Travelzoo 2011 Annual Report Download - page 8

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7
• Twenty five percent (25%) of the Option will vest on January 23, 2013
• Twenty five percent (25%) of the Option will vest on January 23, 2014
• Twenty five percent (25%) of the Option will vest on January 23, 2015
• Twenty five percent (25%) of the Option will vest on January 23, 2016
Mr. Ceremony and Ms. Tafoya must exercise the Option by January 23, 2022; after such date, the Option will expire.
Exercise of Option
Optionee 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 Optionee 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 Optionee other than by will or the laws of descent and distribution and may be exercised during
Optionee’s lifetime only by him or his guardian or legal representative.
Effect of Termination of Employment
If Optionee’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, Optionee (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 January 23, 2022.
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 Optinee would generally recognize taxable
income in that amount.
Personal Interest
Mr. Ceremony is the Chief Financial Officer of the Company and Ms. Tafoya is the President, North America.
Registration
The Company will register the shares of common stock made available under the Stock Option Agreement under the Securities Act
of 1933, as amended.