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Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of
November 5, 2007 (the “Effective Date”), by and between
Travelzoo Inc., a Delaware corporation (the “Company”)
with principal corporate offices at 590 Madison Avenue, 21
st Floor, New York, NY 10022, and Max Rayner, whose
address is currently xxxxxxxx, xxxxxxxx, xx xxxxx
(“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 retain Employee as
Chief Information Officer (“CIO”), 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:
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1.
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Duties and Scope of Employment
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(a)
Position .
Employee shall be employed as CIO in the Company’s Mountain
View, California office.
(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 CIO, 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 the date which
is nineteen (19) months after the Effective Date (the
“Expiration Date”). Notwithstanding the foregoing, this
Agreement shall expire on the date the Employee dies, and may be
terminated by the Company during the Term, by delivery of written
notice to Employee, for Cause (as hereinafter defined), because of
Disability (as
hereinafter defined), or without Cause. 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)) or Disability (as defined in Section
2(c)), Employee shall receive his Base Salary and benefits earned
through the date of termination, plus a lump-sum payment equal to
Base Salary for a period of twelve months (as defined herein) and
COBRA payments for a period of twelve months (“Severance
Pay”), subject to Section 2(f).
(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 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
Disability . Notwithstanding any
provision of this Agreement to the contrary, if Employee is
terminated as a result of a “Disability” (as defined
herein) during the Term, Employee will receive only payment of his
Base Salary, and benefits through the date of termination, and pro
rata bonuses pursuant to Sections 3(b) and 3(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.
(1) If the Company fails to make a
Bona Fide Offer within eighteen (18) months from the Effective Date
for Employee to enter into an employment agreement
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to serve as Chief Executive Officer of the Company
(“CEO”), Employee may resign within thirty (30)
calendar days after the Expiration Date by delivering a written
notice to the Company within twenty calendar days after the
Expiration Date. For purposes of this Section 2(d)(1), a Bona Fide
Offer means an offer to serve as CEO beginning no later than 19
months from the Effective Date, for at least three years at the
Company’s New York headquarters on terms at least as
favorable to Employee as the CEO compensation that an independent
compensation consultant recommends to the Company’s Board of
Directors (“Board”) or the Board’s Compensation
Committee.
(2) 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)(2) 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)(2).
(3) If Employee
resigns pursuant to this Section 2(d) (1) or (2), Employee shall
receive Severance Pay after such resignation, subject to Section
2(f)
(e)
Employee Resignation Following a Change of
Control . If, after a Change of
Control, as hereinafter defined, occurs, Employee is not offered a
position of comparable compensation, responsibilities, and stature
within the Company (including a Bona Fide Offer of the CEO position
as provided in Section 2(d)(1)) in the same geographic area in
which he worked immediately prior to a Change of Control (unless
relocated to New York City as provided in Section 2(d)(1) or by
mutual consent), and Employee resigns within thirty (30) calendar
days after the Change in Control, Employee shall receive Severance
Pay subject to Section 2(f). 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)
Severance Pay Conditions
. Employee shall be required to sign, deliver and
not revoke a General Release in the form attached hereto as Exhibit
C as a condition precedent to payment of any Severance Pay pursuant
to any provision of Section 2 of this Agreement. Any Severance Pay
shall be paid immediately upon the expiration of any revocation
period and the Employee’s delivery of the signed General
Release to Company and shall be subject to the usual and applicable
required withholdings and payroll taxes.
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(g)
Exceptions to Termination because of
Disability or Death . Notwithstanding
any other provisions, if death or disability occur 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), an amount equal to Severance Pay as defined in 2(a)
shall be paid to Employee’s beneficiary or beneficiaries as
designated in Exhibit D, or designated subsequent to this agreement
via Notice to the Company.
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3.
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Compensation and Fringe
Benefits .
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(a)
Base Salary .
Employee will receive a base salary at the annualized rate of
$450,000 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 the North America Executive Bonus Plan
(“Performance Bonus Plan”) approved by the
board’s Compensation Committee. Under the Performance Bonus
Plan, Employee may receive, in addition to his Base Salary, a
quarterly performance bonus in an amount between zero and $50,000
per calendar quarter, provided, however, 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 CIO 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; (iv) deliver the ability to launch Travelzoo Web sites in
Japan, China, India, South Korea, Australia, and Taiwan; (v)
implement a management information system that allows Company to
better monitor delivery of ad campaigns and more accurately
forecast revenue; and (vi) identify successor to lead IT function.
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.
(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
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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.
(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 demonstrably anticipated research or development and not
resulting from any work performed by the Employee for 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
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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
him; 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. This provision
does not alter or limit Employee’s other obligations to
assign intellectual property rights under this
Agreement.
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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 bind
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