that:

(a) General: If the Optionee’s employment terminates for any reason (voluntary or
involuntary) other than death, permanent long-term disability or Retirement (as defined
below), the Optionee may, at any time within the Exercise Period (as defined below),
exercise the Option to the extent of the full number of Option Shares which were exercisable
and which the Optionee was entitled to purchase under the Option on the date of the
termination of his or her employment;

(b) Death or Permanent Long-Term Disability: If the Optionee dies while employed by the
Company or its subsidiaries, or if the Optionee’s employment by the Company or its
subsidiaries is terminated due to the Optionee’s failure to return to work as the result of
a permanent long-term disability which renders Optionee incapable of performing his or her
duties as determined under the provisions of the Company’s long-term disability insurance
program, then (i) all unvested Option Shares hereunder shall immediately vest, and (ii) the
Optionee (or the Optionee’s personal representatives, administrators or guardians, as
applicable, or any person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution) may, at any time within a period of five years
after the Optionee’s death or termination of employment due to the Optionee’s failure to
return to work as the result of a permanent long-term disability, or for such other longer
period established at the discretion of the Committee or the Chief Executive Officer of the
Company, exercise the Option to the extent of the full number of Option Shares which are
exercisable following such vesting;

(c) Retirement: If the Optionee’s employment by the Company or its subsidiaries is
terminated by reason of the Optionee’s Retirement (as defined below), then (i) vesting of
the Option shall continue as if such termination of employment had not occurred and (ii) the
Optionee may, at any time within a period of five years after such termination of employment
by reason of the Optionee’s Retirement and subject to “Forfeiture of Option” below, or for
such other longer period established at the discretion of the Committee or the Chief
Executive Officer of the Company, exercise the Option to the extent of the full number of
Option Shares which were exercisable and which the Optionee was entitled to purchase under
the Option on the date of exercise of the Option; and

(d) Severance: If Optionee is entitled to severance under the Company’s severance pay
plan or under an employment agreement entered into with the Company, then vesting of the
Option shall continue for the period of such severance. Should severance be paid in a lump
sum versus bi-weekly payments, the Option shall continue to vest for the period of time had
severance been paid bi-weekly.

For the purposes of this Option, “Exercise Period” shall mean the greater of (i) a period of three
months after the date of termination of the Optionee’s employment, (ii) if Optionee is entitled to
severance under the Company’s severance pay plan or under an employment agreement entered into with
the Company, a period of three months after the end of such severance period (if severance is paid
in a lump sum versus bi-weekly payments, the Option shall remain exercisable for a period of three
months after the date on which bi-weekly severance payments would have ended), or (iii) such other
longer period established at the discretion of the Committee or the Chief Executive Officer of the
Company. This Option shall in no event be exercisable after the Expiration Date.

For purposes of this Option, “Retirement” means the termination of employment other than by reason
of death or permanent long-term disability by a person who is age 55 or older and whose age in
years plus number of years of Recognized Employment with the Company or its subsidiaries totals 65
or more. For purposes of this Option, “Recognized Employment” shall include only employment since
the Optionee’s most recent date of hire by the Company or its subsidiaries, and shall not include
employment with a company acquired by UnitedHealth Group or its subsidiaries before the date of
such acquisition.

Forfeiture of Option. If Optionee violates any provision of the Restrictive Covenants of
this Certificate, as set forth below, then all unvested portions of the Option Shares, together
with any portions of the Option Shares which vested within one year prior to the termination of
Optionee’s employment with the Company or at any time after such termination (the “Forfeited
Shares”), shall become null and void and the Optionee shall pay to the Company, upon demand, an
amount equal to the difference between the proceeds the Optionee has received from any sales of
Forfeited Shares over the Exercise Price for such stock; and if the Optionee still holds all or any
part of the Forfeited Shares at the time such Company demand is made, the Optionee shall pay over
to the Company an amount equal to the difference between the aggregate Fair Market Value of such
Forfeited Shares on the date the Option was exercised and the aggregate Exercise Price with respect
to such Forfeited Shares. This paragraph does not constitute the Company’s exclusive remedy for
Optionee’s violation of the Restrictive Covenants. The Company may seek any additional legal or
equitable remedy, including injunctive relief, for any such violation.

Restrictive Covenants. In consideration of the terms of this Option and in recognition of
the fact that the Optionee will receive Proprietary Information, as defined below, during
Optionee’s employment with the Company, the Optionee agrees to be bound by the following
Restrictive Covenants:

(a) Proprietary Information. During the course of employment, Optionee will receive
sensitive, confidential, proprietary and/or trade secret information (collectively, “Proprietary
Information”), including, without limitation, information regarding inventions, new product or
marketing plans, business strategies, merger and acquisition targets, financial and pricing
information, computer programs, models and data bases (including limitation source codes), designs,
analytical models, customer lists and information, and supplier and vendor lists and information.
This Proprietary Information includes not only information contained in written or digitized
Company documents but also all such information which Optionee may commit to memory during the
course of the Optionee’s job. It is the Optionee’s responsibility to protect the integrity and
confidential nature of this Proprietary Information, both during and after the Optionee’s
employment with the Company, and the Optionee shall not disclose any such Proprietary Information,
either during or after the term of the Optionee’s employment, except as necessary for the
performance of the Optionee’s duties or as expressly permitted in writing by UnitedHealth Group.
It is understood, however, that nothing herein shall be construed to prohibit the disclosure, or
restrict the use, of information that is available in reasonably similar form to the general
public, through no fault of the Optionee, or that was received by the Optionee outside of
UnitedHealth Group, without an obligation of confidentiality.

(b) Competitive Activity. During the Optionee’s employment with the Company and for
the greater of one year after the termination of the Optionee’s employment for any reason
whatsoever (including Retirement) or the period of time for which the option remains exercisable,
the Optionee shall not engage in any Competitive Activity. For purposes of this Agreement, the
term “Competitive Activity” shall mean involvement in any activities that are competitive with any
product or service that the Optionee was directly involved with, or had Proprietary Information
regarding, during the Optionee’s employment with the Company or its subsidiaries. Because the
Company’s business competes on a nationwide basis, the Optionee’s obligations hereunder shall apply
anywhere in the United States of America.

In the event that any portion of this Section (b) regarding “Competitive Activity” shall be
determined by any court of competent jurisdiction to be unenforceable because it is unreasonably
restrictive in any respect, it shall be interpreted to extend over the maximum period of time for
which it reasonably may be enforced and to the maximum extent for which it reasonably may be
enforced in all other respects, and enforced as so interpreted, all as determined by such court in
such action. The Optionee acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Certificate is to be given the construction that renders its provisions valid
and enforceable to the maximum extent (not exceeding its express terms) possible under applicable
law.

(c) Non-Solicitation. During the Optionee’s employment and for the greater of two
years after the termination of the Optionee’s employment for any reason whatsoever (including
Retirement) or the period of time for which the option remains exercisable, the Optionee shall not:

(i) induce or attempt to induce any employee of the Company to leave the employ of
the Company, or in any way interfere adversely with the relationship between any such
employee and the Company;

(ii) induce or attempt to induce any employee of the Company to work for, render
services to, provide advice to, or supply confidential business information or trade
secrets of the Company to any third person, firm, or corporation;

(iii) employ, or otherwise pay for services rendered by, any employee of the
Company in any business enterprise with which the Optionee may be associated, connected
or affiliated;

(iv) induce or attempt to induce any customer, supplier, licensee, licensor or
other business relation of the Company to cease doing business with the Company, or in
any way interfere with the then existing business relationship between any such
customer, supplier, licensee, licensor or other business relation and the Company; or

(v) assist, solicit, or encourage any other person, directly or indirectly, in
carrying out any activity set forth above that would be prohibited by any of the
provisions of this Agreement if such activity were carried out by the Optionee. In
particular, the Optionee will not, directly or indirectly, induce any employee of the
Company to carry out any such activity.

By accepting this Option, the Optionee agrees that the restrictions and agreements contained
in this Restrictive Covenants section are reasonable and necessary to protect the
legitimate interests of the Company.

Manner of Exercise. On the terms set forth herein, the Option may be exercised in whole or
in part from time to time by delivering notice of exercise to the Company, accompanied by payment
of the Exercise Price and any applicable withholding taxes (i) in cash, by wire transfer, certified
check or bank cashier’s check payable to the Company, (ii) by delivery of shares of Common Stock
already owned by the Optionee or (iii) by delivery of a combination of cash and such shares;
provided, that Optionee shall not be entitled to tender shares of Common Stock pursuant to
successive, substantially simultaneous exercises of options to purchase Common Stock. Any shares
already owned by the Optionee referred to in the preceding sentence must have been owned by the
Optionee for no less than six months prior to the date of exercise of the Option if such shares
were acquired upon the exercise of another option or upon the vesting of restricted stock or
restricted stock units.

No Guarantee of Employment. This Option does not confer on the Optionee any right with
respect to the continuance of any relationship with the Company or its subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such relationship at any time.

No Transfer. During the Optionee’s lifetime, only the Optionee can exercise the Option.
The Optionee may not transfer the Option except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act or the rules promulgated thereunder, to the extent provided in
clause (b) under the section above entitled “Termination of Option.” Any attempt to otherwise
transfer the Option shall be void.

Adjustments to Option Shares. In the event that any dividend or other distribution
(whether in the form of cash, shares of Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the
Company or other similar corporate transaction or event affecting the Shares would be reasonably
likely to result in the diminution or enlargement of any of the benefits or potential benefits
intended to be made available under the Option (including, without limitation, the benefits or
potential benefits of provisions relating to the term, vesting or exercisability of the Option),
the Committee shall, in such manner as it shall deem equitable or appropriate in order to prevent
such diminution or enlargement of any such benefits or potential benefits, adjust any or all of (i)
the number and type of shares (or other securities or other property) subject to the Option and
(ii) the exercise price with respect to the Option; provided, however, that the number of shares
covered by the Option shall always be a whole number. Without limiting the foregoing, if any
capital reorganization or reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another entity, or the sale of all or substantially all of the Company’s
assets to another entity, shall be effected in such a way that holders of the Company’s Common
Stock shall be entitled to receive stock, securities, cash or other assets with respect to or in
exchange for such shares, the Optionee shall have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Certificate and in lieu of the shares of Common
Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the
Option, with appropriate adjustments to prevent diminution or enlargement of benefits or potential
benefits intended to be made available under the Option, such shares of stock, other securities,
cash or other assets as would have been issued or delivered to the Optionee if the Optionee had
exercised the Option and had received such shares of Common Stock prior to such reorganization,
reclassification, consolidation, merger or sale. The Company shall not effect any such
reorganization, consolidation, merger or sale unless prior to the consummation thereof the
successor entity (if other than the Company) resulting from such reorganization, consolidation or
merger or the entity purchasing such assets shall assume by written instrument the obligation to
deliver to the Optionee such shares of stock, securities, cash or other assets as, in accordance
with the foregoing provisions, the Optionee may be entitled to purchase or receive.

Change in Control. Notwithstanding the other vesting provisions set forth herein, but
subject to the other terms and conditions set forth herein, the Option shall become fully vested
and exercisable on the effective date of a Change in Control. For purposes of this Option, a
“Change in Control” shall mean the sale of all or substantially all of the Company’s assets or any
merger, reorganization, or exchange or tender offer which, in each case, will result in a change in
the power to elect 50% or more of the members of the Board of Directors of the Company.

Other. An original record of this Certificate and all the terms thereof is held on file by
the Company. To the extent there is any conflict between the terms contained in this certificate
and the terms contained in the original held by the Company, the terms of the original held by the
Company shall control.

THIS CERTIFICATE REPRESENTS AN OPTION TO PURCHASE SHARES OF COMMON STOCK AND DOES NOT CONSTITUTE OR
REPRESENT SHARES OF COMMON STOCK

NON-NEGOTIABLE

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