AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to the Employment Agreement (this “Amendment”) is made
effective as of January 1, 2013 (the “Effective Date”) by and between Travelzoo
Inc. (the “Company”) and Shirley Tafoya (“Employee”), with reference to the
following facts:
A.    The Company and Employee are parties to an Employment Agreement dated
August 4, 2010 (“Employment Agreement”).
B.    To incorporate changes to the performance bonus provision of the
Employment Agreement, Company and Employee mutually desire to effect certain
amendments to the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
such other good and valuable consideration, the parties agree as follows:
Except as otherwise provided, capitalized terms in this Amendment shall have the
meanings ascribed to such terms in the Employment Agreement.
1.     The entire Sections 3(b) and 3(c) entitled “Performance Bonus” and
“Discretionary Bonus” are hereby deleted and the following is substituted in its
place:
“(b)    Performance Bonus.  Beginning with the first quarter of 2013, Employee
will be eligible to participate in a quarterly Performance Bonus plan
(“Performance Bonus”), under which Employee may receive, in addition to his
Salary, a bonus in an amount between zero and $ 136,000 (One Hundred Thirty-Six
Thousand Dollars) 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).

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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 North
America consolidated revenue during the quarter.
No bonus if actual quarterly North America revenues are less than 95% of the
revenue target for the quarter, or if significant customer criteria are not met.
If actual revenues are 95% or more of the North America revenue target, the
bonus is as follows:
• 95% achievement: $24,000
• 100% achievement: $40,000
• 105% achievement: $48,000 

If the achievement falls between 95% and 100%, bonus will be calculated
according to the following formula:
$24,000 plus $320 for every 0.1 percent achievement above 95%.
Example: 
96.7% achievement would result in a bonus of $24,000 plus 17 times $320 = total
payout of $29,440.
If the achievement is falls between 100% and 105%, bonus will be calculated
according to the following formula:
$40,000 plus $160 for every 0.1 percent achievement above 100%.
Example: 
104.2% achievement would result in a bonus of $40,000 plus 42 times $160 = total
payout of $46,720.
If achievement is 105% or above the bonus is $48,000. 

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North America operating income target for the quarter met.
No bonus if actual quarterly North America operating income is less than 90% of
the operating income target for the quarter.
 If the actual worldwide operating income is 90% or more of the target, the
bonus is paid as follows:
• 90% achievement: $24,000
• 100% achievement: $40,000
• 110% achievement: $48,000
If the achievement falls between 90% and 100%, bonus will be calculated
according to the following formula:
$24,000 plus $160 for every 0.1 percent achievement above 90%.
Example: 
92.9% achievement would result in a bonus of $24,000 plus 29 times $160 = total
payout of $28,640
If the achievement falls between 100% and 110%, bonus will be calculated
according to the following formula:
 
$40,000 plus $160 for every 0.1 percent achievement above 100%.
Example: 
102.5% achievement would result in a bonus of $40,000 plus 25 times $160 = total
payout of $44,000.
If achievement is 110% or above the bonus is $48,000. 

North America audience targets for the quarter met.
up to $40,000 if all targets are met

“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.
All targets (worldwide revenue, worldwide operating income, and worldwide
audience) will be set by the Company’s Board of Directors as part of the
approval of the Company’s annual budget, and can only be modified by the Board
throughout the calendar year. The Company’s Chief Executive Officer will
determine if the criteria are met and will determine the quarterly Performance
Bonus, if any, according to the schedule above.

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The Company shall notify Employee of any changes to the Performance Bonus via
E-mail or in writing.
Any bonus payments, if applicable, shall be made no more than 60 days after the
end of the calendar quarter, and will be subject to the usual and applicable
withholding and payroll taxes.”

This Amendment shall commence on the Effective Date and continue in effect until
the expiration or sooner termination of the Employment Agreement. This Amendment
shall supersede and replace any inconsistent provisions of the Employment
Agreement. Except as expressly set forth herein, all other terms of the
Employment Agreement remain in full force and effect.

Employee acknowledges that she has had an adequate opportunity to review this
agreement and all of its terms and is entering into it voluntarily on the date
shown below her name. She has carefully read this agreement and understands all
of its terms. She further acknowledges that he has voluntarily entered into this
agreement, that this agreement is not the result of any fraud, duress, coercion,
pressure or undue influence exercised by or on behalf of employer, that she has
not relied upon any representation or statement, written or oral, not set forth
in this agreement, and that she has had sufficient time to review and discuss
this agreement with his legal advisor and tax advisor.

TRAVELZOO INC.    SHIRLEY TAFOYA
By: __________________________    By: __________________________
Its: __________________________
Date: ________________________    Date: ________________________

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