EMPLOYMENT AGREEMENT

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement is entered into as of May 8, 2001 (the "Effective Date"), by and between Travelzoo.com Sales, Inc., a California corporation (the "Company"), with principal corporate offices at 800 West El Camino Real, Suite 180, Mountain View, California 94040, and Shirley Tafoya, whose address is currently xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx ("Employee"). The Company and Employee are collectively referred to herein as “the Parties.”

WHEREAS, the Company desires to retain Employee as Vice President Advertising Sales, 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:

(b)         Position . Employee shall be employed as Vice President Advertising Sales.

(b)         Duties . Employee shall report directly to the Chief Executive Officer (or such other persons designated by the Company) and shall perform all duties and obligations of Vice President Advertising Sales (or such other duties assigned to Employee from time to time by the Chief Executive Officer or the Board of Directors). During the term of Employee’s employment with the Company, Employee shall devote her full time, skill and attention to her duties and responsibilities, which Employee shall perform faithfully, diligently and competently, and Employee shall use her 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 Board, except that this provision shall not be interpreted to prohibit Employee from involvement in any charitable or community activity/organization that she is currently involved in and that does not materially interfere with her ability to perform her 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 her 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 Board of Directors (which consent shall not be unreasonably withheld), serve as a member of the board of directors of any noncompeting business.

2.             Nature of Employment . Employee agrees not to leave or discontinue her employment with the Company during the first six (6) months of her employment. Employee understands that if she resigns during the first six (6) months of employment in violation of this Agreement, the provisions of this Agreement shall be null and void and she shall only receive the “Base Salary” (as defined below) and benefits earned as of the date of termination. The Company

agrees not to terminate Employee during the first six (6) months of employment with the Company, subject to the provisions of 2(a) and (b) below. After the six month period has ended, Employee will become an “at-will" employee which means that the employment relationship may be terminated at any time, with or without cause, at the option of either the Company or Employee, upon two weeks written notice to the other party.

(a)           Termination by Company without Cause . If Employee is terminated by the Company without Cause (as defined in paragraph 2(c)) during the initial six (6) months of employment, Employee shall receive the “Base Salary” for the remaining portion of the six (6) month period in exchange for executing a general release of claims as to the Company. If Employee is terminated after the initial six (6) months of employment, Employee shall receive only her Base Salary and benefits earned through the date of termination.

(b)           Termination of Employee following a “Change of Control” . If Employee’s employment is terminated at any time due to a “Change of Control”, as hereinafter defined, or if Employee is not offered a position of comparable pay and responsibilities in the same geographic area in which she worked immediately prior to the Change of Control, Employee shall receive her “Base Salary” and medical benefits for a six (6) month period in exchange for executing a general release of claims as to 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.

(c)           Termination for Cause . If Employee is terminated for “Cause” as defined herein at any time, Employee will receive only payment of her Base Salary and benefits through the date of termination. For purposes of this Agreement, “Cause” is defined as (i) gross misconduct by Employee that is materially injurious to the Company’s business; (ii) the commission by Employee of a felony; or (3) the willful failure or refusal of the Employee, following receipt of an explicit directive from the Company, to comply with the material terms of this Agreement.

(a)           Base Salary . Employee will receive a base salary at the annualized rate of $160,000.00 (the "Base Salary"), which shall be paid periodically in accordance with normal Company payroll practices and subject to the usual and applicable required withholding. Employee understands and agrees that neither her 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)           Incentive Compensation . In addition to the base salary, Employee will receive a 1.0% commission on net advertising revenues generated from the sales of advertising on the Travelzoo website at www.Travelzoo.com and the Travelzoo Top 20 newsletter. For purposes of this Agreement, “net advertising revenue” is defined as:

Net advertising revenues consist of revenues derived from the sales of display advertising, text listings, and banner advertising after agency commissions and discounts. Advertising revenues are recognized in the period in which the advertisement is displayed, provided that evidence of an arrangement exists, no significant obligations remain at the end of the period, and the collection of the resulting receivable is reasonably assured. If advertising is displayed within one month, revenues are recognized at the end of the display period. If advertising is displayed over two or more months, revenues are recognized ratably over the period. To the extent that the minimum guaranteed impressions are not met during the contract period, the Company defers recognition of the corresponding revenues until guaranteed impressions are achieved. Fees for banner advertising are recognized based on the number of impressions displayed or click-throughs delivered during the period. The Company has outsourced part of their advertising sales and production activities to DoubleClick, Inc. Under the terms of the agreement with DoubleClick, the Company recieves a portion of the revenue received by DoubleClick from customers for the display of advertising on the Travelzoo website. The company records these revenues on a net basis.

The commission shall be paid at the end of each month following a fiscal quarter of the Company and will be determined by the Company’s accounting department in accordance with generally accepted accounting principals, as consistently applied. All commission payments will be subject to the usual and applicable required withholding. If Employee’s employment terminates, for whatever reason, she will receive payment for all commission earned as of the date of termination. However, the payment will not be made until the end of the month following the fiscal quarter in which her employment is terminated.

(c)          Management Bonus . Employee is also eligible for a separate quarterly management bonus plan. For every quarter that the Company meets the respective quarter's revenue target as specified in the Master Budget for Travelzoo, the Company will pay Employee a bonus of $10,000. Whether or not the revenue target numbers have been met will be determined by the Company’s accounting department in accordance with generally accepted accounting principals, as consistently applied. The Company reserves the right to update the Master Budget at any time. Company shall notify Employee of any changes of the revenue goals set in the Master Budget. Any payments resulting from the Management Bonus Plan shall be made at the end of each month following a fiscal quarter of the Company and will be subject to the usual and applicable required withholding. If Employee resigns or is terminated for cause, she shall not be eligible for any portion of this management bonus.

(d)         Vacation and Holiday Pay . Employee shall receive three 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.

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.

(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 her employment with the Company, whether pursuant to this Agreement or otherwise. 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 her 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 her 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 her rights as set forth in this Section 5(a)(iii) shall not apply to any invention that qualifies fully under the provisions of California Labor Code Section 2870, where no equipment, supplies, facility or trade secret information of the Company was used and that was developed entirely upon Employee's own time,

and (i) that does not relate to Company business or to the Company's actual or anticipated research or development, or (ii) that 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 re