SERVICE AGREEMENT

Exhibit 10.1

DATED 20 ^th of February 2007

Travelzoo Inc.

and

YAP, Thian Seng

SERVICE AGREEMENT

CONTENTS

Clause		Subject		Page No.
1		Interpretation			1
2		Appointment			3
3		Duties			3
4		Remuneration and Expenses			3
5		Other Benefits			4
6		Sick Leave Entitlement and Medical Benefits			5
7		Holiday Entitlement			5
8		Retirement Fund and Pension Scheme Participation			6
9		Confidentiality			6
10		Restrictions during Employment			6
11		Termination			7
12		Restrictions after Employment			9
13		Employment with New Group Company			10
14		Indemnity			10
15		Notices			10
16		Entire Agreement			11
17		Prior Agreements			11
18		Proper Law and Forum			11
19		Process Agent			11

THIS AGREEMENT is dated the 20 ^th day of February 2007

BETWEEN:

(1)

Travelzoo Inc. , a company incorporated in the State of Delaware in the United States of America whose principal business office is situated at 590 Madison Avenue, 21 st Floor, New York, New York 10022 (the “Company” ); and

(2)

YAP, Thian Seng , holder of Hong Kong Identity Card No. XXXXXXXXXX of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (the “ Executive” ).

RECITAL:

     The Company has agreed to employ the Executive and the Executive has agreed to serve the Company as an employee of the Company on the terms and conditions set out below.

1.

INTERPRETATION

1.1

In this Agreement, unless the context otherwise requires, the following expressions shall bear the following meanings:

“this Agreement”		this Agreement as may from time to time be amended, modified or supplemented pursuant to Clause 16;
“ Appointment ”		the employment of the Executive pursuant to this Agreement;
“Board”		the Board of Directors of the Company from time to time;
“Business”		the business presently carried on by the Company, including but not limited to the publishing of travel offers from more than 500 advertisers;
“Commencement Date”		on or before 6 th May 2007;
“Companies Ordinance”		the Companies Ordinance, Chapter 32, Laws of Hong Kong;
“ Confidential Information ”		any information of, developed, used or applied or which may be developed, used or applied by the Company or any Group Company in relation to the Business, or which the Company or any Group Company has obtained from any third party on terms that restrict its disclosure or use, other confidential technical information, any of the trade secrets, clients’ lists, accounts, financial or trading information or other confidential or personal information which the Executive may receive or obtain in relation to the business, finances, dealings or affairs of the Company or any Group Company, including any information regarding the products, services, research programme, projects or other technical data, know-how or specifications, whether in human or machine readable form, and whether stored electronically or otherwise, or the finances, proposals, contractual arrangements, principals, joint venture partners, contracting parties, employees or agents of the Company or any Group Company;
“ Documents ”		documents, disks, memory, notebooks, tapes or any other medium on which information (whether confidential or otherwise) may from time to time be referred to, written or recorded;
“Employment Ordinance”		the Employment Ordinance, Chapter 57, Laws of Hong Kong;

“Group”		the Company and any company which is for the time being a subsidiary or holding company of the Company and the terms ‘subsidiary” and “holding company’ shall have the meanings ascribed thereto by section 2 of the Companies Ordinance;
“ Group Company ”		any company within the Group;
“HK$”		Hong Kong dollars, the lawful currency of Hong Kong;
“Hong Kong”		the Hong Kong Special Administrative Region of the PRC;
“month”		calendar month;
“ Performance Bonus ”		the quarterly performance based bonus to which the Executive may be entitled pursuant to Clause 5.1.2;
“ PRC ”		the People’s Republic of China and for the purpose of this Agreement, excluding Hong Kong, Macau Special Administrative Region and Taiwan;
“ Prohibited Area ”		Australia, Hong Kong, India, Japan, the PRC, South Korea and Taiwan;
“ Relevant Territory ”		Australia, India and Japan;
“ Restricted Period ”		the period of 12 months from the Termination Date;
“ Salary ”		the salary payable to the Executive pursuant to Clause 4.1;
“Term”		the period from the Commencement Date until the Termination Date;
“ Termination Date ”		the date of termination of the Executive’s employment pursuant to Clause 11;
“ Tuition Fee Reimbursement ”		the reimbursement payable to the Executive pursuant to Clause 5.1.3 in respect of the tuition fees and the expenses on the purchase of necessary books and materials of a top-tier part-time Master degree programme in Business Administration (Executive MBA) to be undertaken by the Executive;
“ U.S. ”		United States of America; and
“Working Days”		Monday to Friday except where such day falls on a statutory holiday.

1.2

In this Agreement:

	1.2.1		References to Clauses and Sub-Clauses are respectively to clauses and sub-clauses in this Agreement;
	1.2.2		reference to any Ordinance, regulation or other statutory provision include reference to such Ordinance, regulation or provision as may be modified, consolidated or re-enacted from time to time;
	1.2.3		unless the context otherwise requires, words denoting the singular include the plural and vice versa, words denoting gender include both genders and the neuter and words denoting a person include a corporation, sole proprietorship, firm, joint venture or syndicate and, in each case, vice versa; and
	1.2.4		the rule known as ejusdem generis shall not apply, so that words and phrases in general terms following or followed by specific examples shall be construed in the widest possible sense and shall not be construed as limited or related to the examples given.

1.3

The headings in this Agreement are for ease of reference only and do not form part of the Agreement.

2.

APPOINTMENT

2.1

Subject to the terms set out in this Agreement, the Company appoints the Executive and the Executive accepts his employment as an employee of the Company with the duties described in Clause 3.

2.2

The Executive’s employment shall commence on the Commencement Date and shall continue unless terminated by the Company pursuant to Clause 11.2 or terminated by the parties hereto pursuant to Clause 11.1.

3.

DUTIES

3.1

The Executive shall during the Term:

3.1.1

serve the Company in his capacity as Managing Director, Japan, India and Australia, of the Company with such executive and management responsibilities and duties with regard to the operations of the Group in the Relevant Territory and the development and expansion of the Business as the Board may direct, including but not limited to the following:

	(a)		Launch and develop the Travelzoo business in the Relevant Territory in accordance with the Company’s strategy and operating budgets;
	(b)		Assume profit and loss responsibility for the Business in the Relevant Territory. For the avoidance of doubt, nothing herein shall be construed as rendering the Executive to become personally liable for the profits and losses of the Business in the Relevant Territory; and
	(c)		Represent the Company in the Relevant Territory.

	3.1.2		devote the whole of his working time, attention and abilities during normal business hours and such additional hours as may reasonably be required to administer the duties associated with his position; and
	3.1.3		use his best endeavors to promote and protect the interests of the Company and shall at all times keep the Board promptly and fully informed of all matters relating to or in connection with the performance and exercise of his duties under the Agreement.

3.2

The Executive shall work in Hong Kong or any other part of the world (including but not limited to the Relevant Territory) which the Board may require for the proper performance and exercise of his duties under this Agreement.

3.3

The normal business hours of the Company are 9:00 a.m. to 5:30 p.m., with one hour’s break for lunch, Monday to Friday. However, the Executive shall be required to work such hours as are reasonably necessary to fulfil his duties under this Agreement.

3.4

The Executive shall attend a one-month training programme organised by the Company in the U.S. upon commencement of the Executive’s employment with the Company.

4.

REMUNERATION AND EXPENSES

4.1

As remuneration for his services, the Executive shall be entitled to a salary at the rate of HK$1,561,800 per calendar year (or such other rate as may from time to time be agreed in writing). The Salary shall accrue from day to day and be payable by equal monthly installments in arrears on or before the last day of each month, provided that if the employment terminates on a date before the end of a month, the Salary for that month shall be in proportion to the number of days for which the Executive was employed that month.

4.2

If applicable at any time and notwithstanding anything to the contrary contained in the constitutional documents of the Company or of any other Group Company, the Salary shall be inclusive of any other fees or remuneration of any description which the Executive might be entitled to receive from the Company or any Group Company or any other company or

		association in which he holds office as a nominee or representative of the Company or any Group Company (and the Executive shall, at the discretion of the Board, either waive his right to any such remuneration or account to the Company for the same forthwith upon receipt).
4.3		The Salary shall be reviewed by the Board not less than annually, the first review being in June 2007.

4.4

The Executive hereby authorises the Company to deduct from any remuneration accrued and due to him under the terms of this Agreement (whether or not actually paid during the Appointment) or from any pay in lieu of notice:

	4.4.1		any overpayment of salary or expenses or payment made to the Executive by mistake or through any misrepresentation;
	4.4.2		any undisputed debt presently payable by the Executive to the Company or any Group Company; and
	4.4.3		any employee’s contribution to pension fund or provident fund as adopted by the Company from time to time, including without limitation any provident fund scheme adopted by the Company pursuant to the Mandatory Provident Fund Scheme Ordinance, Chapter 485, Laws of Hong Kong.

4.5

The Company shall repay to the Executive all reasonable travelling, hotel and other expenses properly incurred by the Executive in connection with the performance of the duties of the Executive under this Agreement, subject to the Executive having delivered to the Company vouchers or evidence of payment of such expenses as the Board may from time to time require.

4.6

The Executive shall be entitled to fly Business Class when the duration of the flight exceeds eight hours and otherwise Economy Class whilst travelling by air on Company duty or otherwise in accordance with the travel policy determined by the Board from time to time. Where the Company makes any credit card available to the Executive the Executive shall:

	4.6.1		take good care of such card and forthwith report any loss of such card to the Board;
	4.6.2		use the card only for the purposes of the relevant Group Company’s business and in accordance with any Company policy applicable thereto; and
	4.6.3		return the card forthwith to the relevant Group Company on request and in any event upon the determination of his employment hereunder.

5.

OTHER BENEFITS

5.1

In addition to the Salary, the Executive shall be entitled to:-

	5.1.1		a sign-on bonus at a rate of HK$312,363 which shall be payable to the Executive on the Commencement Date; and
	5.1.2		a quarterly Performance Bonus that ranges between HK$0 and HK$195,240 (or such other sum as the Board may determine upon review from time to time) per quarter and that is based on the Executive’s performance as described below. The calculation of the Performance Bonus for the quarter will be based on the official budget for the Company (to be approved by the Board and disclosed to the Executive in writing) for the Relevant Territory, which will include quarterly targets for revenues, operating income and subscribers, and a quarterly assessment of the Executive’s performance by the Group CEO of Travelzoo Inc., which will consider the Executive’s motivation and the quality of the Company’s publications and products and advertiser base in his Relevant Territory.
			The following criteria will apply in relation to the quarterly performance bonus plan:

Criteria		Bonus for a particular calendar quarter
Revenue goal as defined in official budget for Relevant Territory met?		HK$48,810
Operating income goal as defined in official budget for Relevant Territory met?		HK$48,810
Subscriber goal as defined in official budget for Relevant Territory met?		HK$48,810
Performance evaluation by the Group CEO of Travelzoo Inc.		Up to HK$48,810
Total		Up to HK$195,240

			The calculation of the Performance Bonus will be made by the Chief Financial Officer of Travelzoo Inc.
			The Performance Bonus will be paid less statutory deductions, if any, within 45 days after the end of the calendar quarter, provided that the Executive shall not be entitled to the Performance Bonus for a particular calendar quarter or any part thereof if the Executive’s employment is terminated by the Executive pursuant to Clause 11.1 or by the Company pursuant to Clause 11.2 on or before the payment date of the Performance Bonus for such calendar quarter. If the Executive’s employment is terminated by the Company pursuant to Clause 11.1, the Executive shall be entitled to a pro-rata amount of the Performance Bonus for the relevant calendar quarter which shall be payable within 45 days after the end of the relevant calendar quarter.
			For the first twelve months from the Commencement Date, the Company guarantees the Executive the full Performance Bonus of HK$195,240 per quarter.
			Any bonus payments for periods beginning after the first day of a calendar quarter or ending before the last day of a calendar quarter will be pro rata.
	5.1.3		reimbursement of the tuition fees and the expenses on the purchase of necessary books and materials up to a maximum amount of HK$1,100,000 in respect of a top-tier part-time Master degree programme in Business Administration (Executive MBA) to be undertaken by the Executive, subject to the presentation of receipts or other appropriate evidence as the Company may require.

6.

SICK LEAVE ENTITLEMENT AND MEDICAL BENEFITS

6.1

The Executive shall be entitled to his full Salary during periods of absence due to ill-health or sickness properly vouched for in accordance with the requirements of the Board, provided that the aggregate period of absence of in any 12 month period shall not exceed the maximum number of Working Days as prescribed by the Employment Ordinance (Chapter 57, Laws of Hong Kong) from time to time.

6.2

If at any time required by the Board, the Executive shall at the expense of the Company undergo a medical examination by such doctor or doctors, as the Board shall nominate.

6.3

The Executive, his spouse and children under the age of 18 shall be covered by the Company’s medical benefits scheme or medical insurance scheme in accordance with the Company’s prevailing medical benefits arrangements. The Executive shall comply with the reasonable procedural requirements of the Company or the underwriter of the relevant insurance policy when submitting claims for the medical benefits or under the medical insurance.

7.

HOLIDAY ENTITLEMENT

7.1

The Executive shall during the Term be entitled to paid leave of absence of 25 Working Days (in addition to the usual public holidays) in each complete holiday year worked (and pr