Document:

Exhibit 10.3 Karen Rohan OL

Exhibit 10.3

Nancy Untiet
Senior Executive Recruiter
Aetna
151 Farmington Avenue
Hartford, CT 06156
(860) 273-1891

May 18, 2012

Karen S. Rohan
28 Highwood Lane
Falmouth, MA 02536

Dear Karen:

On behalf of Aetna, I am pleased to offer you the position of Head of Specialty Businesses, responsible for all business lines therein except for Pharmacy and Behavioral Health.  You will assume responsibility for all of the Specialty Businesses no sooner than 12 months from your first day of employment.

We look forward to having you start work on or before, August 14, 2012.  As approved by the Board of Directors Committee on Compensation and Organization on May 18, 2012, your base salary will be $600,000 per year, payable in accordance with the company's regular payroll practices (currently bi-weekly).  Your salary will be reviewed periodically for a possible salary increase and the company may also from time to time review and adjust salaries to reflect appropriate compensation for each position.  This offer is made with the understanding that your principal work location is Hartford, CT.  In addition, the amount of time you spend in multiple states due to business travel may impact your state tax liability. 

You will be eligible for consideration for a pro-rated award under the company's annual incentive program beginning with the 2012 performance year (payable in 2013) as long as the plan is in effect.  Each year thereafter, while you are employed by the company, you will be eligible for consideration for additional awards under the annual incentive program while the plan remains in effect.  Your full-year annual target bonus opportunity will be 90% of your base salary.  

In connection with the Company's long-term incentive awards granted in 2012, the Board of Directors' Committee of Compensation and Organization has approved a grant to you of Aetna Market Stock Units (MSUs) which we consider as having a total target value of $1,190,000.  The number of MSUs that you will receive will be based on both a valuation factor and the closing price of Aetna common stock on the effective date of the grant, in accordance with Company grant practices.  

The Board of Directors' Committee on Compensation and Organization also approved a grant of performance stock units (PSUs) which we consider as having a total target value of $510,000.  The number of PSUs that you will receive will be based on the closing price of Aetna common stock on the effective date of the grant, in accordance with Company grant practices.

Rohan, K.
05/18/12
Page 2

A one-time payment of $135,000 (less applicable withholding and taxes) will be made to you after you begin work at Aetna in recognition of your career move.  This payment will be reflected in either your first or the following paycheck (depending on the payroll cycle and your start date).  If you voluntarily terminate your employment or are terminated for misconduct within 12 months after your start date, you will be responsible for repaying the full amount of your sign-on bonus.  If you voluntarily terminate your employment or are terminated for misconduct after 12 months, but before 18 months of your start date, you will be responsible for repaying 50% of your sign-on bonus.

In further recognition of your career move, the Board of Directors' Committee on Compensation and Organization also approved a grant of sign-on restricted stock units (RSUs) which we consider as having a total target grant value of $2,000,000. The number of RSUs that you will receive will be based on the closing price of Aetna common stock on the effective date of the grant, in accordance with Company grant practices.  These RSUs will vest in three equal annual installments from the date of the grant.  The RSU grant will be subject to you agreeing to the terms of the award agreement and the plan except as provided below.  Additional details are provided in the Term(s) of Award documents, which you will receive approximately two weeks after the grant effective date.  

As a part of the Executive Tier of the Aetna Equity based Compensation program, we encourage you to achieve a certain level of ownership in Company stock to better align the interests of senior executives with Company shareholders.  Specifically, we expect you to own shares of stock in the Company with a dollar value greater than or equal to 300% of your base salary.  If at the time of vesting or exercise of an equity grant an executive is not in compliance with his or her stock ownership requirement, the executive must retain 35% of the after tax shares received on vesting or exercise until 30 days past termination of employment.  Net shares held from vested RSUs, PSUs and MSUs, shares delivered upon exercise of a SAR and voluntarily deferred shares and/or net shares held are counted for purposes of determining whether an executive has satisfied the ownership expectation. There are also a variety of Company programs currently available to you to build this stock ownership position.  Additional program details will be made available to you with your 2012 awards. 

If your employment is involuntarily terminated by the Company other than for cause, you will receive payment for fifty two weeks (52) weeks of salary in lieu of amounts payable under any Company severance and salary continuation benefits plan, upon delivery of a release of any employment-related claims and covenants in form and substance reasonably satisfactory to the Company.

For the purpose of Paid Time Off (PTO) accrual only, you will earn twenty-eight (28) PTO days as if you had ten (10) years of service.  In your first partial calendar year of employment, your PTO accrual will be pro-rated, based on your hire date.  PTO includes time out of the office for vacation, personal time, family illness, and incidental sick days. 

Rohan, K.
05/18/12
Page 3

You will be eligible to participate in our contributory health and welfare benefit plan.  Coverage for medical, dental, life, disability, flexible spending accounts and accident benefits will become effective on the first of the month following the date you begin work (or re-commence work if you are being re-hired).  If you begin work on the first of the month, your benefits will become effective immediately.  Information on Aetna's total benefits package (various benefit programs and services and associated costs), can be accessed at www.Aetna.com/working (Benefits).  Once you begin work, you can enroll for coverage through our intranet site. 

If you have a disability and will need an accommodation to perform the essential functions of your job, please call Aetna's HR Contact Center at 1-800-238-6247.  They will collect contact information from you and refer your request to Aetna's Workplace Accommodations Unit.  The Workplace Accommodations Unit will then contact and work with you to identify and implement a reasonable accommodation. 

This offer is based on the information you provided in the Aetna Employment Application and is also contingent upon successful completion of a background check. As you were also previously advised, a drug test is part of the standard pre-employment process.  This job offer is contingent upon your passing a urinalysis drug test before your start date.  Your test must be scheduled and taken no later than two business days from the date you verbally accepted Aetna's offer of employment.  The enclosed handout, the Aetna Candidate Information sheet, provides instructions you must follow to schedule and take your drug test within the timeframe noted above.

Federal law requires that we verify the employment authorization of all new employees.  On your first day, you must bring appropriate documentation to verify both your identity and employment eligibility.  Please carefully review the enclosed materials that provide information about certain documents (List of Acceptable Documents) that you must bring to work on your first day in order to complete the I-9 form. In addition, the employee name which you have provided to us must match exactly to the name associated with your social security number and listed with the Social Security Administration (including middle name/initial) as well as the identity document which you provide when completing your I-9.  If it does not, we may not be able to hire you or your employment could be terminated at a later date.  Therefore, please follow up with the SSA to resolve any discrepancies prior to your scheduled first day of work.

In addition, Aetna participates in the federal E-Verify Program in all states, with the exception 
of Illinois. Under the E-Verify Program, documents used to determine employment authorization are subject to verification by the Social Security Administration and Department of Homeland Security through their databases. Should we receive a non confirmation from the Department of Homeland Security and/or cannot determine the validity of the documents presented we may terminate your employment. 

Rohan, K.
05/18/12
Page 4

Aetna is aware of a restrictive covenant dated July 28, 2009 that you had executed in favor of your current employer which places various post-employment restrictions on your activities (“Restrictive Covenant”).  You warrant and represent that (i) this Restrictive Covenant is the only one you have executed in favor of your current employer; (ii) that your are under no other post-employment restrictions of any kind; and (iii) you can and will perform the duties of the Executive Vice President of Specialty Businesses as outlined herein and comply with all provisions of the Restrictive Covenant, or any other similar restriction.  Regardless of your belief of your ability to honor the terms of the Restrictive Covenant, you have agreed to seek an acknowledgement from your current employer that your employment with Aetna as contemplated herein will not violate the provisions of your Restrictive Covenant, or any similar restriction, and to promptly advise Aetna of your current employer's position on this issue.  In the event that your current employer obtains or secures a court order preventing you from working for Aetna pursuant to the Restrictive Covenant, Aetna will pay, upon the permanent lifting or removal of such injunction and commencement of your employment with Aetna, in an amount equivalent to your base salary for the lesser of (i) the length of time such order is in place or (ii) six months.

Aetna is further aware that you have been eligible, and might otherwise be eligible, for certain compensation beyond your base salary pursuant to a 2011 Magellan Management Incentive Plan (“Special Compensation).  You may suffer the loss of Special Compensation through either the forfeiture or denial of Special Compensation as yet unpaid, or the repayment of Special Compensation already paid to you.  Aetna will reimburse you for the documented loss of any Special Compensation, up to a maximum value of $1,950,000 delivered in a combination of cash (for cash repayments) and restricted stock units (in the event of any forfeited vested equity), but only after a court, or other body with jurisdiction over such matters, enters a final order, and only to the extent, that you are not entitled (or have to repay) such Special Compensation. 

Aetna expects you to treat confidential and proprietary information-both that belonging to Aetna and that belonging to other companies-appropriately. This includes not disclosing or using any confidential or proprietary information or trade secrets from prior employers.  If you are not sure if this applies to you, you should seek legal advice. To protect the company's proprietary information, as a condition of your employment, you will be required to sign and return the attached Non-Solicitation, Confidentiality and Assignment Agreement, or such other restrictive covenant that Aetna provides.  

This offer and your acceptance of that offer also are contingent upon your agreement to use the Company's mandatory/binding arbitration program rather than the courts to resolve employment-related legal disputes.  In arbitration, an arbitrator instead of a judge or jury resolves the dispute, and the decision of the arbitrator is final and binding.  The enclosed materials should answer any questions you have about Aetna's Employment Dispute Arbitration Program.  With respect to claims subject to the arbitration requirement, arbitration replaces your right and the company's right to sue or participate in a lawsuit. You are advised to, and may take the opportunity to, obtain legal advice before final acceptance of the terms of this offer.  You will be required to complete an electronic version of the enclosed Employment Dispute Arbitration Acknowledgement Form on your start date.

Rohan, K.
05/18/12
Page 5

You should understand that this letter is not an employment contract.  Aetna is an “at will” employer and makes no representation to you of continued employment.  While the company hopes that its employment relationship with its employees will be mutually enjoyable and lasting, Employees may terminate their employment at any time, with or without cause, or notice and the company may do the same.  Please note, this letter contains all of the terms of the company's offer to you. You may not rely on any verbal or other promise, inducement which is not in this letter.

During and following the employment period, Aetna shall indemnify you and hold you harmless from and against any claim, loss or cause of action arising from or out of your performance as an officer, director or employee of Aetna or in any other capacity, including any fiduciary capacity, in which you serve at the request of Aetna (collectively “Claims”) to the maximum extent permitted by applicable law and Aetna's by-laws.  Aetna's obligation shall not extend to any Claim alleging, in all or part, that you have violated any obligation, promise, contract or other undertaking, whether written or oral, that you owe to your current employer, including but not limited to any Restrictive Covenant or other similar restriction.  

Your New Employee Orientation will be delivered via Aetna's intranet on your start date.  Our orientation web-site will provide you with information which allows you to sign-up for benefits, handle payroll administration functions, obtain your employee I.D. badge and parking hang tag (where applicable), etc.  Look for the "Welcome to Aetna" e-mail that will start you on your orientation experience.

Once again, I am delighted to extend this offer to you and look forward to your acceptance.  Please acknowledge your acceptance of this offer by signing the enclosed copy of this letter, the enclosed copy of the non-solicitation/confidentiality/assignment agreement, and returning within seven (7) days after receipt.  If you have any questions, please do not hesitate to call me.

Sincerely,

Aetna Life Insurance Company

By:  /s/ Nancy Untiet                          
       Nancy Untiet

Accepted: /s/ Karen Rohan                    Date:     5/21/2012            

c:  Mark Bertolini

Enclosures

Description of Aetna's Employment Dispute Arbitration Program 
Following are the provisions of Aetna's Employment Dispute Arbitration Program: 

		
	1.
	Except as otherwise specified, all employment-related legal disputes between employees and the Company will be submitted to and resolved by binding arbitration, and neither the employee nor the company will file or participate as an individual party or member of a class in a lawsuit in any court against the other with respect to such matters. This shall apply to claims brought on or after the date the employee becomes subject to this Program, even if the facts and circumstances relating to the claim occurred prior to that date and regardless of whether the employee or the Company previously filed a complaint/charge with a government agency concerning this claim. 

		
	2.
	For purposes of this Program, the "Company" includes Aetna Inc., its subsidiaries and related companies, their predecessors, successors and assigns, and those acting as representatives or agents of those entities. "Employee" includes current and former employees of the Company.  

		
	3.
	This Program does not apply to workers' compensation claims, unemployment compensation claims, and claims under the Employee Retirement Income Security Act of 1974 ("ERISA") for employee benefits. A dispute as to whether this Program applies must be submitted to the binding arbitration process set forth in this Program. 

		
	4.
	The employee and/or the Company may seek emergency or temporary injunctive relief from a court in accordance with applicable law. However, after the court has issued a ruling concerning the emergency or temporary injunctive relief, the employee and the Company shall be required to submit the dispute to binding arbitration pursuant to this Program.

		
	5.
	Unless otherwise agreed, the arbitration will be administered by the American Arbitration Association (the "AAA") and will be conducted pursuant to the AAA's Employment Arbitration Rules and Mediation Procedures (the "Rules"), as modified in this Program, in effect at the time the request for arbitration is filed. For more information, visit the AAA website. 

		
	6.
	If the Company initiates a request for arbitration, the Company will pay all of the administrative fees and costs charged by the AAA, including the arbitrator's compensation and charges for hearing room rentals, etc. If the employee initiates a request for arbitration or submits a counterclaim to the Company's request for arbitration, the employee shall be required to contribute One Hundred Dollars ($100.00) to those administrative fees and costs, payable to the AAA at the time the employee's request for arbitration or counterclaim is submitted. The Company may increase the contribution amount to no more than the maximum permitted under the AAA rules then in effect. In all cases, the employee and the Company shall be responsible for payment of any fees assessed by the arbitrator as a result of that party's delay, request for postponement, failure to comply with the arbitrator's rulings and for other similar reasons. 

		
	7.
	The employee and the Company may choose to be represented by legal counsel in the arbitration process and shall be responsible for their own legal fees, expenses and costs. However, the arbitrator shall have the same authority as a court to order the employee or the Company to pay some or all of the other's legal fees, expenses, and costs, in accordance with applicable law. 

		
	8.
	Unless otherwise agreed, there shall be a single arbitrator, selected by the employee and the Company from a list of qualified neutrals furnished by the AAA. If the employee and the Company cannot agree on an arbitrator, one will be selected by the AAA. 

		
	9.
	Unless otherwise agreed, the arbitration hearing will take place in the city where the employee works or last worked for the Company. If the employee and the Company disagree as to the proper locale, the AAA will decide. 

		
	10.
	The employee and the Company shall be entitled to conduct limited pre-hearing discovery. Each may take the deposition of one person and anyone designated by the other as an expert witness. The party taking the deposition shall be responsible for all associated costs, such as the cost of a court reporter and the cost of an original transcript. Each party also has the right to submit one set of ten written questions (including subparts) to the other party, which must be answered under oath, and to request and obtain all documents on which the other party relies in support of its answers to the written questions. Additional discovery may be permitted by the arbitrator upon a showing that it is necessary for that party to have a fair opportunity to present a claim or defense. 

		
	11.
	The arbitrator shall apply the same substantive law that would apply if the matter were heard by a court and shall have the authority to order the same remedies (but no others) as would be available in a court proceeding. The time limits for requesting arbitration or submitting a counterclaim and the administrative prerequisites for filing an arbitration claim or counterclaim are the same as they would be in a court proceeding. The arbitrator shall  consider and decide dispositive motions (motions seeking a decision on some or all of the claims or counterclaims without an arbitration hearing) filed by any party

		
	12.
	All proceedings, including the arbitration hearing and decision, are private and confidential, unless otherwise required b

y law. Arbitration decisions may not be published or publicized without the consent of both the employee and the Company. 
		
	13.
	Unless otherwise agreed, the arbitrator's decisions will be in writing with a brief summary of the arbitrator's opinion. 

		
	14.
	The arbitrator's decision is final and binding on the employee and the Company. After the arbitrator's decision is issued, the employee or the Company may obtain an order of judgment from a court and may obtain a court order enforcing the decision. The arbitrator's decision may be appealed to the courts only under the limited circumstances provided by law.

		
	15.
	If the employee previously signed an agreement, including but not limited to an employment agreement, containing arbitration provisions, those provisions are superseded by the arbitration provisions of this Program. 

		
	16.
	If any provision of this Program is found to be void or otherwise unenforceable, in whole or in part, this shall not affect the validity of the remainder of the Agreement. All other provisions shall remain in full force and effect. 

The Company may modify or eliminate this program. However, with respect to an employee or former employee who has agreed to be bound by the terms of this program, the Company may only modify or eliminate the program with that individual's consent (or as required by law).

 

Questions and Answers about the Employment Dispute Arbitration Program 

The following questions and answers are designed to provide additional information about Aetna's Employment Dispute Arbitration Program.   

What is arbitration? 
In arbitration, each side presents its position in a formal, confidential hearing to an impartial, outside arbitrator whom they have selected. The process often involves the testimony of witnesses, depositions, and the formal introduction of evidence. The arbitrator then makes a final, binding decision.   

Why does Aetna want us to use binding arbitration? 
The Company's goal is to resolve employment-related disputes between Aetna and its employees in a fair, cost-effective and prompt manner. The Company believes binding arbitration will better achieve those objectives than the traditional litigation process. Many companies, including a number of our competitors (such as CIGNA, Wellpoint and United Healthcare) have implemented binding arbitration programs.   

Does this mean that if I have an employment-related legal dispute with Aetna and it is not resolved through less formal means, the dispute will not be decided by a judge or jury? 
Yes. While some disputes are not subject to the arbitration provisions, all "covered" disputes will be submitted to a neutral arbitrator who will use the American Arbitration Association's (AAA's) Employment Arbitration Rules and Mediation Procedures, as modified by Aetna's Employment Dispute Arbitration Program, and will make a final and binding decision. These Rules are available online at the AAA Website, and we encourage you to read them carefully.   

Will the arbitrator have the authority to award the same type of monetary and non-monetary relief as a judge or jury? 
Yes. The arbitrator will be able to award the same types of relief as a judge or jury. Likewise, the arbitrator cannot grant remedies that are unavailable in court.   

What if I disagree with the arbitrator's decisions? Can I appeal to a court? 
Except in very limited circumstances (for example, where fraud on the part of the arbitrator is claimed), an arbitrator's decision is final and binding on both the employee and the Company. One reason why arbitration generally results in a more prompt outcome is that in most situations the arbitrator's decision is not subject to appeal by either party.   

Will I have as much time to file an arbitration claim as I would to file a lawsuit? 
Yes. The time limits are the same as they would be in a court proceeding.   

Who pays for the arbitration costs? 
Except for a nominal administration fee that must be paid by an employee at the time of filing an arbitration claim with the AAA, Aetna pays the fees and expenses charged by the AAA, including the neutral arbitrator's compensation. Each party is required to pay fees assessed as a result of its own delay, request for postponement/cancellation of a scheduled hearing or failure to comply with an arbitrator's rulings, etc.   

If I decide to be represented by a lawyer in the arbitration proceeding, who pays my legal fees? 
Just as in the traditional legal process, each party may choose to be represented by counsel and is responsible for payment of its own legal fees. However, the arbitrator has the same authority as a judge to order one party to pay the other party's legal fees and/or costs and expenses.   

What if I am already subject to an arbitration requirement in another employment agreement I have with the Company? 
The current agreement replaces any and all arbitration clauses contained in other employment agreements you may have with the Company.    

Do the arbitration provisions cover only future claims I may have?     
Any "covered" employment-related claim that you bring on or after the date you become subject to Aetna's Employment Dispute Arbitration Program is subject to arbitration, even if the facts and circumstances surrounding the claim occurred earlier and regardless of whether you previously filed a complaint/charge with a government agency concerning the claim.                                                       

Do the arbitration provisions also cover employment-related claims that Aetna may have against me?
Yes. The provisions are mutual and also require Aetna to arbitrate any "covered" employment-related claims it may have 

against you.       

Do the arbitration provisions preclude me from filing a charge with the Equal Employment Opportunity Commission (EEOC) or a similar agency?
No. The arbitration provisions do not preclude you from filing a charge with the EEOC or similar agency. In fact, if filing a charge or complaint with a government agency would otherwise be required before filing a lawsuit, the same requirements must be met before filing an arbitration claim. 

If I have additional questions as to how the arbitration program works, who should I contact?
You may contact the HR Contact Center. 

 
 
 
 
 
 
 
 
 
 
 
 

This page is for your information. You will be required to complete an electronic version of this form on your start date. 
 
Aetna Employment Dispute Arbitration Program 
Acknowledgement 
 
 
 
I acknowledge that: 
 
 
		
	•
	I received a description of Aetna's Employment Dispute Arbitration Program and accompanying Questions and Answers and was offered an opportunity to review these materials. 

		
	•
	I was advised that with respect to claims subject to arbitration, arbitration replaces my right and the Company's right to sue or participate in a lawsuit.  I was further advised of my right to obtain legal advice about arbitration before accepting the terms of my job offer.

		
	•
	My offer of employment was contingent upon my agreement to use Aetna's mandatory/binding arbitration program rather than the courts to resolve employment-related legal disputes.  I agree to do so.  

 
      
Your electronic acknowledgment will be retained indefinitely as a part of Aetna's company records.  You and your department owner will receive only an email copy of your acknowledgement.  It is recommended you keep your copy of the email confirmation for your personal records. 
 
Additional Information
 
o   I certify that I am a minor and I need to have my acknowledgement signed by a parent or legal guardian and the signed acknowledgement must be returned to my department owner.10.14

                                                                                                                                                                                 EXHIBIT10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is entered into as of February 27, 2012, (the “Effective Date”), by and between Travelzoo Inc., a Delaware corporation (the “Company”) with principal corporate offices at 590 Madison Avenue, 37th Floor, New York, NY 10022, and Mark Webb, whose address is 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 desires to employ Employee as President, Travelzoo Local Deals,   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, Travelzoo Local Deals.  Travelzoo Local Deals includes all activities regarding Local Deals in the US, Canada, UK, Spain, France and Germany.

(b) Duties.  During the term of Employee's employment with the Company, Employee shall devote his full time, skill and attention to his duties and responsibilities as the President, Travelzoo Local Deals, which Employee shall perform faithfully, diligently and competently, and Employee shall use his 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 he is currently involved in, or may become involved in, and that does not materially interfere with his ability to perform his 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 his 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 Chief Executive Officer.  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 his Base Salary and Benefits for a period of six (6) months (“Severance Pay”) in equal installments on the dates on which the Employee's Base Salary would otherwise have been paid if Executive's employment had continued for such period, with such installments paid in accordance with the Company's normal payroll dates in effect on the date of such termination of employment.  Such Severance Pay shall be subject to Section 2(d) 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 his 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 his 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 his 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 his 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 he worked immediately prior to a Change of Control, and Employee resigns within sixty (60) days after the Change in Control, Employee shall receive his Base Salary for a period of six (6) months (“Severance Pay”), benefits, and pro rata performance bonus pursuant to paragraph 3(b) earned through the date of termination.  Any such Severance Pay shall be paid in equal installments on the dates on which the Employee's Base Salary would otherwise have been paid if Executive's employment had continued for such period, with such installments paid in accordance with the Company's normal payroll dates in effect on the date of such termination of employment.  Any payments and benefits payable pursuant to this Section 2(e) shall be subject to Section 2(e) as a condition precedent.  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 he resigns during the Term of this Agreement he must give six weeks' notice.  He 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 by no later than sixty (60) days following the Employee's termination of employment as a condition precedent to payment of any amounts or benefits payable pursuant to any provision of Section 2 of this Agreement.  Any such payments or benefits shall begin as soon as practicable following the effective date of such release, provided that if the sixty (60) day period following the date of the Employee's termination of employment spans two calendar years, any such payments shall begin no earlier than the first day of such second calendar year regardless of the effective date of such release.  Any Severance Pay or other separation pay and benefits shall be subject to the usual and applicable required withholdings and payroll taxes.

(f) Code Section 409A Compliance.  Notwithstanding anything herein to the contrary, in the event that the Employee is determined to be a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986 as amended, and the regulations and other guidance promulgated there under (“Code Section 409A”), for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, no earlier than the first payroll date which is more than six months following the date of separation from service, but only to the extent required to avoid any adverse tax consequences to the Employee under Code Section 409A.  For purposes of this Agreement, a termination of employment shall only be deemed to occur if such termination of employment constitutes a “separation from service” within the meaning of Code Section 409A.  For purposes of Code Section 409A, the right to Severance Pay hereunder shall be treated as a right to a series of separate payments.

3. Compensation and Fringe Benefits.

(a) Base Salary.  Effective February 27, 2012, Employee will receive a salary at the annualized rate of $384,000 (Three Hundred and Eighty Four 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 his 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) Sign on Bonus.  Employee will receive a one-time Sign on Bonus (“Sign on Bonus”) of $20,000 if he starts in the position no later than February 27, 2012.  

(c) Quarterly Management Bonus.  Employee will be eligible to participate in a quarterly Performance Bonus plan (“Quarterly Performance Bonus”), under which Employee may receive, in addition to his Salary, a bonus in an amount between zero and $60,000 (Sixty Thousand Dollars).  Employee must be employed by the Company through the last day of the quarter in order to receive any Quarterly 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).

The following schedule applies for calculating a bonus.

	
			
	Criteria
	 
	Amount

	Quarterly worldwide Local Deals revenue target met or exceeded, per the official operating budgets
	 
	$20,000

	Quarterly worldwide Local Deals income target met or exceeded, per the official operating budgets, met or exceeded
	 
	20,000

	Quarterly assessment of Executive's leadership and management performance, as determined by the Chief Executive Officer
	Up to
	$20,000

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.

The Quarterly Performance Bonus will be guaranteed for the first two quarters of employment (Q1 and Q2 2012), provided the Employee is employed in good standing on the last day of each quarter for which such bonus is being paid. The first quarter of employment will be prorated. 

(d) Operating Income Share Performance Bonus.  Employee will be eligible to participate in a Operating Income Share Performance Bonus plan (“Operating Income Share Performance Bonus”) until December 31, 2014, under which Employee may receive, in addition to his Salary, a further quarterly bonus for meeting or exceeding given Local Deals worldwide operating income goals.  This Operating Income Share Performance Bonus is capped at $1,500,000 (One Million, Five Hundred Thousand Dollars) per calendar year.  Employee must be employed by the Company through the last day of the first quarter following the calendar year, in order to receive any Annual Performance Bonus.

The following schedule applies for calculating a bonus.
	
		
	Criteria
	Amount

	Worldwide Local Deals operating income incrementally improves over prior year period and meets budget.  When this occurs, the Executive will receive the following  percentage share of the incremental worldwide local deals operating income:
	 

	No improvement on prior year average quarterly worldwide local deals operating income.

	No annual bonus

	Any improvement on prior year average quarterly worldwide Local Deals operating income until the current quarterly worldwide local deals operating income budget has been met.

	5%  of incremental worldwide Local Deals operating income achieved

	Achieving and surpassing the current worldwide quarterly Local Deals operating income budget. 
	7.5%  of incremental worldwide Local Deals operating income achieved

For avoidance of confusion, see Attachment B which outlines the Operating Income Share Performance Bonus for 2012.  
The Operating Income Share Performance Bonus is calculated and paid quarterly.  Any bonus payments, if applicable, shall be made no more than 90 days  after  the end of the calendar quarter, and will be subject to the usual and applicable withholding and payroll taxes. 

(e) 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. 

(f) 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.  The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year.  Reimbursement of an eligible expense shall in no event occur later than the last day of the calendar year following the calendar year in which such expense was incurred.  The right to expenses reimbursements in connection with the agreement is not subject to liquidation or exchange for another benefit.

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 his 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 his 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 his 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 his 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 his 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 his 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 his; 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, his 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 his employment under this Agreement, including his special access to the Proprietary Information, and in consideration of his 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 his employment, whether under this Agreement or otherwise, and after the termination of such employment, he will not, directly or indirectly, disclose, furnish, make available or utilize any of the Proprietary Information, other than in the proper performance of his 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 and daily deals  (the “Products”);
    2. perform services for, or engage in, any business or segment of a business that operates a travel search engine or daily deals (i.e. Groupon, Living Social, Amazon Offer, Google Offers) (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 use the Company's Proprietary Information to, 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 his possession by virtue of his employment by the Company are and will remain the property of the Company.  Upon termination of his employment with the Company, Employee shall immediately return to the Company all such items in his 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 his 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. Severability.  In 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 New York, New York in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the "Rules").  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 attorneys' fees and costs incurred in connection therewith.
(c) The arbitrator shall apply New York law to the merits of any dispute or claim, without reference to rules of conflict of law.  Employee hereby expressly consents to the personal jurisdiction of the state and federal courts located in New York County, New York as the exclusive jurisdiction 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) Employee understands that nothing in this Section modifies Employee's at-will status.  Either the Company or Employee can terminate the employment relationship at any time, with or without cause, subject only to the restrictions set forth in Section 2 above.
(e) Employee has read and understands Section 11, which discusses arbitration.  Employee understands that by signing this agreement, employee agrees 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 employee's 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; 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.
(f) The Parties may apply to any court of competent jurisdiction (in accordance with Section 11(c)) 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 New York.

14. Acknowledgment.  Employee acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his 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.
By:     
Title:     
Date:     

EMPLOYEE:
        
MARK K. WEBB
Date:

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