SEPARATION AGREEMENT
AND MUTUAL GENERAL RELEASE OF CLAIMS
Theodore W. Darnall (hereinafter
referred to as “Employee”) and Starwood Hotels &
Resorts Worldwide, Inc. (hereinafter referred to as the
“Company”) agree as follows:
ONE : Termination of
Employment .
Employee acknowledges that his employment with the Company will
end upon his resignation, which he hereby tenders as a result of a
reduction in his role and which will be effective October 15,
2006, unless such employment is terminated earlier pursuant to the
terms herein (hereinafter referred to as the “Termination
Date”). After the Termination Date, Employee will perform no
further duties, functions or services for the Company or any of its
affiliates, nor will he be entitled to any further compensation
and/or benefits except as described herein. Following the
Termination Date, Employee shall be eligible for continued
insurance coverage under COBRA.
If, prior to October 15, 2006, Employee is terminated for
cause or voluntarily resigns his employment, the date that
Employee’s employment is terminated for cause or he
voluntarily resigns shall be deemed the Termination Date. For
purposes of this Agreement, “cause,” shall mean
(i) any material breach by Employee of any of the duties,
responsibilities or obligations of his employment or any of the
policies or practices of the Company; (ii) Employee’s
willful failure or refusal to properly perform (as determined by
Company in its reasonable discretion and judgment), or the habitual
neglect of, the duties, responsibilities or obligations of his
employment, or to properly perform or follow (as determined by
Company in its reasonable discretion and judgment) any lawful order
or direction by the Company; (iii) any acts or omissions by
Employee that constitute (as determined by Company in its
reasonable discretion and judgment) fraud, dishonesty, breach of
duty of loyalty, breach of trust, gross negligence, civil or
criminal illegality, or any other misconduct or behavior that could
subject the Company to civil or criminal liability or otherwise
adversely and materially affect the business, interests or
reputation of the Company or any of its affiliates. For the
purposes of the acts described in items (i) through
(iii) of this paragraph, any determination that any act or
failure to act by Employee constitutes “cause” shall be
made by the Company in its reasonable discretion and judgment,
provided that the Company shall provide Employee with reasonable
notice of such determination and an opportunity to correct or cure
any such act or failure to act .
TWO : Benefits .
Provided that (a) Employee executes this Agreement and does
not revoke it pursuant to Paragraph EIGHT herein; (b) his
employment is not terminated for cause prior to October 15,
2006; (c) he does not voluntarily resign prior to
October 15, 2006, and (d) within twenty-one
(21) days after the Termination Date, Employee shall have
executed and delivered to the Company a General Release and Waiver
(“Release”) in the form annexed hereto as
Appendix B and does not revoke it, and in consideration for
Employee’s agreements and covenants including the release of
claims set forth in this Agreement and as full and complete and
final satisfaction of any and all claims which Employee had, has or
may have against the Company, the Company agrees that within
30 days after the Termination Date and subject to the
conditions to payment set forth herein, it will (i) pay
Employee an amount equal to 12 months of his base salary in a
lump sum of $445,788.00 (which equals $595,788.00 less the $150,000
loan from the Company to Employee that is due upon his separation
from employment), less applicable deductions; (ii) pay
Employee the additional sum of $282,999.30 (which is an amount
equal to 50% of his target bonus for the 2006 performance year);
(iii) pay out Employee’s 2005 and 2006 HOT feature in
respect to unvested benefits allocated to Employee under the
Company’s Annual Incentive Plan as follows: (a) cash in
an amount equal to $101,506, which represents one-half of the
initial Hot Deduction of $203,012 made on March 1, 2005 (with
the remaining one-half having been paid out in vested Units on
March 1, 2006) and (b) cash in an amount equal to
$210,889, which represents the Hot Deduction made on March 1,
2006 ; (iv) make COBRA premium payments on
Employee’s behalf, minus Employee’s normal
contributions, for a period of 12 months should Employee choose to
continue coverage under the Company’s applicable plans after
the Termination Date; and (v) accelerate the vesting of 100%
of Employee’s currently unvested options. The vesting of
Employee’s unvested restricted stock will not be accelerated,
and such stock will continue to vest in accordance with the award
agreements covering each grant subject to Employee’s
compliance with the non competition provisions set forth in
Section 17 below; provided that the vesting of such restricted
stock shall not be accelerated upon a Change in Control (as defined
in the Company’s 2004 Long Term Incentive Compensation Plan)
of the Company, and provided further that in the event that a
Change in Control of the Company which results in the Company no
longer having a class of common equity securities traded on a
national securities exchange or quoted on an inter-dealer quotation
system is consummated prior to any payment date above, Employee
shall be entitled to receive the highest amount paid per share in
such Change in Control transaction for each share of restricted
stock on the applicable vesting date.
Notwithstanding the foregoing, Employee will not be eligible to
participate and expressly and knowingly waives any right to
participate in any employee benefit plans (except health and life
insurance plans) within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended,
(“ERISA”) or any other plan, policy or arrangement of
the Company, including, but not limited to, any plan, policy or
arrangement relating to bonuses, profit sharing, compensation,
pension, severance, deferred compensation, fringe benefits,
insurance, welfare, post-retirement, stock purchases, disability,
accidents, sick time, vacation pay, termination, unemployment,
executive compensation, incentives, commissions or sales
arrangements, change in control, and other plan, agreement, policy,
or arrangement (whether written or unwritten), such as the Annual
Incentive Plan; the Long Term Incentive Compensation Plan; and the
Employee Stock Purchase Plan; nor will he be eligible to receive
any incentives, bonuses, further option or stock grants under such
plans, provided that any benefits under any employee benefit plans
that have vested prior to the Termination Date shall be payable to
Employee in accordance with the terms of the plan(s).
Employee will not be entitled to any of the severance payments
or benefits set forth in Paragraph TWO or any other consideration
under this Agreement until after the later of all of the following:
(i) receipt by the Company of this Agreement signed by
Employee; (ii) receipt by the Company within 21 days of
the Termination Date of the Release annexed hereto as
Appendix B signed by Employee; (iii) expiration of the
revocation period set forth in numbered Paragraph EIGHT,
without Employee revoking this Agreement; and (iv) expiration
of the revocation period set forth in the Release annexed hereto as
Exhibit B signed by Employee, without Employee revoking such
Release.
THREE : Mutual General
Release .
In exchange for the agreement to provide the severance pay and
other benefits and arrangements provided for in this Agreement,
Employee understands that he is waiving any and all claims Employee
may have against the Company and its affiliates and subsidiaries
and its and their officers, directors, employees, agents,
shareholders, employee benefit programs, administrators, insurers,
attorneys and successors and assigns (collectively
“Releasees”), from any and all claims, actions, suits,
damages, complaints and grievances Employee, his attorneys, heirs,
dependents, beneficiaries, executors, administrators, successors,
and assigns, may have up to the date hereof related to
Employee’s employment with the Company or the termination of
that employment. This includes a release of any rights or claims
Employee may have under the Age Discrimination in Employment
Act , which prohibits discrimination in employment based on
age; Title VII of the Civil Rights Act of 1964, as amended, and the
Civil Rights Act of 1991, which prohibit discrimination in
employment based on race, color, national origin, ancestry,
religion or sex; the Pregnancy Discrimination Act, which prohibits
discrimination based on pregnancy; the Equal Pay Act, which
prohibits paying men and women unequal pay for equal work; the
Civil Rights Acts of 1866 and 1871, as amended, which protect
against certain discrimination and violations of individuals’
civil rights; the Americans with Disabilities Act, which prohibits
discrimination on the basis of physical or mental disability; the
Employee Retirement Income Security Act (ERISA), which regulates
certain conduct and practices relating to employee benefit and
health plans; the Family and Medical Leave Act, which provides time
off to employees for certain family and medical events and
prohibits discrimination relating to such leaves of absence; the
Immigration Reform and Control Act, which prohibits discrimination
based upon an individual’s national origin citizenship status
and/or work authorization documents; the New York State Executive
Law, the New York City Administrative Code, and the New York State
Constitution; or any other federal, state or local laws or
regulations prohibiting employment discrimination or regulating
employment or termination of employment. This also includes a
release by Employee of any claims for wrongful discharge and any
other common law claims. This release applies to all claims through
the date of execution of this Agreement and covers both claims that
Employee knows about and those he may not know about but excludes
(i) any claim by Employee to enforce the terms of this
Agreement; and (ii) any claim to enforce Employee’s
defense and/or indemnification rights; and (iii) any claims
related to actions or omissions occurring after the execution of
this Agreement.
In consideration of Employee’s agreements hereunder, the
Company, on its own behalf and on behalf of its current and former
affiliates or related companies, subsidiaries, branches and
divisions, and the successors and assigns of all of the foregoing
(collectively, the “Company Releasor”) hereby releases
Employee and Employee’s heirs, executors, administrators,
successors and assigns from or in connection with any and all
actions, claims or demands, known or unknown and of any nature
whatsoever and which Company Releasor ever had, now has or
hereafter can, shall or may have as of the date hereof relating to
Employee’s employment with the Company, except that this
Release shall not apply to (i) any obligation of Employee
pursuant to this Agreement ; (ii) any act by Employee
during
