Document:

exh10-56.htm

Exhibit 10.56

 

CD INTERNATIONAL ENTERPRISES, INC.

2015 EMPLOYEE AND CONSULTANT STOCK INCENTIVE AND COMPENSATION PLAN

1.           Purpose.

1.1           Purpose. The purpose of the CD International Enterprises, Inc. 2015 Employee and Consultant Stock Incentive and Compensation Plan is to enable the Company to offer to its employees, officers, directors and consultants whose past, present and/or potential contributions to the Company and its Subsidiaries have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. The types of long-term incentive Awards that may be provided under the Plan will enable the Company to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of its businesses.

2.           Definitions.

2.1           Definitions. For purposes of the Plan, the following terms shall be defined as set forth below:

(a)           “Agreement” means the agreement between the Company and the Holder setting forth the terms and conditions of an Award under the Plan. Agreements shall be in the form(s) attached hereto.

(b)           “Award” means Stock Options, Restricted Stock and/or other Stock Based Awards awarded under the Plan.

(c)           “Board” means the Board of Directors of the Company.

(d)           “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(e)           “Committee” means the Board or any committee of the Board that the Board may designate to administer the Plan or any portion thereof.  If no Committee is so designated, then all references in this Plan to “Committee” shall mean the Board.

(f)           “Common Stock” means the common stock of the Company, $0.0001 par value per share.

(g)           “Company” means CD International Enterprises, Inc., a corporation organized under the laws of the State of Florida.

(h)           “Disability” means physical or mental impairment as determined under procedures established by the Committee for purposes of the Plan.

(i)           “Effective Date” means the date set forth in Section 12.1, below.

(j)           “Fair Market Value”, means, as of any given date: (i) if the Common Stock is listed on a national securities exchange, the closing price of the Common Stock in the principal trading market for the Common Stock on such date, as reported by the exchange (or on the last preceding trading date if such security was not traded on such date); (ii) if the Common Stock is not listed on a national securities exchange, but is traded in the over-the-counter market, the closing bid price for the Common Stock on such date, as reported by the  OTCQB Markets Inc. or similar publisher of such quotations; and (iii) if the fair market value of the Common Stock cannot be determined pursuant to clause (i) or (ii) above, such price as the Committee shall determine, in good faith.

(k)           “Holder” means a person who has received an Award under the Plan.

(l)           “Normal Retirement” means retirement from active employment with the Company or any Subsidiary, other than for Cause or due to death or disability, of a Holder who; (i) has reached the age of 65; (ii) has reached the age of 62 and has completed five years of service with the Company; or (iii) has reached the age of 60 and has completed 10 years of service with the Company.

  

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(m)           “Other Stock-Based Award” means an Award under Section 9, below, that is valued in whole or in part by reference to, or is otherwise based upon, Common Stock.

(n)           “Parent” means any present or future “parent corporation” of the Company, as such term is defined in Section 424(e) of the Code.

(o)           “Plan” means the CD International Enterprises, Inc. 2015 Employee and Consultant Stock Incentive and Compensation Plan, as hereinafter amended from time to time.

(p)           “Repurchase Value” shall mean the Fair Market Value in the event the Award to be repurchased under Section 10.2 is comprised of shares of Common Stock and the difference between Fair Market Value and the Exercise Price (if lower than Fair Market Value) in the event the Award is a Stock Option or Stock Appreciation Right; in each case, multiplied by the number of shares subject to the Award.

(q)           “Restricted Stock” means Common Stock, received under an Award made pursuant to Section 8, below that is subject to restrictions under said Section 8.

(r)           “SAR Value” means the excess of the Fair Market Value (on the exercise date) over the exercise price that the participant would have otherwise had to pay to exercise the related Stock Option, multiplied by the number of shares for which the Stock Appreciation Right is exercised.

(s)           “Stock Appreciation Right” means the right to receive from the Company, on surrender of all or part of the related Stock Option, without a cash payment to the Company, a number of shares of Common Stock equal to the SAR Value divided by the Fair Market Value (on the exercise date).

(t)           “Stock Option” or “Option” means any option to purchase shares of Common Stock that is granted pursuant to the Plan.  Options granted under the Plan are not intended to be “incentive stock options” within the meaning of Section 422 of the Code.

(u)           “Subsidiary” means any present or future “subsidiary corporation” of the Company, as such term is defined in Section 424(f) of the Code.

3.           Administration.

3.1           Committee Membership. The Plan shall be administered by the Board or a committee designated by the Board. Committee members shall serve for such term as the Board may in each case determine, and shall be subject to removal at any time by the Board. The Committee members, to the extent deemed to be appropriate by the Board, shall be “non-employee directors” as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”).

 

 

3.2           Powers of Committee. The Committee shall have the authority and responsibility to recommend to the Board for approval, Awards for Board members, executive officers, non-executive employees and consultants of the Company, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, and/or (iv) Other Stock-Based Awards. For purposes of illustration and not of limitation, the Committee shall have the authority (subject to the express provisions of this Plan):

(a)           to select the officers, employees, directors and consultants of the Company or any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock, and/or Other Stock-Based Awards may from time to time be awarded hereunder.

(b)           to determine the terms and conditions, not inconsistent with the terms of the Plan or requisite Board approval, of any Award granted hereunder including, but not limited to, number of shares, share exercise price or types of consideration paid upon exercise of Stock Options and the purchase price of Common Stock awarded under the Plan (including without limitation by a Holder’s conversion of deferred salary or other indebtedness of the Company to the Holder), such as other securities of the Company or other property, any restrictions or limitations, and any vesting, exchange, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions, as the Committee shall determine;

  

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(c)           to determine any specified performance goals or such other factors or criteria which need to be attained for the vesting of an Award granted hereunder;

(d)           to determine the terms and conditions under which Awards granted hereunder are to operate on a tandem basis and/or in conjunction with or apart from other equity awarded under this Plan and cash Awards made by the Company or any Subsidiary outside of this Plan; and

(e)           to determine the extent and circumstances under which Common Stock and other amounts payable with respect to an Award hereunder shall be deferred that may be either automatic or at the election of the Holder; and

3.3           Interpretation of Plan.

Subject to Section 11, below, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued under the Plan (and to determine the form and substance of all Agreements relating thereto), and to otherwise supervise the administration of the Plan. Subject to Section 11, below, all decisions made by the Committee pursuant to the provisions of the Plan shall be made in the Committee’s sole discretion, subject to Board authorization if indicated, and shall be final and binding upon all persons, including the Company, its Subsidiaries and Holders.

4.           Stock Subject to Plan.

4.1           Number of Shares. The total number of shares of Common Stock reserved and available for issuance under the Plan shall be thirty million (30,000,000) shares. Shares of Common Stock under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares.  The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day of January each calendar year during the term of the Plan, beginning with fiscal year 2015, by an amount equal to one and one-half percent (1.5%) of the total number of shares of Common Stock outstanding on the last trading day in December of the immediately preceding calendar year, but in no event shall any such annual increase exceed 1,500,000 shares of Common Stock (subject to proportional adjustment in the event of stock splits, reverse stock splits or similar events).  If any share of Common Stock that have been granted pursuant to a Stock Option ceases to be subject to a Stock Option, or if any shares of Common Stock that are subject to any Stock Appreciation Right, Restricted Stock, Deferred Stock Award, or Other Stock-Based Award granted hereunder are forfeited or any such Award otherwise terminates without a payment being made to the Holder in the form of Common Stock, such shares shall again be available for distribution in connection with future grants and Awards under the Plan.

4.2           Adjustment Upon Changes in Capitalization, Etc. In the event of any dividend (other than a cash dividend) payable on shares of Common Stock, stock split, reverse stock split, combination or exchange of shares, or other similar event (not addressed in Section 4.3, below) occurring after the grant of an Award, which results in a change in the shares of Common Stock of the Company as a whole, (i) the number of shares issuable in connection with any such Award and the purchase price thereof, if any, shall be proportionately adjusted to reflect the occurrence of any such event and (ii) the Committee shall determine whether such change requires an adjustment in the aggregate number of shares reserved for issuance under the Plan or to retain the number of shares reserved and available under the Plan in their sole discretion. Any adjustment required by this Section 4.2 shall be made by the Committee, in good faith, subject to Board authorization if indicated, whose determination will be final, binding and conclusive.

  

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4.3           Certain Mergers and Similar Transactions. In the event of (a) a dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the shareholders of the Company or their relative stock holdings and the Awards granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all Awardees), (c) a merger in which the Company is the surviving corporation but after which the shareholders of the Company immediately prior to such merger (other than any shareholder that merges, or which owns or controls another corporation that merges, with the Company in such merger) cease to own their shares or other equity interest in the Company, (d) the sale of substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or similar transaction, any or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement will be binding on all Awardees. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Awardees as was provided to shareholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Holder, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Holder. In the event such successor corporation (if any) refuses or otherwise declines to assume or substitute Awards, as provided above, (i) the vesting of any or all Awards granted pursuant to this Plan will accelerate immediately prior to the effective date of a transaction described in this Section 4.3 and (ii) any or all Stock Options granted pursuant to this Plan will become exercisable in full prior to the consummation of such event at such time and on such conditions as the Committee determines. If such Stock Options are not exercised prior to the consummation of the corporate transaction, they shall terminate at such time as determined by the Committee. Subject to any greater rights granted to Awardees under the foregoing provisions of this Section 4.3, in the event of the occurrence of any transaction described in this Section 4.3, any outstanding Awards will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.

5.           Eligibility.

Awards may be made or granted to employees, officers, directors and consultants who are deemed to have rendered or to be able to render significant services to the Company or its Subsidiaries and who are deemed to have contributed or to have the potential to contribute to the success of the Company. Notwithstanding anything to the contrary contained in the Plan, Awards covered or to be covered under a registration statement on Form S-8 may be made under the Plan only if (a) they are made to natural persons, (b) who provide bona fide services to the Company or its Subsidiaries, and (c) the services are not in connection with the offer and sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.

6.           Stock Options.

6.1           Grant and Exercise. Any Stock Option granted under the Plan shall contain such terms, not inconsistent with this Plan as the Committee may from time to time approve.

6.2           Terms and Conditions. Stock Options granted under the Plan shall be subject to the following terms and conditions:

(a)           Option Term. The term of each Stock Option shall be fixed by the Committee.

(b)           Exercise Price. The exercise price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant and may not be less than 50% of the Fair Market Value on the day of grant.

(c)           Exercisability. Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee and as set forth in Section 10, below. If the Committee provides, in its discretion, that any Stock Option is exercisable only in installments, i.e., that it vests over time, the Committee may waive such installment exercise provisions at any time at or after the time of grant in whole or in part, based upon such factors as the Committee shall determine.

 

 

  

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(d)           Method of Exercise. Subject to whatever installment, exercise and waiting period provisions are applicable in a particular case, Stock Options may be exercised in whole or in part at any time during the term of the Stock Option, by giving written notice of exercise to the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price, which shall be in cash or, if provided in the Agreement, either in shares of Common Stock (including Restricted Stock and other contingent Awards under this Plan) or partly in cash and partly in such Common Stock, or such other means which the Committee determines are consistent with the Plan’s purpose and applicable law. Cash payments shall be made by wire transfer, certified or bank check or personal check, in each case payable to the order of the Company; provided, however, that the Company shall not be required to deliver certificates for shares of Common Stock with respect to which an Option is exercised until the Company has confirmed the receipt of good and available funds in payment of the purchase price thereof. Payments in the form of Common Stock shall be valued at the Fair Market Value on the date prior to the date of exercise. Such payments shall be made by delivery of stock certificates in negotiable form that are effective to transfer good and valid title thereto to the Company, free of any liens or encumbrances. A Holder shall have none of the rights of a Shareholder with respect to the shares subject to the Option until such shares shall be transferred to the Holder upon the exercise of the Option.

(e)           Transferability. Except as may be set forth in the Agreement, no Stock Option shall be transferable by the Holder other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Holder’s lifetime, only by the Holder (or, to the extent of legal incapacity or incompetency, the Holder’s guardian or legal representative).

(f)           Termination by Reason of Death. If a Holder’s employment by the Company or a Subsidiary terminates by reason of death, any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall thereupon automatically terminate, except that the portion of such Stock Option that has vested on the date of death may thereafter be exercised by the legal representative of the estate or by the legatee of the Holder under the will of the Holder, for a period of one year (or such other greater or lesser period as the Committee may specify at grant) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.

(g)           Termination by Reason of Disability. If a Holder’s employment by the Company or any Subsidiary terminates by reason of Disability, any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall there upon automatically terminate, except that the portion of such Stock Option that has vested on the date of termination may thereafter be exercised by the Holder for a period of one year (or such other greater or lesser period as the Committee may specify at the time of grant) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter.

(h)           Other Termination. Subject to the provisions of Section 13, below, and unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, if a Holder is an employee of the Company or a Subsidiary at the time of grant and if such Holder’s employment by the Company or any Subsidiary terminates for any reason other than death or Disability, the Stock Option shall thereupon automatically terminate, except that if the Holder’s employment is terminated by the Company or a Subsidiary without cause or due to normal retirement, then the portion of such Stock Option that has vested on the date of termination of employment may be exercised for the lesser of three months after termination of employment or the balance of such Stock Option’s term.

(i)           Buyout and Settlement Provisions. The Committee may at any time, subject to Board authorization, if indicated, offer to repurchase a Stock Option previously granted, based upon such terms and conditions as the Committee shall establish and communicate to the Holder at the time that such offer is made.

7.           Stock Appreciation Rights.

7.1           Grant and Exercise. The Committee, subject to Board authorization, if indicated, may grant Stock Appreciation Rights to participants who have been, or are being granted, Stock Options under the Plan as a means of allowing such participants to exercise their Stock Options without the need to pay the exercise price in cash. A Stock Appreciation Right may be granted either at or after the time of the grant of such Stock Option.

  

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7.2           Terms and Conditions. Stock Appreciation Rights shall be subject to the following terms and conditions:

(a)           Exercisability. Stock Appreciation Rights shall be exercisable as shall be determined by the Committee and set forth in the Agreement.

(b)           Termination. A Stock Appreciation Right shall terminate and shall no longer be exercisable upon the termination or exercise of the related Stock Option.

(c)           Method of Exercise. Stock Appreciation Rights shall be exercisable upon such terms and conditions as shall be determined by the Committee and set forth in the Agreement and by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the Holder shall be entitled to receive a number of shares of Common Stock equal to the SAR Value divided by the Fair Market Value on the date the Stock Appreciation Right is exercised.

(d)           Shares Affected Upon Plan. The granting of a Stock Appreciation Right shall not affect the number of shares of Common Stock available for Awards under the Plan. The number of shares available for Awards under the Plan will, however, may be reduced by the number of shares of Common Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation Right relates.

8.           Restricted Stock.

8.1           Grant. Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee, subject to Board authorization, if indicated, shall determine the eligible persons to whom, and the time or times at which, grants of Restricted Stock will be awarded, the number of shares to be awarded, the price (if any) to be paid by the Holder, the time or times within which such Awards may be subject to forfeiture (“Restriction Period”), the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.

8.2           Terms and Conditions. Each Restricted Stock Award shall be subject to the following terms and conditions:

(a)           Certificates. Restricted Stock, when issued, will be represented by a stock certificate or certificates registered in the name of the Holder to whom such Restricted Stock shall have been awarded. During the Restriction Period, certificates representing the Restricted Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend to the effect that ownership of the Restricted Stock (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock and any securities constituting Retained Distributions that shall be forfeited or that shall not become vested in accordance with the Plan and the Agreement.

(b)           Rights of Holder. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Stock, to receive and retain all regular cash dividends and other cash equivalent distributions as the Board may in its sole discretion designate, pay or distribute on such Restricted Stock and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to such Restricted Stock, with the exceptions that (i) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Stock until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled; (ii) the Company will retain custody of the stock certificate or certificates representing the Restricted Stock during the Restriction Period; (iii) other than regular cash dividends and other cash equivalent distributions as the Board may in its sole discretion designate, pay or distribute, the Company will retain custody of all distributions (“Retained Distributions”) made or declared with respect to the Restricted Stock (and such Retained Distributions will be subject to the same restrictions, terms and conditions as are applicable to the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested and with respect to which the Restriction Period shall have expired; (iv) a breach of any of the restrictions, terms or conditions contained in this Plan or the Agreement or otherwise established by the Committee with respect to any Restricted Stock or Retained Distributions will cause a forfeiture of such Restricted Stock and any Retained Distributions with respect thereto.

  

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(c)           Vesting; Forfeiture. Upon the expiration of the Restriction Period with respect to each Award of Restricted Stock and the satisfaction of any other applicable restrictions, terms and conditions (i) all or part of such Restricted Stock shall become vested in accordance with the terms of the Agreement, subject to Section 10, below, and (ii) any Retained Distributions with respect to such Restricted Stock shall become vested to the extent that the Restricted Stock related thereto shall have become vested, subject to Section 10, below. Any such Restricted Stock and Retained Distributions that do not vest shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Restricted Stock and Retained Distributions that shall have been so forfeited.

9.           Other Stock-Based Awards.

Other Stock-Based Awards may be awarded, subject to limitations under applicable law, that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, purchase rights, shares of Common Stock awarded which are not subject to any restrictions or conditions, or other rights convertible into shares of Common Stock and Awards valued by reference to the value of securities of or the performance of specified Subsidiaries. Other Stock-Based Awards may be awarded either alone or in addition to or in tandem with any other Awards under this Plan or any other plan of the Company. Each other Stock-Based Award shall be subject to such terms and conditions as may be determined by the Committee.

10.           Accelerated Vesting and Exercisability.

10.1           Non-Approved Transactions. If any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as referred in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities in one or more transactions, and the Board does not authorize or otherwise approve such acquisition, then the vesting periods of any and all Stock Options and other Awards granted and outstanding under the Plan shall be accelerated and all such Stock Options and Awards will immediately and entirely vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all Common Stock subject to such Stock Options and Awards on the terms set forth in this Plan and the respective agreements respecting such Stock Options and Awards.

10.2           Approved Transactions. The Committee may, subject to Board authorization, if indicated, in the event of an acquisition of substantially all of the Company’s assets or at least 50% of the combined voting power of the Company’s then outstanding securities in one or more transactions (including by way of merger or reorganization) which has been approved by the Company’s Board of Directors, (i) accelerate the vesting of any and all Stock Options and other Awards granted and outstanding under the Plan, and (ii) require a Holder of any Award granted under this Plan to relinquish such Award to the Company upon the tender by the Company to Holder of cash in an amount equal to the Repurchase Value of such Award.

11.           Amendment and Termination.

The Board may at any time, and from time to time, amend alter, suspend or discontinue any of the provisions of the Plan, but no amendment, alteration, suspension or discontinuance shall be made that would impair the rights of a Holder under any Agreement theretofore entered into hereunder, without the Holder’s consent.

12.           Term of Plan.

12.1           Effective Date. The Plan shall become effective at such time as the Plan is approved and adopted by the Company’s Board of Directors (the “Effective Date”).

12.2           Termination Date. Unless otherwise terminated by the Board, this Plan shall continue to remain effective until the earlier of ten (10) years from the Effective Date or such time as no further Awards may be granted and all Awards granted under the Plan are no longer outstanding.

  

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13.           General Provisions.

13.1           Written Agreements. Each Award granted under the Plan shall be confirmed by, and shall be subject to the terms, of the Agreement executed by the Company and the Holder. The Committee may terminate any Award made under the Plan if the Agreement relating thereto is not executed and returned to the Company within 10 days after the Agreement has been delivered to the Holder for his or her execution.

13.2           Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Holder by the Company, nothing contained herein shall give any such Holder any rights that are greater than those of a general creditor of the Company.

13.3           Employees.

 

 

(a)           Engaging in Competition with the Company; Disclosure of Confidential Information. If a Holder’s employment with the Company or a Subsidiary is terminated for any reason whatsoever, and within three months after the date thereof such Holder either (i) accepts employment with any competitor of, or otherwise engages in competition with, the Company or (ii) discloses to anyone outside the Company or uses any confidential information or material of the Company in violation of the Company’s policies or any agreement between the Holder and the Company, the Committee, in its sole discretion, may require such Holder to return to the Company the economic value of any Award that was realized or obtained by such Holder at any time during the period beginning on that date that is six months prior to the date such Holder’s employment with the Company is terminated.

(b)           Termination for Cause. If a Holder’s employment with the Company or a Subsidiary is terminated for cause, subsequent to the grant of any Award under this Plan to such employee, the Committee, in its sole discretion, may require such Holder to return to the Company the economic value of any Award that was realized or obtained by such Holder at any time following the grant date of such Award.

(c)           No Right of Employment. Nothing contained in the Plan or in any Award hereunder shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary any right to continued employment with the Company or any Subsidiary, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any Holder who is an employee at any time.

13.4.           Investment Representations; Company Policy. The Committee may require each person acquiring shares of Common Stock pursuant to a Stock Option or other Award under the Plan to represent to and agree with the Company in writing that the Holder is acquiring the shares for investment without a view to distribution thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option or other Award under the Plan shall be required to abide by all policies of the Company in effect at the time of such acquisition and thereafter with respect to the ownership and trading of the Company’s securities.

13.5           Additional Incentive Arrangements. Nothing contained in the Plan shall prevent the Board from adopting such other or additional incentive arrangements as it may deem desirable, including, but not limited to, the granting of Stock Options and the Awarding of Common Stock and cash otherwise than under the Plan; and such arrangements may be either generally applicable or applicable only in specific cases.

13.6           Governing Law. The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Florida.

13.7           Other Benefit Plans. Any Award granted under the Plan shall not be deemed compensation for purposes of computing benefits under any retirement plan of the Company or any Subsidiary and shall not affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation (unless required by specific reference in any such other plan to Awards under this Plan).

13.8           Non-Transferability. Except as otherwise expressly provided in the Plan or the Agreement, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated, pledged, exchanged, transferred, encumbered or charged, and any attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void.

  

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13.9           Applicable Laws. The obligations of the Company with respect to all Stock Options and Awards under the Plan shall be subject to (i) all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the Securities Act of 1933, as amended, and (ii) the rules and regulations of any securities exchange on which the Common Stock may then be listed.

13.10           Conflicts.  If any of the terms or provisions of any Agreement conflicts with any terms or provisions of the Plan, then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of the Plan. Additionally, if any Agreement does not contain any provision required to be included therein under the Plan, such provision shall be deemed to be incorporated therein with the same force and effect as if such provision had been set out at length therein.

13.12           Non-Registered Stock. The shares of Common Stock to be distributed under this Plan have not been, as of the Effective Date, registered under the Securities Act of 1933, as amended, or any applicable state or foreign securities laws and the Company has no obligation to any Holder to register the Common Stock or to assist the Holder in obtaining an exemption from the various registration requirements, or to list the Common Stock on a national securities exchange or any other trading or quotation system.

  

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Plan Amendments

	
 

Date Approved by Board

	
Date Approved by Shareholders, if necessary

	
 

Sections Amended

	
 

 

 

Description of Amendment(s)

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  

  

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FORM OF OPTION AWARD AGREEMENT

CD International Enterprises, Inc.

431 Fairway Drive

Suite 200

Deerfield Beach, FL  33441

[DATE]

_________________

_________________

_________________

Re:           Stock Option

Dear __________:

We are pleased to advise you that, on [_______], the Board of Directors of CD International Enterprises, Inc. (the “Company”) authorized the Award to you of an option to purchase [_______] shares of our common stock, par value $0.0001 per share (the “Option”), upon the following terms and conditions:

1.           The Option is granted in accordance with and subject to the terms and conditions of the Company’s 2015 Employee and Consultant Stock Incentive and Compensation Plan (the “Plan”).

2.           The Option is exercisable commencing on [__________] and terminating at 5:00 pm New York time on [__________].

3.           The price at which the Option may be exercised is $[_____] per share.

4.           The Option is non-transferable and may be exercised, in whole or in part, during the exercise period, only by you, except that upon your death, the Option may be exercised strictly in accordance with the terms and conditions of the Plan.

5.           The exercise price and number of shares issuable upon exercise of the Option (the “Option Shares”) are subject to adjustment in accordance with the Plan in the event of stock splits, dividends, reorganizations and similar corporate events.

6.           If, neither the Option nor the Option Shares have been registered under the Securities Act of 1933, as amended (the “Act”), and the Option Shares may not be sold, assigned, pledged, transferred or otherwise disposed of absent registration under the Act or the availability of an applicable exemption from registration.  All certificates evidencing the Option Shares will contain a legend describing this restriction on resale of the Option Shares. There is no assurance that there will be a public market into which you may sell the Option Shares or that you will be able to sell your Option Shares at a profit or at all.

7.           In order to exercise the Option, you must provide us with written notice that you are exercising all or a portion of your Option. The written notice must specify the number of Option Shares that you are exercising your Option for, and must be accompanied by the exercise price described in paragraph 3, above. You agree to execute and deliver such additional documents as we may request in connection with and as a condition to your ability to exercise the Option.  Your Option Shares will be issued to you within approximately one week following our receipt of your exercise notice, cleared funds evidencing the exercise price and any additional documents we may request.

8.           If you are a Chinese domestic individual, you represent and warrant that you have taken any and all actions necessary to comply with all applicable foreign exchange procedures through a domestic agent institution in accordance with your participation in the Plan.

  

  

  

9.           If you are an affiliate of the Company as that term is defined in the Securities Exchange Act of 1934, as amended, at the time you exercise the Option, you acknowledge that the Option Shares cannot be issued to you without a restrictive legend and may not be resold by you pursuant to the registration statement on Form S-8 which the Company has filed with the Securities and Exchange Commission covering shares of common stock underlying awards to be made under the Plan.  You acknowledge you will be required to resell the Option Shares in accordance with the provisions of Rule 144 of the Act.

10.           No rights or privileges of a shareholder of the Company are conferred by reason of the grant of the Option to you. You will have no rights of a shareholder until you have delivered your exercise notice to us and we have received the exercise price of the Option in cleared funds.

11.           You understand that the Plan contains important information about your Option and your rights with respect to the Option. The Plan includes terms relating to your right to exercise the Option; important restrictions on your ability to transfer the Option or Option Shares; provisions relating to adjustments in the number of Option Shares and the exercise price; and early termination of the Option following the occurrence of certain events; including the termination of your relationship with us. By signing below, you acknowledge your receipt of a copy of the Plan. By acceptance of your Option, you agree to abide by the terms and conditions of the Plan.

12.           Our business is subject to many risks and uncertainties. The exercise of your Option is a speculative investment and there is no assurance that you will realize a profit on the sale of Option Shares received upon exercise of your Option.

13.           The Option will become effective upon your acknowledgment of the terms and conditions of this Agreement and your delivery to us of a signed counterpart of this Agreement.

14.           This Agreement and Plan contain all of the terms and conditions of your Option and supersedes all prior agreements or understandings relating to your Option. This Agreement shall be governed by the laws of the State of Florida without regard to the conflicts of law provisions thereof.

15.           This Agreement may be only amended in writing signed by you and the Company.

Very truly yours,

__________________________

Yuejian (James) Wang,

Chief Executive Officer

AGREED TO AND ACCEPTED THIS

_____ DAY OF ________ 20__

________________________________

(Signature)

_________________________________

(Print Name)Exhibit

         Exhibit 10.1

SECURITIES PURCHASE AGREEMENT
by and among
TRAVELZOO (EUROPE) LIMITED,
and 
TRAVELZOO (ASIA PACIFIC) INC.
Dated August 20, 2015

TABLE OF CONTENTS
	
				
	 
	 
	Page
	

	ARTICLE I DEFINITIONS
	1
	

	 
	 
	 

	1.1
	Definitions    
	1
	

	 
	 
	 

	ARTICLE II PURCHASE AND SALE
	8
	

	 
	 
	 

	2.1
	Sale of the Purchased Securities
	8
	

	 
	 
	 

	2.2
	Purchase Price    
	8
	

	 
	 
	 

	2.3
	Closing
	8
	

	 
	 
	 

	2.4
	Closing Deliverables
	8
	

	 
	 
	 

	2.5
	Purchase Price Adjustment
	9
	

	 
	 
	 

	2.6
	Taxes
	11
	

	 
	 
	 

	2.7
	Further Assurances
	12
	

	 
	 
	 

	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
	12
	

	 
	 
	 

	3.1
	Existence and Power
	12
	

	 
	 
	 

	3.2
	 Valid and Enforceable Agreement; Authorization
	13
	

	 
	 
	 

	3.3
	Tax Matters
	13
	

	 
	 
	 

	3.4
	Litigation
	14
	

	 
	 
	 

	3.5
	Capitalization; Subsidiaries
	14
	

	 
	 
	 

	3.6
	Securities Ownership
	15
	

	 
	 
	 

	3.7
	Financial Statements
	15
	

	 
	 
	 

	3.8
	Condition of Real and Personal Property
	16
	

	 
	 
	 

	3.9
	Contracts
	16
	

	 
	 
	 

	3.10
	Licenses and Permits
	16
	

	 
	 
	 

	3.11
	Compliance with Laws
	17
	

	 
	 
	 

	3.12
	Employee and Labor Matters
	17
	

	 
	 
	 

	3.13
	Intellectual Property Matters
	17
	

	 
	 
	 

	3.14
	Employee Benefit Plans
	19
	

	 
	 
	 

	3.15
	Intentionally Omitted
	20
	

	 
	 
	 

	3.16
	Insurance
	20
	

	 
	 
	 

	3.17
	Transactions with Affiliates
	20
	

	 
	 
	 

	3.18
	Brokers
	20
	

	 
	 
	 

	3.19
	No Other Representations or Warranties
	20
	

	 
	 
	 

	
				
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
	20
	

	 
	 
	 

	4.1
	Existence and Power
	21
	

	 
	 
	 

	4.2
	Valid and Enforceable Agreement; Authorization
	21
	

	 
	 
	 

	4.3
	Brokers
	21
	

	 
	 
	 

	4.4
	Litigation
	21
	

	 
	 
	 

	4.5
	No Knowledge of Breach of Seller Representation
	21
	

	 
	 
	 

	4.6
	No Other Representations or Warranties
	21
	

	 
	 
	 

	ARTICLE V ADDITIONAL COVENANTS OF THE PARTIES
	22
	

	 
	 
	 

	5.1
	Books and Records
	22
	

	 
	 
	 

	5.2
	Confidentiality; Announcements
	22
	

	 
	 
	 

	5.3
	Advertiser and Subscriber Information
	22
	

	 
	 
	 

	5.4
	Cooperation; Further Assurances
	23
	

	 
	 
	 

	5.5
	Financial Statements
	23
	

	 
	 
	 

	5.6
	Termination of Certain Agreements
	24
	

	 
	 
	 

	5.7
	Non-Competition; Non-Solicitation
	24
	

	 
	 
	 

	ARTICLE VI INDEMNIFICATION
	25
	

	 
	 
	 

	6.1
	Indemnification by Seller
	25
	

	 
	 
	 

	6.2
	Indemnification by Buyer
	25
	

	 
	 
	 

	6.3
	Notice and Payment of Losses
	26
	

	 
	 
	 

	6.4
	Defense of Third-Party Claims
	26
	

	 
	 
	 

	6.5
	Survival of Representations and Warranties
	27
	

	 
	 
	 

	6.6
	Limitation on Indemnification
	27
	

	 
	 
	 

	6.7
	Payments
	28
	

	 
	 
	 

	6.8
	Right of Offset;Escrow
	29
	

	 
	 
	 

	6.9
	Characterization of Indemnity Payments
	29
	

	 
	 
	 

	6.10
	Exclusive Remedy
	29
	

	 
	 
	 

	ARTICLE VII MISCELLANEOUS PROVISIONS
	29
	

	 
	 
	 

	7.1
	Notice
	29
	

	 
	 
	 

	7.2
	Entire Agreement
	30
	

	 
	 
	 

	7.3
	Severability
	31
	

	 
	 
	 

	7.4
	Assignment; Binding Agreement
	31
	

	 
	 
	 

	7.5
	Expenses
	31
	

	 
	 
	 

	7.6
	Counterparts
	31
	

	 
	 
	 

	7.7
	Headings; Interpretation
	31
	

	
				
	 
	 
	 

	7.8
	Governing Law
	32
	

	 
	 
	 

	7.9
	Arbitration
	32
	

	 
	 
	 

	7.10
	Disclosure Generally
	32
	

	 
	 
	 

	7.11
	No Third Party Beneficiaries or Other Rights
	32
	

SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is entered into as of this 20th day of August, 2015, by and between TRAVELZOO (EUROPE) LIMITED, a corporation organized under the Laws of the United Kingdom (“Buyer”) and TRAVELZOO (ASIA PACIFIC) INC., a Cayman Islands corporation (“Seller”). Buyer and Seller each referred to as a “Party” and collectively as the “Parties”.  Capitalized terms are defined in Article I. 
RECITALS
A.Seller is the owner of one hundred percent (100%) of the issued and outstanding Capital Securities of Travelzoo (Asia) Limited, a Hong Kong company (“Travelzoo Asia”) and Travelzoo Japan K.K., a Japanese kabushiki kaisha (“Travelzoo Japan” and together with Travelzoo Asia, the “Companies” and each a “Company”);
B.The Buyer desires to purchase one hundred percent (100%) of the Capital Securities of the Companies held by Seller (the “Purchased Securities”), on the terms and conditions set forth herein; and 
C.Seller desires to sell the Purchased Securities to Buyer, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants, representations, warranties, conditions, and agreements hereinafter expressed, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 

1

ARTICLE I
DEFINITIONS
1.1     Definitions. Without limiting the effect of any other terms defined in the text of this Agreement, the following words shall have the meaning given them in this Article I: 
“Accounting Firm” shall have the meaning set forth in Section 2.5(c). 
“Affiliate” means, with respect to any Person, any Person which is controlling, controlled by, or under common control with, directly or indirectly through any Person, the Person referred to, and, if the Person referred to is a natural person, any member of such Person’s immediate family. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”) as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. 
“Agreement” means this Agreement as executed on the date hereof and as amended or supplemented in accordance with the terms hereof, including all Schedules and Exhibits hereto, as attached hereto at the time of signing and as subsequently updated or amended in accordance with the terms hereof. 
“Audited Financials” has the meaning set forth in Section 5.5. 
“Business Day” means any day which is not a Saturday, Sunday or a legal holiday in the State of New York, United States of America. 
“Buyer” has the meaning set forth in the preamble. 
“Buyer Parties” has the meaning set forth in Section 6.1.
“Capital Securities” means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, including common shares or preferred shares in a corporation, membership interests in a limited liability company, limited or general partnership interests in a partnership or any other equivalent of such ownership interest.
“Client Information” has the meaning set forth in Section 5.3(a).
“Closing” has the meaning set forth in Section 2.3. 
“Closing Balance Sheet” has the meaning set forth in Section 2.5(a). 
“Closing Date” has the meaning set forth in Section 2.3. 
“Closing Date Net Working Capital” has the meaning set forth in Section 2.5(a).

2

“Closing Date Payment” has the meaning set forth in Section 2.2(b).
“Code” means the United States Internal Revenue Code of 1986, as amended. 
“Company” and “Companies” have the meanings set forth in the recitals.
“Company Licensed IP Rights” has the meaning set forth in Section 3.13(a).
“Company Owned IP Rights” has the meaning set forth in Section 3.13(a).
“Company Plan” has the meaning set forth in Section 3.14(a).
“Constituent Documents” means, relative to a Person that is not a natural person, its certificate of incorporation, bylaws, certificate of partnership, partnership agreement, certificate of formation, limited liability company agreement, operating agreement and all shareholder agreements, voting trusts and similar arrangements applicable to any of such entity’s capital securities; in each of the foregoing cases, to which such Person is a party or bound.
“Contract” means any contract, agreement, lease, indenture, mortgage, deed of trust, evidence of indebtedness, binding commitment or instrument. 
“Contractors” has the meaning set forth in Section 3.12(b).
“Deferred Payment” has the meaning set forth in Section 2.2(a)(ii).
“Disclosure Schedule(s)” means the disclosure schedules delivered by Seller to Buyer on the date hereof and the schedules delivered by Buyer to Seller on the date hereof, as applicable.
“Disputed Items and Amounts” has the meaning set forth in Section 2.5(b).
“Effective Time” means the effective time of the Closing, which shall be deemed to be as of 11:59 p.m. New York time on the Closing Date.
“Employee” has the meaning set forth in Section 3.12(a). 
“Encumbrances” means mortgages, liens, charges, claims, security interests, easements or other encumbrances.  
“Escrow Agreement” has the meaning set forth in Section 6.8.
“Example Statement of Net Working Capital” means the statement of the aggregate value of certain of the current assets of the Companies less the aggregate value of certain of the current liabilities of the Companies, in each case, determined on a consolidated basis without duplication as of the close of business on March 31, 2015 determined in accordance with the methodology set forth on Exhibit A annexed hereto.
“Final Net Working Capital” has the meaning set forth in Section 2.5(d).

3

“Financial Statements” has the meaning set forth in Section 5.5.
“Fundamental Representations” has the meaning set forth in Section 6.5.
“GAAP” means generally accepted accounting principles in the United States. 
“Historic Quarterly Financials” has the meaning set forth in Section 5.5.
“Indemnifying Party” has the meaning set forth in Section 6.3. 
“Indemnity Basket” has the meaning set forth in Section 6.6(a). 
“Indemnity Cap” has the meaning set forth in Section 6.6(c). 
“Injured Party” has the meaning set forth in Section 6.3. 
“Insurance Policies” has the meaning set forth in Section 3.16.
“Intellectual Property” means patents, inventions, designs, models, know-how, trade secrets, trademarks, trade dress, service marks, copyrights, business names, source codes, domain names and other material business identifiers, registrations and applications and all renewals of the foregoing and rights to apply for any of the foregoing, and all the goodwill associated therewith, and rights to sue or take any other action with respect to any past or future infringement, misappropriation, dilution or other violation of any rights with respect to the foregoing. This term does not include non-proprietary information, know-how or processes otherwise available to the industry or public, or rights obtained pursuant to licenses associated with software and other intellectual property generally made available for purchase or use by industry or the public. 
“IRS” means the United States Internal Revenue Service. 
“JAMS” has the meaning set forth in Section 7.9.
“Latest Balance Sheet” has the meaning set forth in Section 5.5.
“Law” or “Laws” means any statute, law, ordinance, decree, order, injunction, rule, directive, or regulation of any government or quasi-governmental authority located anywhere in the world, and includes, but is not limited to, United States federal and state securities laws and the rules and regulations of any regulatory or self-regulatory authority compliance with which is required by law, in effect on the date hereof. 
“Loss” or “Losses” means each and all of the following items to the extent actually paid or incurred: losses, liabilities, damages, judgments, fines, costs, penalties, amounts paid in settlement and reasonable out-of-pocket costs and expenses incurred in connection therewith (including, without limitation, costs and expenses of suits and proceedings, and reasonable fees and disbursements of counsel). 

4

“Material Adverse Effect” means a material adverse effect on the assets, business, financial condition or results of operations of the Companies taken as a whole. 
“Material Contracts” has the meaning set forth in Section 3.9(a).
“Net Working Capital” means the aggregate value of the current assets of the Companies less the aggregate value of the current liabilities of the Companies, in each case, determined on a consolidated basis without duplication as of the Effective Time and calculated in accordance with the accounting judgments, estimates, methodologies, practices, policies and procedures applied in preparing the Example Statement of Net Working Capital (including by (i) including only current assets and current liabilities to the extent that such assets and liabilities are of the type and kind included in the Example Statement of Net Working Capital and (ii) establishing levels of reserves in the same manner as such reserves were established in preparing the Example Statement of Net Working Capital). 
“Notice of Claim” has the meaning set forth in Section 6.3. 
“Notice of Dispute” has the meaning set forth in Section 2.5(b). 
“Ordinary Course” means the ordinary course of commercial operations customarily engaged in by the Company and its Subsidiaries, consistent with past or current practice. 
“Party” has the meaning set forth in the preamble. 
“Payment Option” has the meaning set forth in Section 6.7.
“Person” means an individual, general or limited partnership, corporation (including any nonprofit corporation), business trust, limited liability company, limited liability partnership, joint stock company, estate, trust, association, organization, unincorporated association, joint venture or other entity. 
“Personal Information” has the meaning set forth in Section 3.13(f).
“Permitted Encumbrances” means, collectively, (a) Encumbrances that are disclosed in the Disclosure Schedules, (b) liens for Taxes, fees, levies, duties or other governmental charges of any kind which are not yet delinquent or are being contested in good faith by appropriate proceedings, (c) liens for mechanics, materialmen, laborers, employees, suppliers or similar liens arising by operation of Law which are not material to the Company taken as a whole, (d) rights or liens of any lessors with respect to any of the leased real property or leased personal property and (e) in the case of real property, and only to the extent such items do not materially and adversely impact the operation of such real property in the Ordinary Course, any matters, restrictions, covenants, conditions, limitations, rights, rights of way, encumbrances, encroachments, reservations, 

5

easements, agreements and other matters of record, such state of facts of which an accurate survey or inspection of the property would reveal, and the provisions of any Law. 
“Post-Closing Periods” means all taxable periods of the Company commencing after the Effective Time and the portion of any Straddle Period ending after the Effective Time. 
“Pre-Closing Periods” means all taxable periods of the Company ending on or before the Effective Time and the portion of any Straddle Period commencing prior to the Effective Time. 
“Primary Unaudited Financials” has the meaning set forth in Section 5.5.
“Privacy Policy” has the meaning set forth in Section 3.13(f).
“Promissory Note” means that certain secured promissory note, dated as of the Closing Date, made by Buyer in favor of Seller, in the form attached as Exhibit B hereto.
“Purchase Price” has the meaning set forth in Section 2.2. 
“Purchased Securities” has the meaning set forth in the preamble.
“Records” has the meaning set forth in Section 5.1. 
“Representatives” means directors, officers, employees, Affiliates, investment bankers, attorneys, accountants and other advisors or representatives. 
“Restricted Business” means any Person engaged in the business of advertising, selling or otherwise publishing travel and/or entertainment offers from various third party providers by means of the internet, email newsletter and alert services and similar media.
“Restricted Period” has the meaning set forth in Section 5.7(a).
“Review Period” has the meaning set forth in Section 2.5(b).
“Right of Offset” has the meaning set forth in Section 6.8.
“Rights” means, with respect to any Person, (a) securities, options, warrants, puts, calls, agreements (by conversion, exchange, exercise or otherwise), obligations, conversion or exchange rights, preemptive rights, rights of first refusal, redemption rights, repurchase rights, plans, “tag-along” or “drag-along” rights, commitments, agreements, arrangements or undertakings (i) obligating such Person or any of its Affiliates to issue, deliver, redeem, purchase or sell or otherwise transfer, or cause to be issued, delivered, redeemed, purchased or sold or otherwise transferred, any Capital Securities, of such Person or any of its Affiliates or any securities or obligations convertible or exchangeable into or exercisable for, any Capital Securities, (ii) giving any Person a right to subscribe for or acquire any Capital Securities, or (iii) obligating such Person or any of its Affiliates to issue, grant, adopt or enter into any such right; or (b) stock appreciation, 

6

phantom stock, profit participation or similar rights with respect to the Capital Securities, of such Person.
“SEC” has the meaning set forth in Section 3.7(b). 
“Seller” has the meaning set forth in the preamble. 
“Seller’s knowledge” means the actual knowledge of each of the individuals set forth in Section 1.1 of the Disclosure Schedules and the knowledge such individual would reasonably be expected to obtain in the course of diligently performing his duties for the Companies.
“Seller Parties” has the meaning set forth in Section 6.2.
“Shares” has the meaning set forth in Section 3.5(a).
“Straddle Period” means any taxable period of Seller that begins before and ends after the Effective Time. 
“Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation).  The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.  For the avoidance of doubt, each of Shanghai Travelzoo International Service Co. Ltd., Travelzoo (Shanghai) Media Co. Ltd., and Beijing Travelzoo Travel Information Technology Limited shall be deemed to be Subsidiaries of the Companies for all purposes in this Agreement.
“Target Net Working Capital” means Negative Five Million Nine Hundred Fifty Eight Thousand Two Hundred Forty Seven dollars (-$5,958,247).
“Tax” or “Taxes” means all material taxes, charges, fees, levies, or other like governmental assessments including, without limitation, all material federal, possession, state, city, county and foreign (or governmental unit, agency, or political subdivision of any of the foregoing) income, profits, employment (including unemployment insurance and employee income tax withholding), franchise, gross receipts, sales, use, transfer, stamp, occupation, property, capital, severance, 

7

premium, windfall profits, tariff, customs, duties, ad valorem, value-added and excise taxes, and any other governmental charges of the same or similar nature; and all penalties, additions to tax and interest relating to any such taxes, premiums or charges. Any one of the foregoing Taxes shall be referred to sometimes as a “Tax”. 
“Tax Returns” means all returns, reports, estimates, declarations, claims for refund, information returns or statements relating to, or required to be filed in connection with any Taxes, including any schedule or attachment thereto, and including any amendment or supplement thereof. 
“Terminated Contracts” has the meaning set forth in Section 5.6.
“Territory” means all countries located in those time zones that are more than five (5) hours ahead of Greenwich Mean Time, based on Standard time, including, without limitation, India and Pakistan, but excluding Russia.
“Transactions” means the transactions contemplated by this Agreement.
“Travelzoo” means Travelzoo Inc., a Delaware corporation.
“Travelzoo Asia” has the meaning set forth in the recitals.
“Travelzoo Asia Shares” has the meaning set forth in Section 3.5(a).
“Travelzoo Japan” has the meaning set forth in the recitals.
“Travelzoo Japan Shares” has the meaning set forth in Section 3.5(a).
“Unaudited Annual Balance Sheets” has the meaning set forth in Section 5.5.
“Unaudited Financials” has the meaning set forth in Section 5.5. 
“Unaudited Income Statement” has the meaning set forth in Section 5.5.
ARTICLE II
PURCHASE AND SALE 
2.1     Sale of the Purchased Securities.   Subject to the terms and conditions of this Agreement, Seller agrees to sell, assign, transfer and deliver to Buyer on the Closing Date, and Buyer agrees to purchase from Seller on the Closing Date, the Purchased Securities, free and clear of any and all Encumbrances as of the Closing Date.  All certificates representing the Purchased Securities shall be duly endorsed to Buyer by Seller, with all necessary transfer tax and other revenue stamps affixed and cancelled. 
2.2 Purchase Price. 

8

(a)    Components of the Purchase Price.  As full and total consideration for the purchase by Buyer of the Purchased Securities from Seller, the aggregate purchase price (the “Purchase Price”) shall be the sum of: 
(i)    the Closing Date Payment (as the same may be adjusted pursuant to Section 2.5); and 
(ii)    Five Million Six Hundred Fifty Seven Thousand Seven Hundred Fifty dollars ($5,657,750), payable in accordance with terms of the Promissory Note (the “Deferred Payment”), subject to Buyer’s Right of Offset.
(b)    Payment of the Purchase Price. At the Closing, Buyer shall pay to Seller an amount equal to the sum of Sixteen Million Nine Hundred Seventy Three Thousand Two Hundred Fifty Dollars ($16,973,250) (the “Closing Date Payment”), by wire transfer in readily available funds as set forth in Section 2.2(b) to Seller pursuant to the wire transfer instructions set forth in Section 2.2(b) of the Disclosure Schedules, or such other account or accounts as Seller may direct by written notice to Buyer given pursuant to this Agreement.
2.3 Closing. The closing of the Transactions (the ”Closing”) shall take place concurrently with the execution and delivery of this Agreement (the date of this Agreement being referred to herein as the “Closing Date”).
2.4  Closing Deliverables.
(a)     Seller Deliveries to Buyer.  At Closing, Seller shall deliver or cause to be delivered to Buyer:
(i)    evidence, in form and substance reasonably satisfactory to Buyer, of the transfer and sale to Buyer of the Purchased Securities, and the registration of Buyer as the record and beneficial owner of such Purchased Securities in the official books and records of the Companies;
(ii)    a certificate of the Secretary or equivalent officer of Seller certifying that (A) attached thereto are (1) true and complete copies of all Constituent Documents of the Companies and each of their respective Subsidiaries, and (2) resolutions adopted by the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the consummation of the Transactions, and (B) all such Constituent Documents and resolutions are in full force and effect; and
(iii)    such other documents, certificates, instruments and agreements as may be reasonably requested by Buyer in connection with the Closing.

9

       (b)    Buyer Deliveries to Seller.  At Closing, Buyer shall deliver or cause to be delivered to Seller:
(i)    the Closing Date Payment by wire transfer of immediately available funds to the account designated by Seller in accordance with this Agreement; 
(ii)    the Promissory Note duly executed by Buyer;
(iii)    such other documents, certificates, instruments and agreements as may be reasonably requested by Seller in connection with the Transaction.
2.5 Purchase Price Adjustment.
(a)     Promptly after the Closing Date, and in any event not later than sixty (60) calendar days following the Closing Date, Buyer shall prepare, or cause to be prepared, and deliver to Seller a balance sheet of the Companies on a consolidated basis as of the Effective Time (the “Closing Balance Sheet”), showing Buyer’s reasonably-detailed, good faith calculation of Net Working Capital as of the Closing Date (the “Closing Date Net Working Capital”), together with applicable documentation substantiating such calculation.  The Closing Date Net Working Capital shall be calculated in the same manner as Net Working Capital. 
(b)     Buyer shall permit Seller and its accountants to review promptly upon request all accounting records, work papers and computations used by Buyer in the preparation of such Closing Balance Sheet and the computation of Closing Date Net Working Capital. If Seller disputes the Closing Date Net Working Capital as calculated by Buyer, not more than thirty (30) calendar days after the date Seller receives Buyer’s calculation thereof (the “Review Period”), Seller shall deliver to Buyer a notice of its objection to the Closing Balance Sheet  (a “Notice of Dispute”), which shall specify those items and/or amounts in Buyer’s calculation of the Closing Date Net Working Capital as to which Seller disagrees, the basis for such disagreement and what Seller believes are, in each instance, the appropriate amounts (collectively, the “Disputed Items and Amounts”).  Alternatively, the Closing Date Net Working Capital shall become final and binding upon the Parties in the event that (i) prior to the end of the Review Period, Seller accepts the Closing Date Net Working Capital by delivering written notice thereof to Buyer, or (ii) Seller fails to give the Notice of Dispute prior to the expiration of the Review Period.  Buyer or Seller, as the case may be, shall within five (5) Business Days of the date upon which the Proposed Closing Date Calculations become final and binding in accordance with the provisions of the immediately preceding sentence make the payment required by Section 2.5(d). 
(c)     Upon receipt of a Notice of Dispute, Buyer shall promptly consult with Seller in good faith with respect to the Disputed Items and Amounts in an effort to resolve the dispute. If any such dispute cannot be resolved by Buyer and Seller within thirty (30) calendar days (or longer, as mutually agreed by the Parties) after Buyer receives the Notice of Dispute, the Parties shall refer the dispute to the Northern California office of McGladrey LLP (the “Accounting Firm”), as an arbitrator to finally determine, as soon as practicable, and in any event within twenty (20) calendar days after such reference, all points of disagreement with respect to the calculation of the Net Working Capital.  Buyer and Seller shall cooperate with each other and the Accounting Firm in 

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connection with the matters set forth in this Section 2.5, including by furnishing such information as may be reasonably requested.  Each of Buyer and Seller shall afford the other Party the reasonable and unrestricted opportunity to participate in all communications with the Accounting Firm.  The Accounting Firm shall decide only the Disputed Items and Amounts, and may not assign a value to any item in dispute which is either higher or lower than the respective calculations for such item submitted by the Parties. The Accounting Firm shall apply the terms of Section 2.5 of this Agreement, and shall otherwise conduct the arbitration under such procedures as the Parties may agree or, failing such agreement, under then prevailing JAMS Comprehensive Arbitration Rules & Procedures. All determinations by the Accounting Firm shall be final, conclusive and binding with respect to the calculation of the Net Working Capital in the absence of fraud or manifest error. The fees and expenses of the Accounting Firm incurred pursuant to this Section 2.5 shall be borne pro rata as between the Seller, on the one hand, and the Buyer, on the other hand, in proportion to the final allocation made by such Accounting Firm of the Disputed Items and Amounts weighted in relation to the claims made by the Seller and the Buyer, such that the prevailing party pays the lesser proportion of such fees, costs and expenses.  For example, if the Buyer claims that the appropriate adjustments are, in the aggregate, $1,000 greater than the amount determined by the Seller and if the Accounting Firm ultimately resolves the dispute by awarding to the Buyer an aggregate of $300 of the $1,000 contested, then the fees, costs and expenses of the Accounting Firm will be allocated 30% (i.e., 300 ÷ 1,000) to the Seller and 70% (i.e., 700 ÷ 1,000) to the Buyer; provided, that such fees and expenses shall not include, so long as a Party complies with the procedures of this Section 2.5, the other Party’s outside counsel or accounting fees.
(d)     The Purchase Price shall be adjusted as follows, based on the Net Working Capital as of the Closing Date as finally determined under this Section 2.5 (the “Final Net Working Capital”): 
(i)    Seller shall pay to Buyer the amount, dollar for dollar, by which Final Net Working Capital is less than Target Net Working Capital; and
(ii)    Buyer shall pay to Seller the amount, dollar for dollar, by which Final Net Working Capital is greater than Target Net Working Capital; and
(iii)    In the event Final Net Working Capital is equal to Target Net Working Capital, no adjustment to the Purchase Price shall be made.
Any payment so required to be made by Buyer or Seller pursuant to this Section 2.5 shall be by transfer of immediately available funds not more than five (5) Business Days after final determination thereof; provided that any payment so required to be made by Seller pursuant to this Section 2.5 may be satisfied, at Buyer’s election upon written notice to Seller, by Buyer’s exercise of its Right of Offset. 
2.6 Taxes.
(a)     All customs, sales, use, value-added, gross receipt, registration, stamp duty or other similar transfer Taxes incurred in connection with the transfer and sale of the Purchased Securities as contemplated by the terms of this Agreement, including all recording or filing fees, 

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notarial fees and other similar costs of Closing, that may be imposed upon, or payable, collectible or incurred, but excluding for the avoidance of doubt any income Tax on the Purchase Price, shall be borne by the Buyer.  The parties agree to furnish or cause to be furnished to each other, upon request, as promptly as practical, such information (including reasonable access to books and records) and assistance as is reasonably necessary in an effort to allow the Parties to minimize all such Taxes. 
(b)     Except as provided in Section 2.6(a), any Taxes with respect to the Companies or their respective Subsidiaries for any Pre-Closing Periods, including any Taxes required to be withheld and paid in connection with the payment of the Purchase Price, shall be borne by Seller, it being acknowledged and agreed that Seller shall bear no additional responsibility for Taxes to the extent such Taxes are (i) accrued or otherwise accounted for in the Final Net Working Capital, or (ii) withheld by the Buyer in accordance with the terms of this Agreement. The Buyer shall be responsible for any Taxes with respect to Companies or their respective Subsidiaries for any Post-Closing Periods. All Taxes collected by Seller from third parties prior to the Closing, including, but not limited to, sales and use Taxes and all payroll withholding Taxes, including both employee and employer portions, shall be paid by Seller to the appropriate governmental authority. 
(c)     Taxes covering any Straddle Period shall be pro-rated between Seller and the Buyer based upon the number of days in the Straddle Period ending as of the Effective Time and number of days in the Straddle Period ending after the Effective Time, respectively. The portion of such Tax that relates to the portion of such Tax period ending as of the Effective Time shall be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction the numerator of which is the number of days in the Tax period ending as of the Effective Time and the denominator of which is the number of days in the entire Tax period. 
(d)     The Buyer and Seller agree to furnish or cause to be furnished to each other, upon request, as promptly as practical, such information (including reasonable access to books and records) and assistance as is reasonably necessary for the filing of any Tax Return, the conduct of any Tax audit, and for the prosecution or defense of any claim, suit or proceeding relating to any Tax matter. The Buyer and Seller shall cooperate with each other in the conduct of any Tax audit or other Tax proceedings and each shall execute and deliver other documents as are reasonably necessary to carry out the intent of this Section 2.6(d). Any Tax audit or other Tax proceeding shall be deemed to be a third party claim subject to the procedures set forth in Section 6.4 of this Agreement. 
(e)     The Buyer shall promptly pay or shall cause prompt payment to be made to Seller of all refunds of Taxes and interest thereon received by, or credited against any Tax liability of the Buyer or any Affiliate of the Buyer attributable to Taxes paid by Seller or its Affiliates with respect to any Pre-Closing Period. Seller shall promptly pay or shall cause prompt payment to be made to Buyer of all refunds of Taxes and interest thereon received by, or credited against any Tax liability of Seller or any Affiliate of the Seller attributable to Taxes paid by Buyer or its Affiliates with respect to any Post-Closing Period. 
(f)     Notwithstanding any provision to the contrary in this Agreement, the Buyer shall be entitled to deduct and withhold from the Purchase Price such amounts as the Buyer is required 

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to deduct and withhold with respect to the payment of the Purchase Price under the Code, or under any applicable provision of state, local, or non-U.S. Tax law.  To the extent that amounts are so withheld and paid over to the appropriate governmental authority by the Buyer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Seller in respect of which such deduction and withholding was made by the Buyer.
2.7     Further Assurances. From and after the Closing, the Parties shall do such acts and execute such documents and instruments as may be reasonably required to make effective the Transactions. 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the representations and warranties set forth in this Article III, each of which is true and correct as of the Closing Date, and which shall survive the Closing Date and the Transactions to the extent set forth herein. 
3.1 Existence and Power.
(a) Seller has the requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Transactions. Seller has the corporate power and authority to transfer the Purchased Securities. 
(b)     Seller is duly organized, validly existing and in good standing under the Laws of the Cayman Islands.  Each of the Companies and their respective Subsidiaries is duly organized, validly existing and in good standing under the Laws of its jurisdiction of formation.
(c)     None of Seller, the Companies or any Subsidiary of a Company is party to, subject to or bound by any Contract, Encumbrance, Law or Constituent Document that would (i) be breached or violated or its obligations thereunder accelerated or increased (whether or not with notice or lapse of time or both) in any material respect by the execution or delivery by it of this Agreement or the performance by Seller of the Transactions, or (ii) prevent the carrying out of the Transactions. Except as set forth in Section 3.1 of the Disclosure Schedule or otherwise provided for herein, no permit, consent, waiver, approval or authorization of, or declaration to or filing or registration with, any governmental or regulatory authority or third party, is required in connection with the execution, delivery or performance of this Agreement by Seller, or the consummation by Seller of the Transactions, except for any such permits, consents, waivers, approvals, authorizations, declarations, filings or registrations the failure of which to make or obtain does not have and will not have a Material Adverse Effect. The Transactions will not result in the creation of any material Encumbrance against the Purchased Securities or any of the properties, assets, or rights of the Companies or their respective Subsidiaries. 
(d)     Each of Seller, the Companies and each Subsidiary of the Companies has the power and authority to own, lease and use its assets and to transact the business in which it is engaged, and holds all material authorizations, franchises, licenses and permits required therefor. 

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3.2     Valid and Enforceable Agreement; Authorization. This Agreement has been duly executed and delivered by Seller, and constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to enforcement of creditors’ rights generally, and (ii) general principles of equity. The execution and delivery of this Agreement and the consummation of the Transactions have been duly authorized, approved and ratified by all necessary corporate action on the part of Seller. 
3.3     Tax Matters.  Except as set forth in Section 3.3 of the Disclosure Schedules: 
(a)     Each of Seller, and/or the Companies has prepared and duly filed (or has had prepared and filed on its behalf) with the appropriate Tax Authority all Tax Returns, required to be filed with respect to the Companies and their respective Subsidiaries and has timely paid (or has had paid on its behalf) all Taxes shown as due on such Tax Returns, including Taxes which any of Seller, the Companies or any Subsidiary of a Company is obligated to withhold; 
(b) None of Seller, the Companies or any Subsidiary of a Company is currently the subject of a Tax audit or examination;
(c)     Each of Seller, the Companies and each Subsidiary of a Company, as applicable, has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor or other third party, and all required Tax Returns related thereto have been properly completed and timely filed;
(d)     None of Seller, the Companies or any Subsidiary of a Company has consented to extend the time, or is the beneficiary of any extension of time, in which any Tax may be assessed or collected by any taxing authority (other than any extension which is no longer in effect);
(e)     None of Seller, the Companies or any Subsidiary of a Company has received from any Tax Authority any written notice of proposed adjustment, deficiency, underpayment of Taxes which has not since been satisfied by payment or been withdrawn; 
(f)     None of Seller, the Companies or any Subsidiary of a Company  (i) has been a member of an affiliated group or filed or been included in a combined, consolidated or unitary income Tax Return (other than any such Tax Return of which Seller is the common parent), (ii) has any liability for Taxes of another Person under Section 1.1502‐6 of the Treasury Regulations (or any similar provision of state, local or foreign Law) or (iii) is a party to or bound by, or liable for any Taxes as a result of, any Tax allocation or sharing agreement;
(g)     None of Seller, the Companies or any Subsidiary of a Company is party to any income Tax allocation or sharing agreement;
(h)     None of Seller, the Companies or any Subsidiary of a Company is a party to or has engaged in any transaction that, as of the date hereof, is a “listed transaction” under Section 6707A(c)(2) of the Code or Section 1.6011-4(b)(2) of the Treasury Regulations; and

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(i)     None of Seller, the Companies or any Subsidiary of a Company will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any change in method of accounting for a Pre-Closing Period, or (ii) any “closing agreement,” as described in Section 7121 of the Code (or any similar provision of state, local or foreign income Tax Law).
3.4     Litigation. Except as set forth in Section 3.4 of the Disclosure Schedules, there are no material actions, suits or proceedings pending or, to Seller’s knowledge, threatened against Seller (in respect of the Companies), any Company or any Subsidiary of a Company. None of Seller (in respect of the Companies), any Company or any Subsidiary of a Company is subject to any order, judgment, writ, injunction or decree of any court or governmental or regulatory authority or body (excluding any such matters of general applicability or applicable to entities situated similarly to Seller rather than to them specifically). 

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3.5 Capitalization; Subsidiaries.
(a)    The authorized Capital Securities of Travelzoo Asia consists solely of ten thousand (10,000) ordinary shares (the “Travelzoo Asia Shares”), 10,000 shares of which are issued and outstanding, and all of which are beneficially and of record owned by Seller.  The authorized Capital Securities of Travelzoo Japan consists solely of ten (10) shares (the “Travelzoo Japan Shares” and together with the Travelzoo Asia Shares, the “Shares”)), ten (10) shares of which are issued and outstanding, and all of which are beneficially and of record owned by Seller.  All of the issued and outstanding Shares have been duly authorized and validly issued, are fully paid and non-assessable and were issued in compliance with all applicable Laws.
(b)     There are no outstanding Rights, equity-based compensation arrangements or commitments of any character to grant any Rights, to purchase or acquire from any Company any of its Capital Securities. 
(c)     The Companies have no obligation (contingent or otherwise) to purchase or redeem any of their respective Capital Securities.
(d)     Except as set forth in Section 3.5(d) of the Disclosure Schedules, each Company does not, directly or indirectly, own any Capital Securities of, or any interest convertible into or exchangeable or exercisable for, at any time, any Capital Securities of, any Person.  Section 3.5(d) of the Disclosure Schedules sets forth the name, owner and percentages of outstanding equity securities owned, directly or indirectly, by any Company, with respect to each Person of which such Company owns directly or indirectly, any Capital Securities.  Except as set forth in Section 3.5(d) of the Disclosure Schedules or as set forth in its Constituent Documents, all outstanding equity securities of each Subsidiary of a Company have been duly authorized and validly issued, are free and clear of any Rights, or equity-based compensation arrangements or commitments of any character to grant any Rights, and are owned, beneficially and of record, by a Company or one if its wholly owned Subsidiaries.  Except as set forth in Section 3.5(d) of the Disclosure Schedules, there are no outstanding (i) Capital Securities of any Subsidiary of any Company, or (ii) Rights to acquire from any Subsidiary of any Company, and no obligation of any Subsidiary of any Company to issue, any Capital Securities or securities convertible into or exchangeable for, at any time, Capital Securities of any Subsidiary of any Company.
3.6     Securities Ownership.  Seller is the true and lawful record and beneficial owner of the Purchased Securities.  All of such Purchased Securities have been duly and validly authorized and issued and are fully paid, non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, except as such liability may be imposed pursuant to applicable Laws, and such ownership is free and clear of all Encumbrances. 

3.7     Financial Statements.  The representations set forth in this Section 3.7 are made as of the date of the delivery of the Financial Statements, pursuant to Section 5.5:
(a)     Except as set forth in Section 3.7(a) of the Disclosure Schedules, the Financial Statements (i) have been prepared, at the request of Buyer, in accordance with GAAP applied on a 

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consistent basis throughout the periods covered thereby and (ii) fairly present, in all material respects, the combined consolidated financial position of the Companies as of the dates thereof and the consolidated results of operations and cash flows for the periods then ended.
(b)    The Audited Financials have been prepared in a manner consistent with the financial statements (including any notes thereto) filed by Travelzoo with the Securities Exchange Commission (“SEC”) on Form 10-K for the fiscal year ended December 31, 2014.  The Audited Financials have been audited by an independent registered accounting firm in accordance with GAAP.  The Unaudited Financials have been prepared in a manner consistent with the financial statements (including any notes thereto) filed by Travelzoo with the SEC on Form 10-Q for the period ended June 30, 2015. The Unaudited Financials have been reviewed by an independent registered accounting firm.  
(c)    There are no liabilities or obligations of the Companies, other than liabilities or obligations (i) reflected and accrued for or reserved against in the Latest Balance Sheet, (ii) incurred in the ordinary course of business since the date of the Latest Balance Sheet (none of which is a liability resulting from a breach of contract, breach of warranty, fraud, tort, infringement, proceeding or violation of any Law), or (iii) that are executory obligations under a Material Contract (other than liabilities relating to any breach, or any fact or circumstance that, with notice, lapse of time or both, would result in a breach, thereof by a Company).
3.8 Condition of Real and Personal Property.
(a)     All of the leased real property that is used in the Ordinary Course of business of the Companies and their respective Subsidiaries has been maintained in good condition in the Ordinary Course. 
(b)     All tangible personal property that is used in the Ordinary Course of business of the Companies and their respective Subsidiaries has been maintained in good operating condition and repair, in the Ordinary Course. 
3.9 Contracts.
(a)     Section 3.9 of the Disclosure Schedules sets forth a list (including all amendments) of all Contracts which (i) require payments by or to (or on behalf of) any Company or any Subsidiary of a Company which in excess of $50,000 during any calendar year, (ii) are Contracts relating to indebtedness, including surety bonds, performance bonds and letters of credit, (iii) are partnership, joint venture or similar agreements, (iv) are Contracts which contain non-competition provisions restricting the Companies or any Subsidiary of any Company or “most favored nations” obligations, (v) grant to the Companies, a Subsidiary of a Company or any other Person a right of first refusal, first offer or first negotiation; (vi) are Contracts pursuant to which the Companies or any Subsidiary of a Company has granted any exclusive marketing, sales representative relationship, franchising consignment or distribution right to any third party, (vii) which relate to the operation, control, ownership or management of any Subsidiary of the Companies, or (viii) which are otherwise material to the Companies (collectively the “Material Contracts”). 

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(b)     The terms of all Material Contracts have been complied with in all material respects by the Companies and their Subsidiaries and, to Seller’s knowledge, by the other parties to such Material Contracts. The Material Contracts are in full force and effect, and neither Company has waived any of its material rights thereunder. 
(c)     No Company or any Subsidiary of a Company has given or received any written notice of any intention to terminate, repudiate or disclaim any Material Contract. 
3.10     Licenses and Permits. Except as set forth in Section 3.10 of the Disclosure Schedules, to the Seller’s knowledge, each Company and all of its Subsidiaries have all governmental permits, licenses and authorizations necessary under Law for the conduct of the business of the Companies and their respective Subsidiaries as presently conducted in the Ordinary Course, and all such permits, licenses and authorizations are valid and in full force and effect in all material respects. The Companies and their respective Subsidiaries are, and at all times have been, in compliance in all material respects with the terms and requirements of all such permits, licenses and authorizations. None of the Companies or any Subsidiary of a Company has received any notice of any revocation or non-renewal of such permits, licenses and authorizations. 
3.11     Compliance with Laws. Except as set forth in Section 3.11 of the Disclosure Schedules, each of Seller, the Companies and each Subsidiary of the Companies is in compliance in all material respects with all applicable Laws, rules and regulations currently in effect, in each case other than any such failure to be in compliance as would not, individually or in the aggregate, be materially adverse to any Company or any Subsidiary of a Company. 
3.12 Employee and Labor Matters. 
(a)     Section 3.12(a) of the Disclosure Schedules sets forth a true and complete aggregate list of employees of the Companies or any of their respective Subsidiaries as of the date hereof (collectively, the “Employees”) and such list correctly reflects the aggregate amount of the Employees’ base salary or base wage rate, target bonus or incentive opportunity, the number of exempt and nonexempt status employees (where applicable) and the number of employees that are full-time or part-time. 
(b)     Section 3.12(b) of the Disclosure Schedules sets forth a true and complete list of all independent contractors, consultants, agents or other non-employees providing services to a Company or any Subsidiary of a Company as of the date hereof (collectively, the “Contractors”) which shall include any Person that received at least $50,000 in compensation in 2014 or is expected to receive at least $50,000 in 2015.  The Contractors are not covered by or entitled to benefits under any Company Plan.
(c)     Seller and the Companies have complied in all material respects with applicable Law relating to labor and employment, including those relating to wages, hours, collective bargaining, unemployment, compensation, worker’s compensation, equal employment opportunity, age and disability discrimination, immigration control, information privacy and security. Neither the Companies nor any of their respective Subsidiaries is liable for the payment of any material tax, 

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fines, penalties, or other amounts, however designated, for failure to comply with any applicable Law related to the foregoing
(d)     Except as set forth in Section 3.12 of the Disclosure Schedule, there are no controversies existing, pending or, to Seller’s knowledge, threatened by any association or union or collective bargaining representative of the Employees. 
(e)     Except as set forth in Section 3.12 of the Disclosure Schedule, there is no charge or complaint relating to unfair labor practices pending against Seller, the Companies or any Subsidiary of a Company, nor is there any labor strike, work stoppage, grievance or other labor dispute pending or, to Seller’s knowledge, threatened against Seller, any Company or any Subsidiary of any Company. 
3.13 Intellectual Property Matters; Privacy. 
(a) Section 3.13(a) of the Disclosure Schedules contains a true and complete list of (i) each of the registrations or pending applications for registrations and (ii) other material Intellectual Property rights owned by a Company or any of its wholly-owned Subsidiaries (the “Company Owned IP Rights”).  Section 3.13(a) of the Disclosure Schedules contains a true and complete list of any Contract pursuant to which a Company or any of its Subsidiaries grants or is granted a license to use any Intellectual Property rights (other than for (A) standard off-the-shelf software license agreements entered into in the Ordinary Course and (B) non-exclusive licenses granted in the Ordinary Course) (the “Company Licensed IP Rights”).
(b) The Company Licensed IP Rights and Company Owned IP Rights together constitute all the Intellectual Property necessary to, and used or held for use in, the conduct of the business of the Companies as currently conducted.  The consummation of Transactions will not alter, encumber, impair or extinguish any of the Company Owned IP Rights or the Company Licensed IP Rights.
(c) To the Seller’s knowledge, none of the Companies nor any Subsidiary of a Company has infringed, misappropriated or otherwise violated any valid and enforceable and subsisting Intellectual Property right of any third Person.  There is no claim, action, suit or proceeding pending against, or, to the Seller’s knowledge, threatened against a Company or any of its Subsidiaries, (i) challenging or seeking to deny or restrict, the rights of such Company in any of the Company Owned IP Rights or the Company Licensed IP Rights, (ii) alleging that the use of the Company Owned IP rights or the Company Licensed IP Rights or any services provided by a Company or any Subsidiary of a Company may misappropriate, infringe or otherwise violate any Intellectual Property right of any third Person or (iii) alleging that a Company or any Subsidiary of a Company has infringed, misappropriated or otherwise violated any Intellectual Property right of any third Person.  
(d) Each of the Companies owns all right, title and interest in and to all of their respective Company Owned IP Rights, and has a valid and enforceable contract right to use the Company Licensed IP Rights, free and clear of any Encumbrance other than Permitted Encumbrances.  Each of the Companies has taken all commercially reasonable actions necessary 

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to maintain and protect the Company Owned IP Rights and their respective rights in the Company Licensed IP Rights, including payment of applicable maintenance fees and filing of applicable statements of use.
(e) To the Seller’s knowledge, no Person has infringed, misappropriated or otherwise violated any Company Owned IP Rights or Company Licensed IP Rights; provided that for purposes of this Section 3.13(e) “Seller’s knowledge” shall include only the actual knowledge such individual, without regard to the knowledge such individual would reasonably be expected to obtain in the course of diligently performing his duties for the Companies.  
(f)     Seller, the Companies and their respective Subsidiaries currently have in place, and have had in place at all times since January 1, 2010, a privacy policy (the “Privacy Policy”), which Privacy Policy is substantially similar in all material respects to the privacy policy in effect for Travelzoo.  Seller, the Companies and their respective Subsidiaries are, and all times since January 1, 2010 have been, in compliance in all material respects with the Privacy Policy. 
(g)     The Companies and their Subsidiaries post all policies with respect to the foregoing on their respective websites in conformance with Privacy Laws.  None of Seller, the Companies or their respective Subsidiaries use, collect or receive any Personal Information or sensitive non-personally identifiable information and or become aware of the identity or location of, or identify or locate, any particular Person as a result of any receipt of such Personal Information, except in accordance with their respective privacy policies. 
(h) To the Seller’s knowledge, there have been no security breaches relating to, or material violations of any security policy or Privacy Law regarding, or any unauthorized access of, any data or information used by Seller, the Companies or any of their respective Subsidiaries, including Personal Information.

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3.14 Employee Benefit Plans.  
(a)     Section 3.14(a) of the Disclosure Schedules contains a true, correct and complete list of each Employee Benefit Plan that is sponsored, maintained or contributed to by Seller, a Company or any Subsidiary of a Company for the current or future benefit of any Employee or for which Seller, a Company or any Subsidiary of a Company has any direct or indirect liability (each, a “Company Plan”). With respect to each Company Plan, Seller has made available to Buyer, to the extent applicable: (i) all documents embodying or governing any Company Plan, any funding mechanism for any Company Plan (including, without limitation, trust agreements and insurance policies); and (ii) the summary plan description of the Company Plan (or any other descriptions provided to participants and/or beneficiaries of such Company Plan).       
(b)     Each Company Plan has been maintained in material compliance with its terms and applicable Law.  No Company Plan provides for post­ employment life or health insurance benefits for any Employee or any beneficiary or dependent of any Employee.
(c)     With respect to each Company Plan, all contributions have been made in full or, with respect to payments not due and to the extent required by GAAP, proper accruals for such contributions have been made and are reflected in the accounting records of the Companies or their Subsidiaries, other than any failure that could not reasonably be expected to subject the Companies to any material liability. 
(d)     Except as set forth on the Latest Balance Sheet, or otherwise reflected in the Closing Balance Sheet, there are no unpaid employment-related liabilities incurred or accrued prior to the Closing with respect to Employees and other employees or former employees of the Business, including without limitation any liabilities in connection with all salaries, wages, bonuses, earned and unpaid vacation leave, business expenses, retirement allowance and other reimbursements, termination pay, wrongful dismissal claims, employment insurance premiums, workers’ compensation payments, income tax and applicable pension plan deductions and other payments to be made to or on behalf of such individuals or otherwise.
(e)     Neither the execution of this Agreement nor the consummation of the Transactions (either alone or together with any other event) will, except as expressly provided in this Agreement, (i) entitle any Employee to any payment or benefit, including any bonus, retention, severance, retirement or job security payment or benefit, or (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation under, any Company Plan.   
3.15 Intentionally Omitted. 
3.16     Insurance.  Section 3.16 of the Disclosure Schedules sets forth a true and complete list of all insurance policies pursuant to which Seller or the Companies seek to limit, or transfer to a third party, financial or other risk, owned or held by the Companies or any of their respective Subsidiaries or assets (collectively, the “Insurance Policies”).  For each such policy, Section 3.16 of the Disclosure Schedules provides a brief summary of the coverage and terms of each such policy, including (i) the date thereof; (ii) the name of the insurer and the owner of the policy; (iii) the 

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premiums (or similar consideration) paid therefor for each contract/calendar year for the relevant policy since January 1, 2014; and (iv) the expiration date.  All premiums payable into each such policy have been duly paid and each such insurance policy is in full force and effect.  Except as set forth in Section 3.16 of the Disclosure Schedules, there is no claim pending under any of such insurance policies and no such claim made since January 1, 2012 has been denied or, in the case of any pending claim, questioned or disputed.  Neither Seller nor any Company has received any written notice of cancellation of any of such insurance policies. 
3.17     Transactions with Affiliates.  Section 3.17 of the Disclosure Schedules sets forth all contracts or arrangements between Seller, any Company or any Subsidiary of a Company, on the one hand, and any of their respective Affiliates (excluding for these purposes Travelzoo), on the other hand, that will not be terminated effective as of the Closing Date.  Except as disclosed in Section 3.17 of the Disclosure Schedules, and except for any relationships with Travelzoo, none of Seller, the Companies or their respective Affiliates, directors or executive officers (i) possesses, directly or indirectly, any financial interest in, or is a director or executive officer of, any Person (other than any Company) which is a material client, supplier, customer, lessor, lessee or competitor of any Company or (ii) owns any property right, tangible or intangible, which is used by a Company in the conduct of its business. 
3.18     Brokers.  No finder, broker, agent, or other intermediary acting on behalf of Seller or the Companies is entitled to a commission, fee, or other compensation in connection with the negotiation or consummation of this Agreement or any of the Transactions. 
3.19     No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, Seller makes no other express or implied representation or warranty on behalf of Seller.  
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer makes the representations and warranties set forth in this Article IV, each of which is true and correct as of the Closing Date, and which shall survive the Closing Date and the Transactions to the extent set forth herein. 
4.1 Existence and Power. 
(a)     The Buyer has the corporate power and authority to enter into this Agreement, to perform its obligations hereunder, and to consummate the Transactions. 
(b)     The Buyer is duly incorporated, validly existing and in good standing under the Laws of the United Kingdom. 
(c)     The Buyer is not a party to, subject to or bound by any Contract, Encumbrance, Law or Constituent Document that would prevent Buyer from performing its obligations hereunder or consummating the Transactions. Except as set forth in Section 4.1 of the Disclosure Schedules or otherwise provided for herein, no permit, consent, waiver, approval or authorization of, or 

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declaration to or filing or registration with, any governmental or regulatory authority or third party is required in connection with the execution, delivery or performance of this Agreement by the Buyer or the consummation by the Buyer of the Transactions, except for any such permits, consents, waivers, approvals, authorizations, declarations, filings or registrations the failure of which to obtain does not have and will not have a material adverse effect on Buyer’s ability to perform its obligations hereunder or consummate the Transactions. 
4.2     Valid and Enforceable Agreement; Authorization. This Agreement constitutes a legal, valid and binding obligation of the Buyer, enforceable against it in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to enforcement of creditors’ rights generally and (ii) general principles of equity. The execution and delivery of this Agreement and the consummation of the Transactions have been duly authorized, approved and ratified by all necessary action on the part of the Buyer. The Buyer has full authority to enter into and deliver this Agreement, to perform its obligations hereunder, and to consummate the Transactions. 
4.3     Brokers. No finder, broker, agent, or other intermediary acting on behalf of the Buyer is entitled to a commission, fee, or other compensation in connection with the negotiation or consummation of this Agreement or any of the Transactions. 
4.4     Litigation. There are no actions, suits, proceedings, orders or investigations pending or threatened against the Buyer or any of the Buyer’s Affiliates, at Law or in equity, which if adversely determined would have a material adverse effect on the Buyer’s performance under this Agreement or the consummation of the Transactions. There are no injunctions, decrees or unsatisfied judgments outstanding against or related to the Buyer which would have a material adverse effect on the Buyer’s performance under this Agreement or the consummation of the Transactions. 
4.5     No Knowledge of Breach of Seller Representation. As of the Closing, Buyer has no knowledge of any current, material breach by Seller of Seller’s representations or warranties contained in this Agreement or any other agreements contemplated hereby. 
4.6     No Other Representations or Warranties. Except for the representations and warranties contained in this Article IV, neither the Buyer, nor any other Person, makes any other express or implied representation or warranty on behalf of the Buyer. 
ARTICLE V
ADDITIONAL COVENANTS OF THE PARTIES 
5.1     Books and Records. From and after the Closing, the Buyer shall provide Seller and its Affiliates and their representatives with reasonable access, subject to customary restrictions and confidentiality obligations, for any reasonable purpose, during normal business hours, including but not limited to (a) preparing Tax Returns or (b) defending any claim in respect of which a Notice of Claim has been served on Seller by a third party other than Buyer and its Affiliates, to all books and records related to the Companies, including, but not limited to, accounting and Tax records (“Records”) pertaining or relating to the period prior to the Effective Time. Unless otherwise consented to in writing by Seller, the Buyer shall not, for a period of seven (7) years following the 

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date hereof or such longer period as retention thereof is required by applicable Law, destroy, alter or otherwise dispose of (or allow the destruction, alteration or disposal of) any of the Records without first offering to surrender to Seller such Records.
5.2 Confidentiality; Announcements. 
(a)    Following the Closing, Seller shall maintain, and shall cause its Affiliates to maintain, in confidence any information it or they may have in relation to the Companies, and such information shall not be disclosed or used by Seller or its Affiliates without the Buyer’s prior written consent, unless such information is (i) otherwise publicly available (except as a result of a breach hereof by Seller or its Affiliates), (ii) required to be disclosed pursuant to judicial order, regulation or Law or (iii) required to be disclosed by the rules of the NASDAQ Global Select Market. In the event that Seller or any of its Affiliates or representatives become legally compelled to disclose any such information or documents as referred to in this paragraph, Seller shall, to the extent reasonably practicable, provide the Buyer with prompt written notice before such disclosure, sufficient to enable the Buyer either to seek a protective order, at its expense, or other appropriate remedy preventing or prohibiting such disclosure or to waive compliance with the provisions of this Section 5.2. 
(b)    None of the Parties nor any of their respective representatives shall issue any press releases or make any public announcements with respect to this Agreement or the Transactions without the prior written consent of Buyer and Seller, as the case may be.  Notwithstanding the foregoing, any such press release or public announcement may be made if required by applicable Law or rule of a stock exchange; provided that the Party required to make such press release or public announcement shall, to the extent possible, confer with the other Parties concerning the timing and content of such press release or public announcement before the same is made.
5.3 Advertiser and Subscriber Information. 
(a)    As promptly as reasonably practicable following the Closing, Seller shall make available, and shall cause its Affiliates to make available, to Buyer information relating to advertisers, subscribers and Web site visitors pertaining to the Companies and their respective Subsidiaries (“Client Information”) to the extent permitted by applicable Laws. Seller or its Affiliates may withhold any Client Information to the extent it reasonably believes (based on the opinion of legal counsel) that providing such could violate applicable Law or the terms of any agreement to which Seller or any of its Affiliates is a party. Seller represents and warrants that it is not currently aware of any Laws or agreements which would prevent Seller from providing such Client Information. 
(b)    Buyer shall not use any Client Information in any way that could violate the privacy policies of Seller or its Affiliates as in effect as of the Closing Date. Buyer further agrees to comply with all applicable data protection and privacy Laws in connection with the use of such Client Information. 
5.4     Cooperation; Further Assurances. On or after the Closing Date, the Parties shall, on request, cooperate with one another by furnishing any additional information, executing and delivering any additional documents and instruments and doing any and all such other things as 

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may be reasonably required by the Parties or their counsel to consummate or otherwise implement the Transactions. 
5.5 Financial Statements.  
(a)     On or prior to September 10, 2015, Seller shall deliver to Buyer true and complete copies of the following financial statements (such financial statements, the “Financial Statements”):
(i)    the audited combined consolidated balance sheet of the Companies for the two (2) years ended as of December 31, 2014 and 2013, and the related audited statements of operations, statements of comprehensive income (loss), cash flows and stockholders’ equity for each fiscal year of the Companies then ended, as well as for the fiscal year ended December 31, 2012 (collectively, the “Audited Financials”); 
(ii)    the (A) unaudited combined consolidated balance sheet of the Companies as of the two (2) years ended December 31, 2012 and 2011 (the “Unaudited Annual Balance Sheets”), (B) unaudited, combined consolidated state of comprehensive income (loss) for the year ended December 31, 2011 (the “Unaudited Income Statement”), (C) unaudited combined consolidated balance sheet of the Companies as of March 30, 2014, June 30, 2014, September 30, 2014, March 30, 2015 (the “Historic Quarterly Financials”), and June 30, 2015 (the “Latest Balance Sheet”) and (D) the unaudited consolidated statements of operations, statements of comprehensive income (loss), and cash flows for each period ended as of March 30, 2014, June 30, 2014, September 30, 2014, March 30, 2015 and June 30, 2015, together with related notes (collectively, with the Unaudited Balance Sheets, the Unaudited Income Statement and the Historic Quarterly Financials, the “Primary Unaudited Financials”); and 
(iii)    the unaudited combined consolidated statement of income for the Companies for the three (3) months ended December 31, 2014 and related notes (together with the Primary Unaudited Financials, the “Unaudited Financials”). 
(b)     The Financial Statements shall be in form and substance consistent in all material respects with the financial statements set forth on Section 5.5 of the Disclosure Schedules.

5.6     Termination of Certain Agreements  Seller agrees that at the Closing any agreements listed in Section 5.6 of the Disclosure Schedules shall have been terminated, cancelled, settled or otherwise made inoperative without any further action by the parties thereto without any further obligations under such agreements.  The Parties acknowledge and agree that on and after the Closing Date, the Companies shall no longer have any rights or obligations or otherwise be able to benefit from those agreements set forth in Section 5.6(i) of the Disclosure Schedules (such agreements, the “Terminated Contracts“).  Without limitation to the foregoing, with respect to agreements entered into on or prior to the Closing Date between Seller, a Company or any Subsidiary of a Company, on the one hand, and any of their respective Affiliates, on the other hand, Seller shall (i) terminate or cause to be terminated, (ii) eliminate and procure the release of all liabilities and (iii) terminate all rights of the Companies under such agreements to intercompany accounts payable and accounts receivable without any further action by the parties thereto or any further liability, penalty or cost 

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of the Companies, Buyer or any of their respective Affiliates.  Notwithstanding the foregoing, the arrangements set forth in Section 5.6(ii) of the Disclosure Schedules shall survive the Closing in accordance with their terms, and Buyer hereby agrees to assume and satisfy the obligations of Seller pursuant to such arrangements in accordance with their terms.
5.7 Non-Competition; Non-Solicitation.  
(a)     Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, other than indirectly through such Person’s investment in Travelzoo, (i) engage in or assist others in engaging in the Restricted Business in the Territory; or (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; in each case, for a period beginning on the Closing Date and ending on the third (3rd) anniversary of the Closing Date (such period, the “Restricted Period”). Notwithstanding the foregoing, Seller may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own five percent (5%) or more of any class of securities of such Person.
(b)     During the Restricted Period, Seller shall not, and shall not permit any its Affiliates to, directly or indirectly, hire or solicit any employee of the Companies or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, that nothing in this Section 5.7 shall prevent Seller or any of its Affiliates from hiring (i) any employee whose employment has been terminated by the Companies, or (ii) after one (1) year from the date of termination of employment, any employee whose employment has been terminated by the employee.
(c)     During the Restricted Period, Seller shall not, and shall not permit any of its Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients, business partners or customers of the Companies or potential clients, business partners or customers of the Companies for purposes of diverting their business or services from the Companies.
(d)     Seller acknowledges that a breach or threatened breach of this Section 5.7 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).
(e)     Seller acknowledges that the restrictions contained in this Section 5.7 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the Transactions. In the event that any covenant contained in this Section 5.7 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, 

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then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 5.7 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.  
ARTICLE VI
INDEMNIFICATION 
6.1     Indemnification by Seller. Subject to the limitations set forth in this Article VI, Seller shall indemnify and hold harmless the Buyer, and its current and former officers, directors, managers, members, employees, agents and Affiliates, including officers and directors of any Affiliate of Buyer (collectively, the “Buyer Parties”) against and in respect of any and all Losses arising from: 
(a)     any breach or violation of the covenants or other agreements made by Seller, the Companies or any of their respective Affiliates in Articles II, V, VI, or VII; or
(b)     any breach of any of the representations and warranties made in Article III by Seller. 
6.2     Indemnification by Buyer. The Buyer shall indemnify and hold harmless Seller and its current and former officers, directors, managers, members, employees, agents and Affiliates, including officers and directors of any Affiliate of Seller (collectively, the “Seller Parties”) against and in respect of any and all Losses arising from: 
(a)     any breach or violation of the covenants or other agreements made by the Buyer or any of its Affiliates in Articles II, V, VI, or VII; or
(b)     any breach of any of the representations or warranties made in Article IV by the Buyer. 
6.3     Notice and Payment of Losses. Upon obtaining knowledge of any Loss, the Party entitled to indemnification (the “Injured Party”) shall promptly notify the Party liable for such indemnification (the “Indemnifying Party”) in writing of such Losses which the Injured Party has determined have given or could give rise to a claim under Sections 6.1 or 6.2 (such written notice being hereinafter referred to as a “Notice of Claim”); provided, however, that failure of an Injured Party timely to give a Notice of Claim to the Indemnifying Party shall not release the Indemnifying Party from its indemnity obligations set forth in this Article VI except and to the extent that such failure materially adversely affects the ability of the Indemnifying Party to defend such claim or increases the amount of indemnification which the Indemnifying Party is obligated to pay hereunder, in which event the amount of indemnification which the Injured Party shall be entitled to receive shall be reduced to an amount which the Injured Party would have been entitled to receive had such Notice of Claim been timely given. The Injured Party shall not make any admission of liability, 

27

agreement or compromise with any Person in relation to a Loss without prior consultation with the Indemnifying Party.  A Notice of Claim shall specify in reasonable detail, to the extent known by the Injured Party, the nature and, to the extent reasonably calculable, estimated amount of any such claim giving rise to a right of indemnification. The Indemnifying Party shall satisfy its obligations under Sections 6.1 or 6.2, as the case may be, within sixty (60) Business Days of its receipt of a Notice of Claim; provided, however, that for so long as the Indemnifying Party is disputing its liability or defending a third-party claim in good faith pursuant to Section 6.4, its obligations to indemnify the Injured Party with respect thereto shall be suspended until a final unappealable judgment of a court of competent jurisdiction is given in relation to such claim. The Indemnifying Party shall have thirty (30) Business Days (or such shorter period of time that the Injured Party may be required to respond to any suit or governmental action) after receipt of a Notice of Claim to notify the Injured Party (a) whether or not it disputes its liability to the Injured Party with respect to such Notice of Claim and (b) whether it elects to defend a third party claim pursuant to Section 6.4. 
6.4     Defense of Third-Party Claims. With respect to any action or any claim set forth in a Notice of Claim relating to a third-party claim, the Indemnifying Party may defend, in good faith and at its expense, any such claim or demand, and the Injured Party, at its expense, shall have the right, but not the obligation, to participate (but not control) at its expense in the defense of any such third-party claim; provided, that the Indemnifying Party shall not be entitled to assume the defense of a third-party claim to the extent that the Injured Party reasonably determines that it has defenses, claims or positions that are in conflict with, or otherwise unique, separate or distinct from the defenses, claims or positions that might be available to other Persons relating to such third-party claim, in which case the Injured Party shall have the right to elect to be represented by separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Injured Party, with such defense of such third-party claim and the costs and expenses of such separate counsel to be borne by the Indemnifying Party. So long as the Indemnifying Party assumes and thereafter diligently defends any such third-party claim, the Injured Party shall not settle or compromise such third-party claim without the consent of the Indemnifying Party. The Indemnifying Party may only settle or compromise such third-party claim without the consent of the Injured Party if such settlement or compromise (i) is solely for monetary damages with no admission of fault on the part of the Injured Party, and (ii) the Indemnifying Party has secured a written unconditional release of the Injured Party. The Injured Party shall make available to the Indemnifying Party or its representatives all records and other materials reasonably required for use in contesting any third-party claim. The Injured Party shall cooperate fully with the Indemnifying Party in the defense of all such claims. If the Indemnifying Party elects not to defend any such third-party claims, or elects to defend such claims but thereafter fails to diligently pursue such defense, the Injured Party shall have no obligation to do so, but may defend, settle or compromise any such third-party claim at the risk and expense of the Indemnifying Party. The Indemnifying Party will not, however, be responsible for any Losses if and to the extent that they arise from action taken or omitted to be taken by the Injured Party in bad faith, fraudulently, negligently or as a result of a breach of this Agreement by the Injured Party. 
6.5 Survival of Representations and Warranties. 

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(a)     Except as specifically set forth in this Section 6.5, the representations and warranties made by any Party in Article III and Article IV shall survive for a period of twelve (12) months following the Closing Date and thereafter to the extent a Notice of Claim is made prior to such expiration with respect to any breach of such representation or warranty occurring prior to such expiration and set out in such Notice of Claim.  
(b)     The representations and warranties of the Parties set forth in Sections 3.3 (Tax Matters), 3.12 (Employee and Labor Maters), and 3.14 (Employee Benefit Plans) shall survive until sixty (60) days following expiration of the applicable statute of limitations.
(c)     The representations and warranties of the Seller set forth in Sections 3.1 (Existence and Power), 3.2 (Valid and Enforceable Agreement; Authorization), 3.6 (Securities Ownership), and 3.18 (Brokers), and the representations and warranties of the Buyer set forth in Sections 4.1 (Existence and Power), 4.2 (Valid and Enforceable Agreement; Authorization), and 4.3 (Brokers) (collectively, the “Fundamental Representations”), shall survive the Closing Date indefinitely. 
(d)     No party shall be entitled to indemnification for breach of any representation and warranty set forth in Article III or Article IV unless a Notice of Claim of such breach has been given to the Indemnifying Party within the period of survival of such representation and warranty as set forth herein. 
6.6 Limitation on Indemnification. 
(a)     The provisions for indemnity under Sections 6.1(b) and 6.2(b) in respect of breaches of representations and warranties, as the case may be, shall be effective only when the aggregate amount of all Losses for which indemnification is sought from Seller or the Buyer under Sections 6.1(b) and 6.2(b) in respect of breaches of representations and warranties, respectively, exceeds One Hundred Fifty Thousand dollars ($150,000) (the “Indemnity Basket”), in which event the Indemnifying Party shall be liable for all Losses in excess of such amount. 
(b)     The indemnification obligations of Seller or the Buyer pursuant to Sections 6.1(b) and 6.2(b) in respect of breaches of representations and warranties, as the case may be, shall be effective only until the aggregate dollar amount paid by the Indemnifying Party in respect of all Losses indemnified against under such Sections, equals Five Million One Hundred Thirty Thousand dollars ($5,130,000) (the “Indemnity Cap”). 
(c)     Notwithstanding the foregoing, the limitations of Sections 6.6(a) and 6.6(b) shall not apply to any Losses arising (i) under Sections 6.1(a) or 6.2(a) in respect of the breach of any covenant or agreement, (ii) out of a breach of Section 3.14(d), (iii) out of the breach of any Fundamental Representation, or (iv) from the fraud or intentional misrepresentation of a party. 
(d)     All indemnification obligations shall be paid in U.S. dollars in the United States. 
(e)     If Seller pays to any Buyer Parties an amount in respect of any claim under this Agreement and the Buyer subsequently recovers from a third party (including an insurer) a sum 

29

which is related to that claim, the Buyer shall promptly repay to Seller so much of the amount paid by Seller as does not exceed the sum recovered from the third party less all reasonable costs, charges and expenses incurred by the Buyer Parties in obtaining that payment and in recovering that sum from the third party. 
(f)     Seller shall not be liable for any breach or non-fulfillment of any of the representations or warranties contained herein, if and to the extent that the Loss occasioned thereby has been recovered under the same or any other representation or warranty contained herein. 
(g)     Nothing shall diminish the Buyer’s common law obligation to mitigate its loss in a commercially reasonable manner. 
(h)     NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NO PARTY SHALL BE LIABLE OR OTHERWISE RESPONSIBLE TO ANY OTHER PARTY HERETO OR ANY AFFILIATE OF ANY OTHER PARTY HERETO FOR CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES, OTHER THAN (i) CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES (X) AWARDED TO A THIRD PARTY PURSUANT TO A THIRD PARTY CLAIM OR (Y) IN CONNECTION WITH CLAIMS OF FRAUD OR WILLFUL OR INTENTIONAL MISREPRESENTATION OR (ii) CONSEQUENTIAL OR SPECIAL DAMAGES THAT WERE REASONABLY FORESEEABLE ON THE DATE HEREOF OR ON THE CLOSING DATE AND ARE A DIRECT CONSEQUENCE OF OR DIRECT RESULT OF, OR DIRECTLY ARISE FROM, A BREACH OF THIS AGREEMENT.
6.7     Payments.  Any Losses that any Buyer Parties are entitled to recover pursuant to Section 6.1 may be satisfied, at Buyer Parties’ election upon written notice to Seller, by (a) Buyer’s exercise of its Right of Offset, or (b) Seller by wire transfer of immediately available funds to an account designated in writing by such Buyer Parties (the “Payment Option”).  Any Losses that any Seller Parties are entitled to recover pursuant to Section 6.2 shall be satisfied by Buyer, by wire transfer of immediately available funds to an account designated in writing by such Seller Parties.  Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VI, the Indemnifying Party shall satisfy its obligations within fifteen (15) Business Days of such adjudication by wire transfer of immediately available funds (with the understanding that if Seller Parties are the Indemnifying Party, payment by wire transfer shall only be required if Buyer Parties elect the Payment Option). The Parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such fifteen (15) Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final adjudication to but excluding the date such payment has been made at a rate per annum equal to seven percent (7%) (with the understanding that if Seller Parties are the Indemnifying Party, payment shall only be required if Buyer Parties elect the Payment Option). Such interest shall be calculated on the basis of a 365 day year and the actual number of days elapsed, without compounding.  
6.8     Right of Offset; Escrow.  Buyer shall have the right to offset from the Promissory Note (the “Right of Offset”) the amount of payments owing to Buyer Parties pursuant to Section 2.5 and/or Section 6.7 (subject to the limitations set forth in Section 6.6), and any such offset shall be deemed 

30

to satisfy Seller’s obligations with respect to any such payments.  In addition to and not in limitation of the foregoing, in the event Buyer proposes to fully satisfy its obligations pursuant to and in accordance with the Promissory Note at any time prior to the twelve month anniversary of the Closing, Buyer and Seller hereby agree that Buyer may, in lieu of payment of any principal and interest payable to Seller in such satisfaction, deposit an amount equal to or less than the difference between (i) the Indemnity Cap, minus (ii) any amount previously paid or set off in respect of Seller’s indemnification obligations pursuant to this Article VI into an escrow account to be maintained by Buyer’s counsel, pursuant to an escrow agreement substantially in the form attached as Exhibit C hereto (the “Escrow Agreement”), for a period not to exceed the twelve month anniversary of the Closing Date; provided, however, that in the event and to the extent any Notice(s) of Claim are delivered prior to the twelve month anniversary of the Closing Date, an amount adequate to satisfy such Notice(s) of Claim shall be held in escrow beyond the twelve month anniversary of the Closing Date in accordance with the terms of the Escrow Agreement.
6.9     Characterization of Indemnity Payments. Any indemnification payments made pursuant to this Agreement shall be considered, to the extent permissible under Law, as adjustments to the Purchase Price for all Tax purposes. 
6.10     Exclusive Remedy. In the absence of fraud or intentional misrepresentation, and except for obtaining equitable remedies, the indemnification provisions set forth in this Article VI shall provide the exclusive remedy for breaches of any covenant, agreement, representation or warranty set forth in this Agreement or any other agreement ancillary hereto executed pursuant to this Agreement. 
ARTICLE VII
MISCELLANEOUS PROVISIONS 
7.1     Notice. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made upon (i) in the case of personal delivery or delivery by electronic mail or facsimile, on the date of such delivery, (ii) in the case of nationally recognized overnight courier, on the next Business Day following dispatch and (iii) in the case of mailing, on the third (3rd) Business Day following such mailing if sent by certified mail, return receipt requested, postage prepaid. All such notices, requests, demands and other communications shall be addressed at the address or facsimile number shown in this Section 7.1 for, or such other address or facsimile number as may be designated in writing hereafter by, such Party: 
If to Seller: 
c/o Intertrust
190 Elgin Avenue, George Town,
Grand Cayman KY1-9005,
Cayman Islands

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With a copy simultaneously by like means to (which copy shall not constitute notice): 
Armstrong Teasdale LLP
7700 Forsyth Boulevard
Suite 1800
St. Louis, MO 63105
Attention: Michael Jefferies
Email: mjefferies@armstrongteasdale.com

If to Buyer: 
Travelzoo Inc. 
590 Madison Avenue, 37th Floor 
New York, New York 10022 
Attention: Glen Ceremony and Rachel Barnett 
Email: gceremony@travelzoo.com
rbarnett@travelzoo.com

With a copy simultaneously by like means to (which copy shall not constitute notice): 
Zukerman Gore Brandeis & Crossman, LLP 
11 Times Square, 15th Floor
New York, New York 10036
Telephone: (212) 223-6700 
Fax: (212) 223-6433 
Attention: Clifford A. Brandeis 
Email: cbrandeis@zukermangore.com

7.2 Entire Agreement. This Agreement, together with the Promissory Note and the Disclosure Schedules and Exhibits hereto, embody the entire agreement and understanding of the Parties hereto with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings relative to such subject matter. 
7.3     Severability. If any provision hereof shall be held invalid or unenforceable by any court of competent jurisdiction or as a result of future legislative action, such holding or action shall be strictly construed and shall not affect the validity or effect of any other provision hereof, as long as the remaining provisions, taken together, are sufficient to carry out the overall intentions of the Parties as evidenced hereby. 
7.4 Assignment; Binding Agreement. This Agreement and various rights and obligations arising hereunder shall inure to the benefit of and be binding upon the Parties hereto and their successors and permitted assigns. Neither this Agreement nor any of the rights, interests, or 

32

obligations hereunder shall be transferred, delegated, or assigned by the Parties hereto without the prior written consent of the other Party (which consent shall not be unreasonably withheld), except that Buyer shall have the right to designate a subsidiary entity to act as the Buyer hereunder, and Buyer shall have the right to transfer and assign its rights hereunder to any entity which is controlled by the Buyer or by the Affiliates of the Buyer. No such assignment shall relieve the Buyer of any liability or obligation hereunder. 
7.5     Expenses. Except as otherwise specifically set forth herein, all fees and expenses incurred in connection with the Transactions, this Agreement and the Transactions, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the Party incurring such fees or expenses.
7.6     Counterparts. This Agreement may be executed in one or more original, facsimile or electronic (i.e. PDF, or portable document format) counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.
7.7     Headings; Interpretation. The table of contents, article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement. Each reference in this Agreement to an Article, Section, Schedule or Exhibit, unless otherwise indicated, shall mean an Article or a Section of this Agreement or a Schedule or Exhibit attached to this Agreement, respectively. References herein to “days”, unless otherwise indicated, are to consecutive calendar days. Whenever the words “include,” “includes,” “including” or words of similar import are used in this Agreement, they shall be deemed followed by the words “without limitation.”  Whenever the context requires in this Agreement, the masculine pronoun shall include the feminine and the neuter, and the singular shall include the plural, and vice versa.  Whenever this Agreement shall require a Party to take an action, such requirement shall be deemed an undertaking by such Party to cause it, and to use its commercially reasonable efforts to cause its other Affiliates, to take appropriate action in connection therewith.  References to any agreement or contract are to such agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  All Parties have participated substantially in the negotiation and drafting of this Agreement and agree that no ambiguity herein should be construed against the draftsman. All references to “$” or “dollars” mean the lawful currency of the United States of America. References to a “corporation” or “company” shall be construed so as to include any corporation, company or other body corporate, wherever and however incorporated or established. References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including,” respectively.
7.8     Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the substantive Laws of the State of New York applicable to contracts executed and performed entirely within the state, without reference to its choice of law rules. 
7.9     Arbitration. In the event of any dispute hereunder, the parties shall use their reasonable efforts to resolve such dispute through discussions by their authorized representatives. Any dispute which is not so resolved within 15 calendar days after the start of such discussions (or such longer period as may be mutually agreed) shall be resolved by arbitration by JAMS (“JAMS”). The arbitration proceedings, including the rendering of an award, shall take place in the Borough of 

33

Manhattan, New York, New York. The arbitration panel shall consist of three persons, one chosen by each of the Buyer and the Seller, and the third chosen by such two arbitrators. If the first two arbitrators are unable to agree on the third arbitrator, the third arbitrator shall be appointed by JAMS. If either Party does not select an arbitrator within 10 days after a request for arbitration hereunder, the arbitrator chosen by the other Party shall act as the sole arbitrator. The arbitration proceedings shall be conducted in accordance with the in accordance the JAMS Comprehensive Arbitration Rules & Procedures. The award of such arbitral tribunal shall be final. Judgment upon such award may be entered by the prevailing Party in any court having jurisdiction. The award of the arbitral tribunal may be alternatively or cumulatively for monetary damages. The arbitral tribunal may issue interim awards and order any provisional measures which should be taken to preserve the respective rights of a Party. The arbitral tribunal shall charge all costs and expenses of the arbitration, including the fees and expenses of the arbitral tribunal and any experts, to the nonprevailing Party; provided that if the tribunal determines that there is not a prevailing Party, such costs and expenses shall be allocated between the parties as the arbitral tribunal deems fair and reasonable taking into account the extent to which parties’ relative positions have prevailed. 
7.10 Disclosure Generally. If and to the extent any information required to be furnished in any Disclosure Schedule is contained in this Agreement or in any other Disclosure Schedule, such information shall be deemed to be included in all of the Disclosure Schedules in which the information would otherwise be required to be included to the extent the relationship of such information to such other Disclosure Schedule is reasonably apparent on the face of the applicable disclosure. The inclusion of any information in any Disclosure Schedule shall not be deemed to be an admission or acknowledgment that such information is material or outside the Ordinary Course. 
7.11 No Third Party Beneficiaries or Other Rights. Nothing herein shall grant to or create in any Person not a party hereto, or any such Person’s Affiliates, any right to any benefits hereunder, and no such party shall be entitled to sue either Party to this Agreement with respect thereto. The representations and warranties contained in this Agreement are made for purposes of this Agreement only and shall not be construed to confer any additional rights on the Parties under applicable state or federal or foreign securities Laws.  
 [Signatures on following page]

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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed as of the date first above written. 

TRAVELZOO (EUROPE) LIMITED 

 

 
By:    /s/ Richard Singer 
Name: Richard Singer
Title:   Managing Director, Europe
    
    
TRAVELZOO (ASIA PACIFIC) INC. 

 

 
By:    /s/ Ralph Bartel 
Name: Ralph Bartel
Title:   Director

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