Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is dated as of the Effective Date (as
hereinafter defined), by and between Wyndham Worldwide Corporation, a Delaware
corporation (the “Company”) and Steven A. Rudnitsky (the “Executive”).

WHEREAS, Cendant Corporation (“Cendant”) has determined to distribute all of the
common stock of the Company directly to its stockholders pursuant to a pro rata
dividend (the “Transaction”); and

WHEREAS, the Company desires to employ the Executive, and the Executive desires
to serve the Company, in accordance with the terms and conditions of this
Agreement.

NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

SECTION I

EFFECTIVENESS

Subject to and upon the consummation of the Transaction (the “Effective Date”),
(i) the Executive shall be an employee of the Company, shall no longer be an
employee of Cendant, and all agreements between the Executive and Cendant
pertaining to his employment with Cendant and the terms thereof shall terminate
and be of no further force or effect and (ii) this Agreement shall become
effective.

SECTION II

EMPLOYMENT; POSITION AND RESPONSIBILITIES

The Company agrees to employ the Executive, and the Executive agrees to be
employed by the Company, for the Period of Employment as provided in Section III
below and upon the terms and conditions provided in this Agreement. During the
Period of Employment, the Executive shall serve as, Chief Executive Officer of
the Company’s Lodging Franchise Business. The Executive shall report to, and be
subject to the direction of, the Chief Executive Officer of the Company (the
“Supervising Officer”). The Executive shall perform such duties and exercise
such supervision with regard to the business of the Company as are associated
with his respective positions, as well as such reasonable additional duties as
may be prescribed from

 

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time to time by the Supervising Officer. The Executive shall, during the Period
of Employment, devote substantially all of his time and attention during normal
business hours to the performance of services for the Company. The Executive
shall maintain a primary office and conduct his business in Parsippany, New
Jersey (the “Business Office”), except for normal and reasonable business travel
in connection with his duties hereunder.

SECTION III

PERIOD OF EMPLOYMENT

The period of the Executive’s employment under this Agreement (the “Period of
Employment”) shall begin on the Effective Date and shall end on the third
anniversary of the Effective Date, subject to earlier termination as provided in
this Agreement. No later than 180 days prior to the expiration of the Period of
Employment, the Company and the Executive will commence a good faith negotiation
regarding extending the Period of Employment; provided, that, neither party
hereto shall have any obligation hereunder or otherwise to consummate any such
extension or any new agreement relating to the Executive’s employment with the
Company.

SECTION IV

COMPENSATION AND BENEFITS

For all services rendered by the Executive pursuant to this Agreement during the
Period of Employment, including services as an executive officer, director or
committee member of the Company or any subsidiary or affiliate of the Company,
the Executive shall be compensated as follows:

(a)    Base Salary

The Company shall initially pay the Executive a fixed base salary (“Base
Salary”) of not less than $500,000, per annum, and thereafter the Executive
shall be eligible to receive annual increases as the Company deems appropriate,
in accordance with its customary procedures regarding salaries of senior
officers. Base Salary shall be payable according to the customary payroll
practices of the Company, but in no event less frequently than once each month.

(b)    Annual Incentive Awards

The Executive will be eligible for discretionary annual incentive compensation
awards; provided, that the Executive will be eligible to earn an annual

 

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bonus for each fiscal year of the Company during the Period of Employment based
upon a target bonus equal to 100% of Base Salary earned during each such year,
subject to the Company’s attainment of applicable performance targets
established and certified by the Compensation Committee (the “Committee”) of the
Company’s Board of Directors, including, if approved by the Committee,
performance and bonus targets relating to the attainment of above-target
performance (each such annual bonus, an “Incentive Compensation Award”). The
Executive’s bonus targets relating to Incentive Compensation Awards will be
established by the Company based upon financial performance targets
substantially equivalent to those applicable to other comparable senior
executive officers (excluding the Supervising Officer).

(c)    Long-Term Incentive Awards

Upon the Effective Date, the Company shall grant the Executive one or more
long-term incentive equity awards with an aggregate grant date value equal to $3
million (the “Initial Grant”). The Initial Grant shall vest as determined by the
Company, including with respect to any performance-based conditions applicable
to vesting, in its sole and absolute discretion, and shall be subject to the
terms and conditions of the Company’s 2006 Equity and Incentive Plan and the
applicable agreement evidencing such award as determined by the Company.
Thereafter, the Executive shall be eligible for long term incentive awards as
determined by the Company, and the Executive will participate in such grants at
a target compensation level commensurate with his position as a senior executive
officer of the Company. For purposes of this Agreement, awards described in this
paragraph are referred to as “Long Term Incentive Awards.”

(d)    Additional Benefits

The Executive shall be entitled to participate in all other compensation and
employee benefit plans or programs and receive all benefits and perquisites for
which salaried employees of the Company generally are eligible under any plan or
program now in effect, or later established by the Company, on the same basis as
most similarly situated senior executives of the Company with comparable duties
and responsibilities. The Executive shall participate to the extent permissible
under the terms and provisions of such plans or programs, and in accordance with
the terms of such plans and program.

 

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SECTION V

BUSINESS EXPENSES

The Company shall reimburse the Executive for all reasonable travel and other
expenses incurred by the Executive in connection with the performance of his
duties and obligations under this Agreement. The Executive shall comply with
such limitations and reporting requirements with respect to expenses as may be
established by the Company from time to time for its executive officers and
shall promptly provide all appropriate and requested documentation in connection
with such expenses.

SECTION VI

DEATH AND DISABILITY

The Period of Employment shall end upon the Executive’s death. If the Executive
becomes Disabled (as defined below) during the Period of Employment, the Period
of Employment may be terminated at the option of the Executive upon notice of
resignation to the Company, or at the option of the Company upon notice of
termination to the Executive. For purposes of this Agreement, “Disability” shall
have the meaning set forth in Section 409A (“Code Section 409A”) of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder. The Company’s obligation to make payments to the Executive under
this Agreement shall cease as of such date of termination, except for Base
Salary and any Incentive Compensation Awards earned but unpaid as of the date of
such termination. Notwithstanding the foregoing, the Company will not take any
action in respect of the Executive’s employment status pursuant to this
paragraph that will cause the Executive to lose eligibility under any
then-existing disability insurance benefit plan sponsored by the Company.

SECTION VII

EFFECT OF TERMINATION OF EMPLOYMENT

(a)    Without Cause Termination and Constructive Discharge. If the Executive’s
employment terminates during the Period of Employment due to either a Without
Cause Termination or a Constructive Discharge (each as defined below): the
Company shall pay the Executive (or his surviving spouse, estate or personal
representative, as applicable), in accordance with paragraph (d) below, an
amount equal to 200% multiplied by the sum of (A) the Executive’s then current
Base Salary, plus (B) the Executive’s then current target Incentive Compensation
Award. In addition,

 

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upon such event, all Long Term Incentive Awards granted on or after the
Effective Date which would have otherwise vested within one year following the
Executive’s termination of employment, will become vested upon the Executive’s
termination of employment, and any such awards which are stock options or stock
appreciation rights will remain outstanding for a period of two years (but not
beyond the original expiration date) following the Executive’s termination of
employment. For purposes of the preceding sentence only, with respect to any
awards that vest pursuant to performance criteria measured over a multi-year
period, with no interim vesting dates, such awards will instead be viewed as
awards which vest in equal pro rata installments on each respective anniversary
of the grant date, and accordingly, upon such termination event, such award will
become vested with respect to shares which would otherwise vested prior to such
termination date and within one year following such termination date; provided,
however, that the vesting of such awards shall not occur unless and until the
Company determines that all applicable performance goals have been attained (and
the Executive will receive such vesting at the same time, and on the same basis,
as other executive officers who are subject to the same performance goals). The
provisions relating to Long Term Incentive Awards set forth in this paragraph
shall not supersede or replace any provision or right of the Executive relating
to the acceleration of the vesting of such awards in the event of a change in
control of the Company or the Executive’s death or disability, whether pursuant
to an applicable stock plan document or award agreement.

(b)    Termination for Cause; Resignation. If the Executive’s employment
terminates due to a Termination for Cause or a Resignation, Base Salary and any
Incentive Compensation Awards earned but unpaid as of the date of such
termination shall be paid to the Executive in accordance with paragraph
(d) below. Outstanding stock options and other equity awards held by the
Executive as of the date of termination shall be treated in accordance with
their terms (except as provided in paragraph (a) above).

(c)    For purposes of this Agreement, the following terms have the following
meanings:

i.    “Termination for Cause” means (a) the Executive’s willful failure to
substantially perform his duties as an employee of the Company or any subsidiary
(other than any such failure resulting from incapacity due to physical or mental
illness), (b) any act of fraud, misappropriation, dishonesty, embezzlement or
similar conduct against the Company or any subsidiary, (c) the Executive’s
conviction of a felony or any crime involving moral turpitude (which conviction,
due to the passage of time or otherwise, is not subject to further appeal),
(d) the Executive’s

 

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gross negligence in the performance of his duties or (e) the Executive
purposefully or negligently makes (or has been found to have made) a false
certification to the Company pertaining to its financial statements. Unless the
Company reasonably determines in its sole discretion that the Executive’s
conduct is not subject to cure, then the Company will provide notice to the
Executive of its intention to terminate the Executive’s employment for Cause
hereunder, along with a description of the Executive’s conduct which the Company
believes gives rise to Cause, and provide the Executive with a period of 15 days
to cure such conduct and/or challenge the Company’s determination that Cause
exists hereunder; provided, however, that (i) the determination of whether such
conduct has been cured and/or gives rise to Cause shall be made by the Company
in its sole discretion and (ii) the Company shall be entitled to immediately and
unilaterally restrict or suspend the Executive’s duties during such 15 day
period pending such determination.

ii.    “Constructive Discharge” means (a) any material failure of the Company to
fulfill its obligations under this Agreement (including without limitation any
reduction of the Base Salary, as the same may be increased during the Period of
Employment, or other element of compensation), (b) the Business Office is
relocated to any location which is more than 30 miles from the city limits of
Parsippany, New Jersey or (c) any of a material diminution of the Executive’s
duties, authority, title or responsibilities or the Executive does not report to
the Chief Executive Officer of the Company at any time. The Executive shall
provide the Company a written notice which describes the circumstances being
relied on for the termination with respect to this Agreement within thirty
(30) days after an event giving rise to the notice. The Company shall have
thirty (30) days after receipt of such notice to remedy the situation prior to
the termination for Constructive Discharge.

iii.    “Without Cause Termination” or “Terminated Without Cause” means
termination of the Executive’s employment by the Company other than due to
death, disability, or Termination for Cause.

iv.    “Resignation” means a termination of the Executive’s employment by the
Executive, other than in connection with a Constructive Discharge.

(d)    Conditions to Payment and Acceleration. All payments due to the Executive
under this Section VII shall be made as soon as practicable, but in no event
earlier (or later) than the date permitted under Section 409A of the Code, to
the extent such payment is subject to Section 409A of the Code; provided,
however, that such payments shall be subject to, and contingent upon, the
execution by the Executive (or his beneficiary or estate) of a release of claims
against the Company and its

 

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affiliates in such reasonable form determined by the Company in its sole
discretion. The payments due to the Executive under this Section VII shall be in
lieu of any other severance benefits otherwise payable to the Executive under
any severance plan of the Company or its affiliates.

SECTION VIII

OTHER DUTIES OF THE EXECUTIVE

DURING AND AFTER THE PERIOD OF EMPLOYMENT

(a)    The Executive shall, with reasonable notice during or after the Period of
Employment, furnish information as may be in his possession and fully cooperate
with the Company and its affiliates as may be requested in connection with any
claims or legal action in which the Company or any of its affiliates is or may
become a party. After the Period of Employment, the Executive shall cooperate as
reasonably requested with the Company and its affiliates in connection with any
claims or legal actions in which the Company or any of its affiliates is or may
become a party. The Company agrees to reimburse the Executive for any reasonable
out-of-pocket expenses incurred by Executive by reason of such cooperation,
including any loss of salary, and the Company shall make reasonable efforts to
minimize interruption of the Executive’s life in connection with his cooperation
in such matters as provided for in this paragraph.

(b)    The Executive recognizes and acknowledges that all information pertaining
to this Agreement or to the affairs; business; results of operations; accounting
methods, practices and procedures; members; acquisition candidates; financial
condition; clients; customers or other relationships of the Company or any of
its affiliates (“Information”) is confidential and is a unique and valuable
asset of the Company or any of its affiliates. Access to and knowledge of
certain of the Information is essential to the performance of the Executive’s
duties under this Agreement. The Executive shall not during the Period of
Employment or thereafter, except to the extent reasonably necessary in
performance of his duties under this Agreement, give to any person, firm,
association, corporation, or governmental agency any Information, except as may
be required by law. The Executive shall not make use of the Information for his
own purposes or for the benefit of any person or organization other than the
Company or any of its affiliates. The Executive shall also use his best efforts
to prevent the disclosure of this Information by others. All records, memoranda,
etc. relating to the business of the Company or its affiliates, whether made by
the Executive or otherwise coming into his possession, are confidential and
shall remain the property of the Company or its affiliates.

 

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(c)    (i)    During the Period of Employment and the Post Employment Period (as
defined below and together with the Period of Employment, the “Restricted
Period”), irrespective of the cause, manner or time of any termination, the
Executive shall not use his status with the Company or any of its affiliates to
obtain loans, goods or services from another organization on terms that would
not be available to him in the absence of his relationship to the Company or any
of its affiliates.

(ii)    During the Restricted Period, the Executive shall not make any
statements or perform any acts intended to or which may have the effect of
advancing the interest of any existing or prospective competitors of the Company
or any of its affiliates or in any way injuring the interests of the Company or
any of its affiliates. During the Restricted Period, the Executive, without
prior express written approval by the Board, shall not engage in, or directly or
indirectly (whether for compensation or otherwise) own or hold proprietary
interest in, manage, operate, or control, or join or participate in the
ownership, management, operation or control of, or furnish any capital to or be
connected in any manner with, any party which competes in any way or manner with
the Company’s lodging business, as such business or businesses may be conducted
from time to time, either as a general or limited partner, proprietor, common or
preferred shareholder, officer, director, agent, employee, consultant, trustee,
affiliate, or otherwise. The Executive acknowledges that the Company’s and its
affiliates’ businesses are conducted nationally and internationally and agrees
that the provisions in the foregoing sentence shall operate throughout the
United States and the world. Notwithstanding the foregoing, during the
Restricted Period (but not during the Period of Employment), the Executive may
make an equity investment in no more than two hotel or resort properties with
respect to which either (a) the Executive will not have beneficial ownership of
more than 4.9% of the total equity or (b) subject to the approval of the Board,
which approval will not be unreasonably withheld, the Executive may own 100% of
the total equity; provided, that such hotels are not affiliated with a
competitive franchise system or otherwise do not cause a material reduction to
the revenues of any member of the Company’s franchise system by virtue of the
geographic proximity of such hotels.

(iii)    During the Restricted Period, the Executive, without express prior
written approval from the Board, shall not solicit any then-current clients of
the Company or any of its affiliates for any existing business of the Company or
any of its affiliates or discuss with any employee of the Company or any of its
affiliates information or operation of any business intended to compete with the
Company or any of its affiliates.

 

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(iv)    During the Restricted Period, the Executive shall not interfere with the
employees or affairs of the Company or any of its affiliates or solicit or
induce any person who is an employee of the Company or any of its affiliates to
terminate any relationship such person may have with the Company or any of its
affiliates, nor shall the Executive during such period directly or indirectly
engage, employ or compensate, or cause or permit any person with which the
Executive may be affiliated, to engage, employ or compensate, any employee of
the Company or any of its affiliates. The Executive hereby represents and
warrants that the Executive has not entered into any agreement, understanding or
arrangement with any employee of the Company or any of its affiliates pertaining
to any business in which the Executive has participated or plans to participate,
or to the employment, engagement or compensation of any such employee.

(v)    For the purposes of this Agreement, proprietary interest means legal or
equitable ownership, whether through stock holding or otherwise, of an equity
interest in a business, firm or entity or ownership of more than 5% of any class
of equity interest in a publicly-held company, the term “affiliate” shall
include without limitation all subsidiaries and licensees of the Company and the
term “Post Employment Period” shall mean either (1) if the Executive’s
employment terminates for any reason at such time following the expiration of
the Period of Employment hereunder, a period of one year following the
Executive’s termination of employment or (2) if the Executive’s employment
terminates during the Period of Employment hereunder, a period of two years
following the Executive’s termination of employment.

(d)    The Executive hereby acknowledges that damages at law may be an
insufficient remedy to the Company if the Executive violates the terms of this
Agreement and that the Company shall be entitled, upon making the requisite
showing, to preliminary and/or permanent injunctive relief in any court of
competent jurisdiction to restrain the breach of or otherwise to specifically
enforce any of the covenants contained in this Section VIII without the
necessity of showing any actual damage or that monetary damages would not
provide an adequate remedy. Such right to an injunction shall be in addition to,
and not in limitation of, any other rights or remedies the Company may have.
Without limiting the generality of the foregoing, neither party shall oppose any
motion the other party may make for any expedited discovery or hearing in
connection with any alleged breach of this Section VIII.

(e)    The period of time during which the provisions of this Section VIII shall
be in effect shall be extended by the length of time during which the Executive

 

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is in breach of the terms hereof as determined by any court of competent
jurisdiction on the Company’s application for injunctive relief.

(f)    The Executive agrees that the restrictions contained in this Section VIII
are an essential element of the compensation the Executive is granted hereunder
and but for the Executive’s agreement to comply with such restrictions, the
Company would not have entered into this Agreement.

SECTION IX

INDEMNIFICATION

The Company shall indemnify the Executive to the fullest extent permitted by the
laws of the state of the Company’s incorporation in effect at that time, or the
certificate of incorporation and by-laws of the Company, whichever affords the
greater protection to the Executive (including payment of expenses in advance of
final disposition of a proceeding).

SECTION X

MITIGATION

The Executive shall not be required to mitigate the amount of any payment
provided for hereunder by seeking other employment or otherwise, nor shall the
amount of any such payment be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date the
Executive’s employment hereunder terminates.

SECTION XI

WITHHOLDING TAXES

The Executive acknowledges and agrees that the Company may directly or
indirectly withhold from applicable payments under this Agreement all federal,
state, city or other taxes that shall be required pursuant to any law or
governmental regulation.

 

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SECTION XII

EFFECT OF PRIOR AGREEMENTS

This Agreement shall supersede any prior agreements between Cendant, the
Company, and the Executive relating to the terms of the Executive’s employment,
and any such prior agreement shall be deemed terminated without any remaining
obligations of either party thereunder (excluding agreements relating to
incentive compensation and outstanding equity awards which explicitly survive).

SECTION XIII

CONSOLIDATION, MERGER OR SALE OF ASSETS

Nothing in this Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or sale
of assets the term “the Company” shall mean the other corporation and this
Agreement shall continue in full force and effect.

SECTION XIV

MODIFICATION

This Agreement may not be modified or amended except in writing signed by the
parties. No term or condition of this Agreement shall be deemed to have been
waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver for the future or act on anything other than that which is
specifically waived.

SECTION XV

GOVERNING LAW

This Agreement has been executed and delivered in the State of New Jersey and
its validity, interpretation, performance and enforcement shall be governed by
the internal laws of that state.

 

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SECTION XVI

ARBITRATION

(a)    Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach hereof which cannot be settled by mutual agreement
(other than with respect to the matters covered by Section VIII for which the
Company may, but shall not be required to, seek injunctive relief) shall be
finally settled by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state arbitration law) as
follows: Any party who is aggrieved shall deliver a notice to the other party
setting forth the specific points in dispute. Any points remaining in dispute
twenty (20) days after the giving of such notice may be submitted to arbitration
in New York, New York, to the American Arbitration Association, before a single
arbitrator appointed in accordance with the arbitration rules of the American
Arbitration Association, modified only as herein expressly provided. After the
aforesaid twenty (20) days, either party, upon ten (10) days notice to the
other, may so submit the points in dispute to arbitration. The arbitrator may
enter a default decision against any party who fails to participate in the
arbitration proceedings.

(b)    The decision of the arbitrator on the points in dispute shall be final,
unappealable and binding, and judgment on the award may be entered in any court
having jurisdiction thereof.

(c)    Except as otherwise provided in this Agreement, the arbitrator shall be
authorized to apportion its fees and expenses and the reasonable attorneys’ fees
and expenses of any such party as the arbitrator deems appropriate. In the
absence of any such apportionment, the fees and expenses of the arbitrator shall
be borne equally by each party, and each party shall bear the fees and expenses
of its own attorney.

(d)    The parties agree that this Section XVII has been included to rapidly and
inexpensively resolve any disputes between them with respect to this Agreement,
and that this Section XVII shall be grounds for dismissal of any court action
commenced by either party with respect to this Agreement, other than
post-arbitration actions seeking to enforce an arbitration award. In the event
that any court determines that this arbitration procedure is not binding, or
otherwise allows any litigation regarding a dispute, claim, or controversy
covered by this Agreement to proceed, the parties hereto hereby waive any and
all right to a trial by jury in or with respect to such litigation.

 

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(e)    The parties shall keep confidential, and shall not disclose to any
person, except as may be required by law, the existence of any controversy
hereunder, the referral of any such controversy to arbitration or the status or
resolution thereof.

SECTION XVII

SURVIVAL

Sections VIII, IX, X, XI and XII shall continue in full force in accordance with
their respective terms notwithstanding any termination of the Period of
Employment.

SECTION XIII

SEPARABILITY

All provisions of this Agreement are intended to be severable. In the event any
provision or restriction contained herein is held to be invalid or unenforceable
in any respect, in whole or in part, such finding shall in no way affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that any such invalid or unenforceable provision shall be
deemed modified so that it shall be enforced to the greatest extent permissible
under law, and to the extent that any court of competent jurisdiction determines
any restriction herein to be unreasonable in any respect, such court may limit
this Agreement to render it reasonable in the light of the circumstances in
which it was entered into and specifically enforce this Agreement as limited.

*****

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

 

WYNDHAM WORLDWIDE CORPORATION /s/ Stephen P. Holmes By:     Stephen P. Holmes

Title:  Chief Executive Officer

 

STEVEN A. RUDNITSKY /s/ Steven A. Rudnitsky

 

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