EMPLOYMENT AGREEMENT
EXHIBIT 10.1
This Employment Agreement (“Agreement”) is entered into as of August 4, 2010 (the “Effective
Date”), by and between Travelzoo Inc., a Delaware corporation (the “Company”) with principal
corporate offices at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, and Xxxxxxx Xxxxxx, whose
address is currently XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (“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 and Employee are Parties to an Employment Agreement dated May 8, 2001,
and subsequent addenda, and the Parties desire to supersede those prior agreements with this
Agreement;
WHEREAS, the Company desires to retain Employee as President, North America, 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 President, North America.
(b) Duties. During the term of Employee’s employment with the Company, Employee
shall devote her full time, skill and attention to her duties and responsibilities as the
President, North America, 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
Company, 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, or may become 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 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.
(a) Termination by Company without Cause. If Employee is terminated by the Company
without Cause, Employee shall receive her Base Salary for a period of twelve (12) months
(“Severance Pay”) subject to 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 her 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 her 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 her 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 her 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 she worked immediately prior to a Change of Control, and Employee resigns within sixty
(60) days after the Change in Control, Employee shall receive her Base Salary for a period of
twelve (12) months (“Severance Pay”), benefits, and pro rata performance bonus pursuant to
paragraph 3(b) earned through the date of termination, subject to paragraph 2(e). 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 she resigns during the Term
of this Agreement, she 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 as a condition
precedent to payment of any Severance Pay pursuant to any provision of paragraph 2 of this
Agreement. Any Severance Pay shall be paid periodically in accordance with normal Company
payroll practices and subject to the usual and applicable required withholdings and payroll
taxes.
3. Compensation and Fringe Benefits.
(a) Base Salary. Effective July 1, 2010, Employee will receive a salary at the
annualized rate of $530,000 (Five Hundred Thirty 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
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) Performance Bonus. Employee will be eligible to participate in a quarterly
Performance Bonus plan (“Performance Bonus”), under which Employee may receive, in addition to
her Salary, a bonus in an amount between zero and $90,000 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 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) or terminated following
a“Change of Control” under Section 2(c).
The following schedule applies for calculating a bonus.
| Criteria | Amount | |||
North America revenue target for the quarter met AND there are no
more than two Significant Customers AND no Significant Customer
accounts for 17% or more of North America consolidated revenue
quarter |
$ | 30,000 | ||
North America operating income target for the quarter met |
$ | 30,000 | ||
North America subscriber target for the quarter met |
$ | 30,000 | ||
Total max. Performance Bonus |
$ | 90,000 | ||
“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.
(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 $30,000 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, and will be subject to the usual and applicable withholding and payroll taxes.
(d) Vacation and Holiday Pay. Employee shall receive five (5) 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.
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 her 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 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) 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
her 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 her 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 her; 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.
(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, her 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 her employment under this Agreement,
including her special access to the Proprietary Information, and in consideration of her
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 her
employment, whether under this Agreement or otherwise, and after the termination of such
employment, she will not, directly or indirectly, disclose, furnish, make available or utilize
any of the Proprietary Information, other than in the proper performance of her 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, 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 her possession by virtue of her employment by the Company are and
will remain the property of the Company. Upon termination of her employment with the Company,
Employee shall immediately return to the Company all such items in her 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 Company’s business interests, that irreparable injury will result to the Company if
Employee breaches any of the terms of said covenants, and that in the event of Employee’s
actual or threatened breach of any such covenants, the Company will have no adequate
remedy at law. Employee accordingly agrees that, in the event of any actual or
threatened breach by her of any of said covenants, the Company will be entitled to
immediate injunctive and other equitable relief, without bond and without the necessity
of showing actual monetary damages. Nothing in this Section 6 will be construed as
prohibiting the Company from pursuing any other remedies available to it for such breach
or threatened breach, including the recovery of any damages that it is able to prove.
Employee agrees that notwithstanding the arbitration provision in Section 11, the Company
may apply to a court of competent jurisdiction, in accordance with Section 11(c) of this
Agreement, to obtain the provisional equitable relief referenced in this Section 6.
(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. Xxxxxxxxxxxx.Xx 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.
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 Xxxxx 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 New York Human
Rights Act, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, and
the Fair Labor Standards Act;
(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 she has had the opportunity to discuss
this matter with and obtain advice from her 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. |
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| By: | ||||
Title: |
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| Date: | ||||
| EMPLOYEE: |
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| Xxxxxxx Xxxxxx |
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| Date: | |||||
