Travelzoo 2010 Annual Report Download - page 8

300,000 shares of the Company’s common stock. The option will begin to partly vest on July 1, 2011. Stockholders
are being asked to approve the issuance of common stock which are issuable to Mr. Loughlin upon exercise of the
Option. The principal terms of the Stock Option Agreement are summarized below. The following summary is
qualified in its entirety by the full text of the Stock Option Agreement, which is incorporated herein by reference to
Exhibit 10.2 to the Company’s report on Form 8-K, filed November 23, 2009.
Exercisability of Option
The exercise price of the Option is $14.97 per share. The Option will become exercisable in accordance with
the following schedule:
• Twenty five percent (25%) of the Option will vest on July 1, 2011
• Twenty five percent (25%) of the Option will vest on July 1, 2012
• Twenty five percent (25%) of the Option will vest on July 1, 2013
• Twenty five percent (25%) of the Option will vest on July 1, 2014
Mr. Loughlin must exercise the Option by November 18, 2019; after such date, the Option will expire.
Exercise of Option
Mr. Loughlin may exercise, in whole or in part, the Option by delivering to the Company not less than 30 days
prior to the exercise date (or such shorter period the Company may approve) a written notice of exercise, designating
the number of shares to be purchased, along with payment of the full amount of the purchase price of the shares
being purchased. The purchase price may be paid in cash or, in the discretion of the Board of Directors, by tender of
shares of common stock already owned by Mr. Loughlin or other method.
Adjustment of Option
As is customary in stock option agreements of this nature, the number of shares subject to the Option and
exercise price are subject to adjustment in the event there is any change in the number of shares of outstanding
common stock of the Company by reason of a stock dividend, recapitalization, merger, consolidation, split-up,
combination, exchange of shares or other similar event.
Transfer Restrictions
The Option is not transferable by Mr. Loughlin other than by will or the laws of descent and distribution and
may be exercised during Mr. Loughlin’s lifetime only by him or his guardian or legal representative.
Effect of Termination of Employment
If Mr. Loughlin’s employment with the Company is terminated, including in the event of his death or disability,
any portion of the Option which is not then exercisable will immediately terminate. With respect to any portion of
the Option which is then exercisable on the date of termination of employment, Mr. Loughlin (or, in the event of his
death, his legatee(s) under his last will, or his personal representatives or distributes) may exercise the Option for a
period of three (3) months following such termination, but in no event after November 18, 2019.
Registration
The Company has registered the shares of common stock made available under the Stock Option Agreement
under the Securities Act of 1933, as amended.
Federal Income Tax Consequences
The Company is generally entitled to a Federal income tax deduction in an amount equal to the difference
between the exercise price of the Option and the fair market value of the shares at the time of exercise, and
Mr. Loughlin would generally recognize taxable income in that amount
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