Wyndham Worldwide (WYN)

Employment Agreements and Other Arrangements

Mr. Holmes. We have entered into an employment agreement, to be effective as of the date of the distribution, with Stephen P. Holmes, who will serve as Chairman of our Board and Chief Executive Officer. Such employment agreement will have a term ending on the third anniversary of the distribution; provided, that such term will automatically extend for one additional year at the end of the initial three-year term, unless we or Mr. Holmes provide notice to the other party of non-renewal at least six months prior to such third anniversary. Pursuant to our by-laws, our Board of Directors may terminate Mr. Holmes’ employment at any time. Upon expiration of the employment agreement, Mr. Holmes will be an employee at will unless the agreement is renewed or a new agreement is executed. In addition to providing for a minimum base salary of $1 million and employee benefit plans generally available to our executive officers, Mr. Holmes’ agreement provides for an annual incentive award with a target amount equal to 200% of his base salary, subject to attainment of performance goals, and grants of long-term incentive awards, upon such terms and conditions as determined by our Board of Directors or Compensation Committee.

In addition, Mr. Holmes will be granted two equity incentive awards relating to our common stock. One of these awards will be in the form of stock-settled stock appreciation rights with a per share exercise price equal to the value of a share of our common stock as of the date of grant (the closing price on the first day of trading following the date of our distribution), will have a value on the date of grant of $2.5 million, and will vest in equal installments on each of the first four anniversaries of May 2, 2006, subject to Mr. Holmes’ continued employment with us through such vesting dates. The other of these awards will be in the form of restricted stock units, will have a value on the grant date of $2.5 million and will vest in equal installments on each of the first four anniversaries of May 2, 2006, subject to Mr. Holmes’ continued employment with us through each such vesting date. Upon a Change-of-Control Transaction (as defined in our 2006 Equity and Incentive Plan), these equity grants will become immediately and fully vested.

Mr. Holmes’ agreement provides that if his employment with us is terminated by us without “cause” or due to a “constructive discharge” (each term as defined in Mr. Holmes’ agreement), he will be entitled to a lump sum payment equal to 299% of the sum of his then-current base salary plus his then-current target annual bonus. In addition, in this event, all of Mr. Holmes’ then-outstanding equity awards from us will become fully vested (and any of our stock options and stock appreciation rights granted on or after the distribution date will remain exercisable until the earlier of three years following his termination of employment and the original expiration date of such awards). Options granted prior to the distribution will remain exercisable in accordance with Mr. Holmes’ prior agreement with Cendant. Mr. Holmes’ employment agreement provides him and his dependents with medical benefits through his age 75. The employment agreement provides Mr. Holmes with the right to claim a constructive discharge if, among other things, (i) he is not our Chief Executive Officer and our most senior executive officer, (ii) he does not report directly to our Board, (iii) a “corporate transaction” (as defined in Mr. Holmes’ employment agreement) has occurred, (iv) we notify Mr. Holmes that we will not extend the term of the employment agreement for an additional fourth year, (v) following the expiration of the employment agreement, we do not offer to extend the agreement for no less than two years and no more than four years on substantially similar terms, or (vi) we fail to nominate Mr. Holmes to be a member of our Board. Mr. Holmes’ agreement provides for post-termination non-competition and non-solicitation covenants which will last for two years following Mr. Holmes’ employment with us, subject to certain exceptions.

We expect to enter into employment agreements with one or more of our other Named Executive Officers, which will become effective as of the date of the distribution or thereafter. The agreements are expected to set forth the base salary, bonus opportunities and initial equity awards to be provided to each of these officers, in addition to other matters.

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