AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”) is entered into as of September 1, 2009 (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 Max Rayner, whose address is currently xxxx xxxxxxxxx, Palo Alto, CA xxxxxx (“Employee”). The Company and Employee are at certain times each referred to herein as a Party, and collectively referred to herein as “the Parties.”

The Company and Employee previously entered into an Employment Agreement dated November 5, 2007 (the “Prior Agreement”), providing for employment of Employee in the position of Chief Information Officer (“CIO”). Section 2(d)(1) of the Prior Agreement provided that Employee had the right to resign for Good Reason and collect Severance Pay if the Company did not make a Bona Fide Offer for Employee to serve as Chief Executive Officer of the Company.

The Company desires to employ Employee as the Chief Technology Officer (“CTO”) on the terms and conditions as set forth in this Agreement. The Company further desires to pay the Severance Pay provided for in the Prior Agreement in consideration for Employee’s agreement not to resign for Good Reason under Section 2(d)(1) of the Prior Agreement and to provide the General Release of claims set forth in Section 8(a) of this Agreement. This Agreement amends, restates and supersedes the Prior Agreement and provides for a General Release by Employee up to the Effective Date of this Agreement.

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 CTO in the Company’s Mountain View, California office.

(b)         Duties . As CTO, Employee shall provide global executive leadership for the Company in the areas of technology, including Engineering, Product Development and Information Systems.

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 CTO, 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 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, (iii) independently perfect prior personal intellectual property in the areas described in Exhibit A, and (iv) with the consent of the Company (which consent shall not be unreasonably withheld and is given herein for the cases listed in Exhibit B), serve as an adviser or a member or non-executive chairman of the board of directors of any noncompeting business.

2.           Term of Employment . The term of this Agreement shall be for the period (the “Term”) commencing on the Effective Date and terminating on September 30, 2010 (the “Expiration Date”). Notwithstanding the foregoing, this Agreement shall expire on the date the Employee dies, and may be terminated by the Company or by Employee during the Term, by delivery of written notice, for Cause or for Good Reason (as hereinafter defined), because of Disability (as hereinafter defined), or without Cause or Good Reason. If Employee continues in employment after the Expiration Date, any such employment will be on an at will basis.

(a)         Termination by Company without Cause . If Employee is terminated by the Company during the Term for reasons other than Cause (as defined in Section 2(b)), the Company shall provide two weeks written notice or two week pay in lieu of notice, and Employee shall receive his Base Salary and benefits earned through the date of termination, and pro rata bonuses pursuant to Sections 4(b) and 4(c), if any, for the calendar quarter in which Employee ceased performing services for the Company.

(b)         Termination for Cause . Notwithstanding any provision of this Agreement to the contrary, if Employee is terminated for “Cause” as defined herein, Employee will receive only payment of his Base Salary and benefits through the date of termination. 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 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, or sexual harassment; (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 because of Death or Disability .

(i)        If Employee’s employment terminates during the Term in connection with his death or Disability (as defined herein) in the course of

Company business or Company-related travel and activities by whatever means (natural, un-natural, criminal acts, terrorism, or acts of god), in additional to amounts payable under Section 2(c)(ii) below, the Company shall pay an amount equal to one year of Employee’s Base Salary to Employee’s beneficiary or beneficiaries as designated in Exhibit C, or designated subsequent to this Agreement via Notice to the Company.

(ii)       If Employee is terminated as a result of his death or a “Disability” (as defined herein) during the Term, for reasons other than described in Section 2(c)(i) above, Employee or Employee’s legal representative will receive only payment of his Base Salary, and benefits through the date of termination, and pro rata bonuses pursuant to Sections 4(b) and 4(c), if any, for the calendar quarter in which Employee ceased performing services for the Company (“Active Employment”) based on performance through the last day of Active Employment. For purposes of this Agreement, “Disability” shall mean a physical or mental impairment that prevents or can be reasonably expected to prevent the performance by the Employee of his duties hereunder for a continuous period of 120 calendar days or longer, or that prevents the performance by Employee of his duties hereunder for more than a total of 85 business days, in any 12-month period, subject to the reasonable accommodation requirements of the Americans with Disabilities Act and other applicable laws.

(d)         Employee Resignation for Good Reason. Employee may resign for Good Reason if at any time during the Term (i) his responsibilities, title, duties and/or stature are materially diminished; (ii) his Base Salary or the potential amount of his Performance Bonus or Discretionary Bonus are materially reduced; (iii) his place of work is relocated to more than 30 miles from Mountain View, California; or (iv) the Company is in material breach of its obligations under this Agreement. Employee may exercise the right to resign for Good Reason pursuant to this Section 2(d) only if the Company fails to cure any such deficiency within thirty (30) calendar days of receiving timely written notice from Employee. Employee must provide said written notice to the Company within thirty (30) calendar days after receiving notice of an event triggering the right to resign for Good Reason under this Section (2)(d). If Employee resigns pursuant to this Section 2(d), Employee shall receive his Base Salary and benefits earned through the date of termination, and pro rata bonuses pursuant to Sections 4(b) and 4(c), if any, for the calendar quarter in which Employee ceased performing services for the Company.

(e)         Employee Resignation Following a Change of Control . If, after a Change of Control, as hereinafter defined, occurs during the Term, Employee is not offered a position of comparable compensation, responsibilities, title, duties and/or stature within the Company in the same geographic area in which he worked immediately prior to a Change of Control (unless relocated to New York City by mutual consent), and Employee resigns within thirty (30) calendar days after the Change in Control, Employee shall receive his Base Salary and benefits earned through the date of termination, and pro rata bonuses pursuant to Sections 4(b) and 4(c), if any, for the calendar quarter in which Employee ceased performing services for the Company. 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.

(f)          Resignation Without Good Reason . Employee may resign at any time without Good Reason after providing two weeks written notice to the Company. If Employee resigns without Good Reason, Employee will receive only payment of his Base Salary and benefits through the date of termination.

3.           Prior Agreement “Good Reason” Severance Payment . The Parties acknowledge and agree that Employee had the option to resign for Good Reason and collect Severance Pay under Section 2(d)(1) of the Prior Agreement because the Company did not make a Bona Fide Offer for Employee to serve as Chief Executive Officer of the Company. In consideration for Employee’s agreement not to resign for Good Reason under Section 2(d)(1) of the Prior Agreement and for the General Release of claims set forth in Section 8(a) of the Agreement, the Company agrees to pay Employee a lump sum gross amount of $450,000, less applicable taxes and withholdings, subject to Employee executing the Agreement and not revoking the General Release set forth in Section 8(a). The payment shall be paid on September 9, 2009, subject to the following conditions precedent: (i) Employee’s delivery of the original signed Agreement to Company; and (ii) expiration of the revocation period set forth in Section 8(d).

4.           Compensation and Fringe Benefits .

(a)         Base Salary . Employee will receive a base salary at the annualized rate of $517,500 per year (the “Base Salary”), 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 Base Salary, a bonus in an amount between zero and $60,000 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 pro rated only if the first or last calendar quarter of the Term is less than a full quarter because: (i) the Agreement expired at the end of the Term or Employee died; (ii) Employee’s employment is terminated without Cause under Section 2(a) or due to death or a disability under Section 2(c); or (iii) Employee resigns for Good Reason under Section 2(d) or following a Change of Control under Section 2(e).

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 Financial Officer will determine if the criteria are met.

Any bonus payment, if applicable, shall be paid to Employee in a lump sum as soon as administratively practicable following the end of the quarter to which it relates but no later than sixty (60) days after the end of the quarter and will be subject to applicable withholding and payroll taxes.

The Company shall notify Employee of any changes to the Performance Bonus in writing, which changes will not take effect until the quarter following the notice of change.

If either the first or last calendar quarter of the Term is less than a full quarter, the bonus for such quarter shall be pro rated. Any bonus payments, if applicable, shall be made at the time specified in the Performance Bonus Plan and will be subject to the usual and applicable withholding and payroll taxes. The Company shall notify Employee of any changes to the Performance Bonus Plan in writing.

(c)         Discretionary Bonus . In addition to Base Salary and any Performance Bonus payable under the Performance Bonus Plan, Employee shall be eligible to be considered for a Discretionary CTO Bonus in an amount between zero and $50,000 per calendar quarter to be determined by the CEO in his sole and absolute discretion. In exercising such discretion, the CEO will take into consideration to what extent Employee

achieves the following strategic goals: (i) transform the national IT organization into a fast and efficient global IT function with 24/7 support; (ii) improve organizational structure of IT department and agility of IT staff; (iii) create the ability to support a frequency of new product releases of three new products in twelve months, whether in terms of new global products or product extensions in geographic reach or significant new features; and (iv) implement a management information system that allows Company to better monitor delivery of ad campaigns and more accurately forecast revenue. If either the first or last calendar quarter of the Term is less than a full quarter, the bonus for such quarter shall be pro rated as provided in Section 4(b). Any bonus payment, if applicable, shall be paid to Employee in a lump sum as soon as administratively practicable following the end of the quarter to which it relates but no later than sixty (60) days after the end of the quarter and will be subject to applicable withholding and payroll taxes.

(d)         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.

(e)         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.

5.           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 year shall not affect the expenses eligible for reimbursement in any other year. Reimbursement of an eligible expense shall be made in accordance with the Company’s policies and practices and as otherwise provided herein, provided, that, in no event shall reimbursement be made after the last day of the year following the year in which the expense was incurred. The right to reimbursement is not subject to liquidation or exchange for another benefit.

6.           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, except for discoveries or intellectual property development made during the term of employment in the areas described in Exhibit A, and except for those that the employee developed entirely on his own time without using the Company’s equipment, supplies, facilities, or trade secret information and unrelated at the time of conception or reduction to practice to the Company’s business, or actual

or dem