EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into as an agreed upon date (the “Effective Date”), by and between Travelzoo Inc., a Delaware corporation (the “Company”) with principal corporate offices at 590 Madison Avenue, 37th Floor, New York, NY 10022, and Glen Ceremony, whose address is currently                                                                          (“Employee”).  The Company and Employee are at certain times each referred to herein as a “Party”, and collectively referred to herein as “the Parties.”

WHEREAS, the Company desires to employ Employee as Chief Financial Officer, and Employee desires to perform such service for the Company, on the terms and conditions as set forth herein;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is mutually agreed by the Parties as follows:

1.    Duties and Scope of Employment .

(a)       Position .  Employee shall be employed as Chief Financial Officer. 

(b)       Duties .  During the term of Employee’s employment with the Company, Employee shall devote his full time, skill and attention to his duties and responsibilities as the Chief Financial Officer, which Employee shall perform faithfully, diligently and competently, and Employee shall use his best efforts to further the business of the Company.  During the term of the Agreement, Employee agrees not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Company, except that this provision shall not be interpreted to prohibit Employee from involvement in any charitable or community activity/organization that he is currently involved in, or may become involved in, and that does not materially interfere with his ability to perform his duties under this Agreement.  Employee shall be permitted, to the extent such activities do not materially and adversely affect the ability of Employee to fully perform his duties and responsibilities hereunder, to (i) manage Employee’s personal, financial and legal affairs, (ii) serve on civic or charitable boards or committees, and (iii) with the consent of the Company (which consent shall not be unreasonably withheld), serve as a member of the board of directors or as an advisor of any noncompeting business.

2.         Term of Employment .  Subject to the provisions of this Section 2, Employee and the Company retain the right to terminate this Agreement at any time, for any reason or no reason, and with or without Cause (as hereinafter defined), and with or without notice.  Nothing in this Agreement shall be deemed to alter the at-will nature of Employee’s employment with the Company, and the at-will nature of Executive’s employment shall not otherwise be modified except in a writing signed by both Employee and the Chairman of the Board of Directors.  Notwithstanding the foregoing, the provisions of Section 5, 6 and 11 of the Agreement shall survive, and continue in full force and effect, after any termination or expiration of this Agreement, irrespective of the reason for the termination or any claim that the termination was wrongful or illegal.

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(a)       Termination by Company without Cause .  If Employee is terminated by the Company without Cause, Employee shall receive his Base Salary and Benefits for a period of six (6) months (“Severance Pay”) in equal installments on the dates on which the Employee’s Base Salary would otherwise have been paid if Executive’s employment had continued for such period, with such installments paid in accordance with the Company’s normal payroll dates in effect on the date of such termination of employment.  Such Severance Pay shall be subject to Section 2(e) as a condition precedent to payment of any Severance Pay. 

(b)       Termination for Cause .  Notwithstanding any provision of this Agreement to the contrary, if Employee is terminated for “Cause” as defined herein or dies at any time, Employee will receive only payment of his Base Salary and benefits through the date of termination or death.  For purposes of this Agreement, “Cause” shall mean that the Employee has (i) continually failed to perform his duties under this Agreement for a period of thirty (30) days after written notice from the Company setting forth with particularity such failure, (ii) committed an act of fraud upon the Company or breached his duty of loyalty to the Company, (iii) committed a felony or a crime of dishonesty, fraud or moral turpitude under the laws of the United States or any state thereof; (iv) misappropriated any funds, property or rights of the Company; (v) violated the Company’s policies regarding workplace conduct, discrimination, sexual harassment, etc.; (vi) willfully failed or refused, following receipt of an explicit directive from the Company, to comply with the material terms of this Agreement; or (vii) failed or refused to cooperate with the Company, or at the Company’s request any governmental, regulatory or self-regulatory agency or entity, in providing information with respect to any act or omission in performing his duties as an employee of the Company, if such request is made connection with any criminal or civil actions, administrative or regulatory proceedings or investigations against or relating to the Company by any governmental, regulatory or self-regulatory agency or entity.

(c)       Termination of Employee following a “Change of Control” .  If a Change of Control, as hereinafter defined, occurs, and Employee is not offered a position of comparable pay and responsibilities within thirty (30) days of the Change of Control in the same geographic area in which he worked immediately prior to a Change of Control, and Employee resigns within sixty (60) days after the Change in Control, Employee shall receive his Base Salary for a period of six (6) months (“Severance Pay”), benefits, and pro rata performance bonus pursuant to paragraph 3(b) earned through the date of termination.  Any such Severance Pay shall be paid in equal installments on the dates on which the Employee’s Base Salary would otherwise have been paid if Executive’s employment had continued for such period, with such installments paid in accordance with the Company’s normal payroll dates in effect on the date of such termination of employment.  Any payments and benefits payable pursuant to this Section 2(e) shall be be subject to Section 2(e) as a condition precedent.  For purposes of this Agreement, "Change of Control" means (i) a merger, consolidation, reorganization or other transaction in which the Company does not survive and in which securities possessing more than 50% of the total combined voting power of the Company's outstanding voting securities are transferred or issued to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) the sale, transfer or other disposition of all or substantially all of the Company's assets

(d)       Employee Resignation .  Employee understands that if he resigns during the Term of this Agreement he must give three months’ notice.  He shall only receive the Base Salary and benefits earned as of the date of termination. 

(e)        Severance Pay Conditions .  Employee shall be required to sign, deliver and not revoke a General Release substantially in the form attached hereto as Exhibit A by no later than sixty (60) days following the Employee’s termination of employment as a condition precedent to payment of any amounts or benefits payable pursuant to any provision of Section 2 of this Agreement.  Any such payments or benefits shall begin as soon as practicable following the effective date of such release, provided that if the sixty (60) day period following the date of the Employee’s termination of employment spans two calendar years, any such payments shall begin no earlier than the first day of such second calendar year regardless of the effective date of such release.  Any Severance Pay or other separation pay and benefits shall be subject to the usual and applicable required withholdings and payroll taxes.

            (f)         Code Section 409A Compliance .  Notwithstanding anything herein to the contrary, in the event that the Employee is determined to be a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986 as amended, and the regulations and other guidance promulgated thereunder (“Code Section 409A”), for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, no earlier than the first payroll date which is more than six months following the date of separation from service, but only to the extent required to avoid any adverse tax consequences to the Employee under Code Section 409A.  For purposes of this Agreement, a termination of employment shall only be deemed to occur if such termination of employment constitutes a “separation from service” within the meaning of Code Section 409A.  For purposes of Code Section 409A, the right to Severance Pay hereunder shall be treated as a right to a series of separate payments.

3.   Compensation and Fringe Benefits .

(a)               Base Salary .  Effective June 1 ^st , 2011, Employee will receive a salary at the annualized rate of $450,000 (Four Hundred and Fifty Thousand Dollar) (the “Salary”) annualized, which shall be paid periodically in accordance with normal Company payroll practices and subject to the usual and applicable required withholdings.  Employee understands and agrees that neither his job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of this Agreement.

(b)               Performance Bonus .   Employee will be eligible to participate in a quarterly Performance Bonus plan (“Performance Bonus”), under which Employee may receive, in addition to his Salary, a bonus in an amount between zero and $37,500 per calendar quarter.  Employee must be employed by the Company through the last day of the quarter in order to receive any Performance Bonus attributable to such quarter with the following exceptions:  the bonus for such quarter shall be prorated only if the last calendar quarter is less than a full quarter because Employee’s employment is terminated without Cause under Section 2(a).

The following schedule applies for calculating a bonus.

“Significant Customer” means, for any quarter, a customer that, together with its affiliates, accounts for 10% (rounded to the nearest 1%) or more of the Company’s worldwide consolidated revenue for the quarter.

The Company’s Chief Executive Officer will determine if the criteria are met.

The Company shall notify Employee of any changes to the Performance Bonus in writing.

Any bonus payments, if applicable, shall be made no more than 60 days of the end of the calendar quarter, and will be subject to the usual and applicable withholding and payroll taxes.

The Performance Bonus will be guaranteed for the first four complete calendar quarters of the Employee’s employment with the Company, commencing with the third quarter for 2011 (September 30, 2011), provided the Employee is employed in good standing on the last day of each quarter for which such bonus is being paid.

(c)       Discretionary Bonus. In addition to the Salary and any Performance Bonus payable, Employee shall be eligible to be considered for a discretionary CEO bonus (the “Discretionary Bonus”) in an amount between zero and $12,500 per calendar quarter to be determined by the Chief Executive Officer in his sole and absolute discretion.  In exercising such discretion, the Chief Executive Officer will take into consideration the Employee’s individual performance.  If either the first or the last calendar quarter of the term is less than a full quarter, the bonus for such quarter shall be prorated.

Any bonus payments, if applicable, shall be made no more than 60 days of the end of the calendar quarter to which such bonus relates, and will be subject to the usual and applicable withholding and payroll taxes.

(d)                  Sign-On Bonus . The Company shall pay Employee a sign-on bonus of $75,000 (Seventy-Five Thousand Dollars), less applicable withholdings, payable upon completion of Employee’s first six (6) months of employment. Employee agrees and understands that if he resigns during the six (6) months of employment, Employee shall not be entitled to the sign-on bonus.  

(e)                  Vacation and Holiday Pay.   Employee shall receive four (4) weeks of paid vacation per year, which accrues over the course of the year.  In addition, the Company provides eight (8) paid holidays each year, along with two (2) “floating holidays” which can be used by Employee at any time.

(f)        Other Benefits .  Employee will be entitled to participate in or receive such benefits under the Company’s employee benefit plans and policies and such other benefits which may be made available as in effect from time to time and as are provided to similarly situated employees of the Company, subject in each case to the generally applicable terms and conditions of the plans and policies in question.

4.   Expenses .  The Company will pay or reimburse Employee for reasonable travel, entertainment or other expenses incurred by Employee in the furtherance of or in connection with the performance of Employee’s duties hereunder in accordance with the Company’s established policies.  The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year.  Reimbursement of an eligible expense shall in no event occur later than the last day of the calendar year following the calendar year in which such expense was incurred.  The right to expenses reimbursements in connection with the agreement is not subject to liquidation or exchange for another benefit.

5.   Certain Covenants .

(a)       Intellectual Property Rights .

(i)         Employee agrees that the Company will be the sole owner of any and all of Employee’s “Discoveries” and “Work Product,” hereinafter defined, made during the term of his employment with the Company, whether pursuant to this Agreement or other duties performed on behalf of the Company.  For purposes of this Agreement, “Discoveries” means all inventions, discoveries, improvements, and copyrightable works (including, without limitation, any information relating to the Company’s software products, source code, know-how, processes, designs, algorithms, computer programs and routines, formulae, techniques, developments or experimental work, work-in-progress, or business trade secrets) made or conceived or reduced to practice by Employee during the term of his employment by the Company, whether or not potentially patentable or copyrightable in the United States or elsewhere.  For purposes of this Agreement, “Work Product” means any and all work product relating to Discoveries.

(ii)        Employee shall promptly disclose to the Company all Discoveries and Work Product.  All such disclosures must include complete and accurate copies of all source code, object code or machine-readable copies, documentation, work notes, flow-charts, diagrams, test data, reports, samples, and other tangible evidence or results (collectively, “Tangible Embodiments”) of such Discoveries or Work Product.  All Tangible Embodiments of any Discoveries or Work Project will be deemed to have been assigned to the Company as a result of the act of expressing any Discovery or Work Product therein.

(iii)       Employee hereby assigns and agrees to assign to the Company all of his interest in any country in any and all Discoveries and Work Product, whether such interest arises under patent law, copyright law, trade-secret law, semiconductor chip protection law, or otherwise.  Without limiting the generality of the preceding sentence, Employee hereby authorizes the Company to make any desired changes to any part of any Discovery or Work Product, to combine it with other materials in any manner desired, and to withhold Employee’s identity in connection with any distribution or use thereof alone or in combination with other materials.  This assignment and assignment obligation applies to all Discoveries and Work Product arising during Employee’s employment with the Company (or its predecessors), whether pursuant to this Agreement or otherwise.  Employee’s agreement to assign to the Company any of his rights as set forth in this Section 5(a)(iii) applies to all inventions other than an invention (a) in which no equipment, supplies, facility or trade secret information of the Company was used (b) was developed entirely upon Employee’s own time (c) does not relate to Company business or to the Company’s actual or anticipated research or development and (d) does not result from any work performed by Employee for the Company.

(iv)       At the request of the Company, Employee shall promptly and without additional compensation execute any and all patent applications, copyright registration applications, waivers of moral rights, assignments, or other instruments that the Company deems necessary or appropriate to apply for or obtain Letters Patent of the United States or any foreign country, copyright registrations or otherwise to protect the Company’s interest in such Discovery and Work Product, the expenses for which will be borne by the Company.  Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agents and attorneys-in-fact to, if the Company is unable for any reason to secure Employee’s signature to any lawful and necessary document required or appropriate to apply for or execute any patent application, copyright registration application, waiver of moral rights, or other similar document with respect to any Discovery and Work Product (including, without limitation, renewals, extensions, continuations, divisions, or continuations in part), (i) act for and in his behalf, (ii) execute and file any such document, and (iii) do all other lawfully permitted acts to further the prosecution of the same legal force and effect as if executed by his; this designation and appointment constitutes an irrevocable power of attorney coupled with an interest.

(v)        To the extent that any Discovery or Work Product constitutes copyrightable or similar subject matter that is eligible to be treated as a “work made for hire” or as having similar status in the United States or elsewhere, it will be so deemed.

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(vi)       The obligations of Employee set forth in this Section 5 (including, without limitation, the assignment obligations) will continue beyond the termination of Employee’s employment with respect to Discoveries and Work Product conceived or made by Employee alone or in concert with others during Employee’s employment with the Company, whether pursuant to this Agreement or otherwise.  Those obligations will be binding upon Employee, his assignees permitted under this Agreement, executors, administrators, and other representatives.

(b)       Exposure to Proprietary Information .

(i)         As used in this Agreement, “Proprietary Information” means all information of a business or technical nature that relates to the Company including, without limitation, all information about software products whether currently released or in development, all inventions, discoveries, improvements, copyrightable work, source code, know-how, processes, designs, algorithms, computer programs and routines, formulae and techniques, and any information regarding the business of any customer or supplier of the Company or any other information that the Company is required to keep confidential.  Notwithstanding the preceding sentence, the term “Proprietary Information” does not include information that is or becomes publicly available through no fault of Employee, or information that Employee learned prior to the Effective Date.

(ii)        In recognition of the special nature of his employment under this Agreement, including his special access to the Proprietary Information, and in consideration of his employment pursuant to this Agreement, Employee agrees to the covenants and restrictions set forth in Section 5 of this Agreement.

(c)       Use of Proprietary Information; Restrictive Covenants .

(i)         Employee acknowledges that the Proprietary Information constitutes a protectable business interest of the Company, and covenants and agrees that during the term of his employment, whether under this Agreement or otherwise, and after the termination of such employment, he will not, directly or indirectly, disclose, furnish, make available or utilize any of the Proprietary Information, other than in the proper performance of his duties for the Company.

(ii)        Employee will not , during the term of this Agreement, anywhere within the United States (the “Restricted Territory”), directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise): 

1.         perform services for, or engage in, any business or segment of a business which generates its revenues primarily from the development, publishing, or sale of online advertisements for travel companies (the “Products”);

2.         perform services for, or engage in, any business or segment of a business that operates a travel search engine (the “Products”)”;

(iii)       Employee will not , during the term of this Agreement or, for a period of one year thereafter (the “Restricted Period”), anywhere within the Restricted Territory, directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise):

1.         except on behalf of the Company use the Company’s Proprietary Information to, solicit any person or entity who is, or was at any time during the twelve-month period immediately prior to the termination of Employee’s employment with the Company, a customer of the Company for the sale of the Products or any product or service of a type then sold by the Company for which Employee provided any assistance in planning, development, marketing, training, support, or maintenance; or

2.         solicit for employment any person who is, or was at any time during the twelve-month period immediately prior to the termination of Employee’s employment with the Company, an employee of the Company.

(d)       Scope/Severability .  The Parties acknowledge that the business of the Company is and will be national and international in scope and thus the covenants in this Section 5 would be particularly ineffective if the covenants were to be limited to a particular geographic area of the United States.  If any court of competent jurisdiction at any time deems the Restricted Period unreasonably lengthy, or the Restricted Territory unreasonably extensive, or any of the covenants set forth in this Section 5 not fully enforceable, the other provisions of this Section 5, and this Agreement in general, will nevertheless stand and to the full extent consistent with law continue in full force and effect, and it is the intention and desire of the parties that the court treat any provisions of this Agreement which are not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent (for example, that the Restricted Period be deemed to be the longest period permissible by law, but not in excess of the length provided for in Section 5(c), and the Restricted Territory be deemed to comprise the largest territory permissible by law under the circumstances).

(e)       Return of Company Materials upon Termination .  Employee acknowledges that all records, documents, and Tangible Embodiments containing or of Proprietary Information prepared by Employee or coming into his possession by virtue of his employment by the Company are and will remain the property of the Company.  Upon termination of his employment with the Company, Employee shall immediately return to the Company all such items in his possession and all copies of such items.

6.   Equitable Remedies .

(a)        Employee acknowledges and agrees that the agreements and covenants set forth in Sections 5(a), (b), (c), (d) and (e) are reasonable and necessary for the protection of the

(b)        Each of the covenants in Sections 5(a), (b), (c), (d) and (e) will be construed as independent of any other covenants or other provisions of this Agreement.

(c)        In the event of any judicial determination that any of the covenants in Sections 5(a), (b), (c), (d), and (e) are not fully enforceable, it is the intention and desire of the parties that the court treat said covenants as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable, and that the court enforce them to such extent.

7.   Assignment .  This Agreement shall be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Employee upon Employee’s death and (b) any successor of the Company.  Any such successor of the Company shall be deemed substituted for the Company under the terms of this Agreement for all purposes.  As used herein, “successor” shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company.  None of the rights of Employee to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable except through a testamentary disposition or by the laws of descent.  Any attempted assignment, transfer, conveyance or other disposition (other than as aforesaid) of any interest in the rights of Employee to receive any form of compensation hereunder shall be null and void.

8.   Notices .  All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given if delivered personally, one (1) day after mailing via Federal Express overnight or a similar overnight delivery service, or three (3) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors in interest at the addresses listed above, or at such other addresses as the parties may designate by written notice in the manner aforesaid.

9.   Severability .  In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

10.  Entire Agreement .  This Agreement represents the entire agreement and understanding between the Company and Employee concerning Employee’s employment relationship with the Company, and supersede in their entirety any and all prior agreements and understandings concerning Employee’s employment relationship with the Company.

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11.  Resolution of Disputes Regarding Employment .

(a)        The Parties agree to submit any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, or to any aspect of the employer/employee relationship or the termination of that relationship, to mediation.  The Parties shall mutually select the mediator and shall equally pay for the costs of the mediator.

(b)        If and only if a mediation is unsuccessful, and the dispute or controversy is not resolved within 30 days after a mediation, either party may submit the matter to binding arbitration, to the extent permitted by law, to be held in or near San Jose, California in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”).  The Company agrees to pay all costs of the arbitrator and the arbitration.  The arbitrator may grant injunctions or other relief in such dispute or controversy.  The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration.  Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.  The arbitrator may award the prevailing party in any such arbitration attorneys’ fees and costs incurred in connection therewith, except for those the Company shall bear, as set forth above.

(c)       The arbitrator shall apply California law to the merits of any dispute or claim, without reference to rules of conflict of law.  The Parties hereby expressly consent to the personal jurisdiction of the state and federal courts located in Santa Clara County, California for any action or proceeding arising from or relating to this Agreement and/or relating to any arbitration in which the Parties are participants.

(d)        The Parties have read and understand Section 11, which discusses arbitration.  The Parties understand that by signing this agreement, the Parties agree to submit any future claims arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof to binding arbitration to the extent permitted by law, and that this arbitration clause constitutes a waiver of the Parties’ right to a jury trial and relates to the resolution of all disputes relating to all aspects of the employer/employee relationship, including but not limited to, the following claims:

(i)         Any and all claims for wrongful discharge of employment; breach of contract, both express and implied; breach of the covenant of good faith and fair dealing, both express and implied; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; misappropriation of Proprietary Information or other breaches covenants set forth in Section 5, and defamation;

(ii)        Any and all claims for violation of any federal, state or municipal statute, including, but not limited to the California Fair Employment & Housing Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990,  the Fair Labor Standards Act, and the California Labor Code;

(iii)       Any and all claims arising out of any other laws and regulations relating to employment or employment discrimination.

(e)        The Parties may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration agreement and without abridgment of the powers of the arbitrator.

12.    No Oral Modification, Cancellation or Discharge .  This Agreement may only be amended, canceled or discharged in writing signed by Employee and the Company.

13.    Governing Law .  This Agreement shall be governed by the laws of the State of California.

14.     Acknowledgment .  Employee acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the respective dates set forth below.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY BOTH PARTIES.

COMPANY :

TRAVELZOO INC.

By:                                                                       

Title:                                                                   

Date:                                                                   

EMPLOYEE :

GLEN CEREMONY

Date:                                                                   

[Attach Exhibit A]