Travelzoo 2009 Annual Report Download - page 22

advertising revenues (as defined in the agreement) generated from the sales of advertising on the Travelzoo Web site
and the Top 20 newsletter; such commission is capped at $42,878, 1.0% of the Company’s net advertising revenues
in the second quarter of 2003. In addition, Ms. Tafoya is entitled to participate in or receive such benefits under the
Company’s employee benefits plans and policies as may be in effect from time to time.
Ms. Tafoya agreed that the Company will own any discoveries and work product (as defined in the agreement)
made during the term of her employment and to assign all of her interest in any and all such discoveries and work
product to the Company. Furthermore, Ms. Tafoya agreed to not, directly or indirectly, solicit the Company’s
customers or employees during the term of her employment and for a period of one year thereafter.
Mr. Max Rayner entered into an employment agreement with the Company on November 5, 2007 as amended
on September 23, 2008 and further amended on September 1, 2009. The term of the agreement ends on
September 30, 2010, after which time Mr. Rayner is an at-will employee. The Company or Mr. Rayner may
terminate the agreement without cause during the term of the agreement upon two weeks prior written notice.
However, if Mr. Rayner is not offered a position of comparable pay and responsibilities in the same geographic area
in which he worked immediately prior to a change of control (as defined in the agreement), and Mr. Rayner resigns
within thirty calendar days after the change in control, Mr. Rayner will be entitled to receive his base salary through
the date of termination. Assuming that Mr. Rayner resigned as of December 31, 2009 following a change of control
of the Company by giving two weeks written notice, Mr. Rayner would be entitled to receive $19,904.
Mr. Rayner is paid a base salary and is eligible to receive a quarterly Performance Bonus and a quarterly
Discretionary Bonus (as defined in the agreement). In addition, Mr. Rayner is entitled to participate in or receive
such benefits under the Company’s employee benefits plans and policies as may be in effect from time to time.
Mr. Rayner agreed that the Company will own any discoveries and work product (as defined in the agreement)
made during the term of his employment and to assign all of his interest in any and all such discoveries and work
product to the Company. Furthermore, Mr. Rayner agreed to not, directly or indirectly, solicit the Company’s
customers or employees during the term of his employment and for a period of one year thereafter.
Certain Relationships and Related Party Transactions
The Company maintains policies and procedures to ensure that our directors, executive officers and employees
avoid conflicts of interest. Our Chief Executive Officer and Chief Financial Officer are subject to our Code of Ethics
and each signs the policy to ensure compliance. Our Code of Ethics requires our leadership to act with honesty and
integrity, and to fully disclose to the Audit Committee any material transaction that reasonably could be expected to
give rise to an actual or apparent conflict of interest. The Code of Ethics requires that our leadership obtain the prior
written approval of the Audit Committee before proceeding with or engaging in any conflict of interest.
Our Audit Committee, with the assistance of legal counsel, reviews all related party transactions involving the
Company and any of the Company’s principal shareholders or members of our board of directors or senior
management or any immediate family member of any of the foregoing. A general statement of this policy is set forth
in our audit committee charter, which was attached as Appendix A to our proxy statement for the 2008 Annual
Meeting of Stockholders which has been filed with the SEC. However, the Audit Committee does not have detailed
written policies and procedures for reviewing related party transactions. Rather, all facts and circumstances
surrounding each related party transaction may be considered. If the Audit Committee determines that any such
related party transaction creates a conflict of interest situation or would require disclosure under Item 404 of
Regulation S-K, as promulgated by the SEC, the transaction must be approved by the Audit Committee prior to the
Company entering into such transaction or ratified thereafter. The chair of the Audit Committee is delegated the
authority to approve such transactions on behalf of the full committee, provided that such approval is thereafter
reviewed by the committee. Transactions or relationships previously approved by the Audit Committee or in
existence prior to the formation of the committee do not require approval or ratification.
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