<PAGE>

     As Filed with the Securities and Exchange Commission on February , 2001
================================================================================
                                                     Registration No. 333-------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-4

                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                                 Travelzoo Inc.

             (Exact name of registrant as specified in its charter)


                                      7373
                          (Primary Standard Industrial
                           Classification Code Number)

                Delaware                                36-4415727
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                 Identification No.)

                       800 West El Camino Real, Suite 180
                             Mountain View, CA 94040
                                  650-943-2400
                                fax 650-943-2433

               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

                    Ralph Bartel                           Copies to:
               Chief Executive Officer                  Denis P. McCusker
                   Travelzoo Inc.                        Bryan Cave LLP
         800 West El Camino Real, Suite 180          One Metropolitan Square
               Mountain View, CA 94040                     36th Floor
                    650-943-2400                       St. Louis, MO 63102
                  fax 650-943-2433                        314-259-2455
       (Name and address of agent for service)          fax 314-259-6580

             ------------------------------------------------------

     Approximate   date  of   commencement   of   proposed   sale   to   public:
---------------------------------.

     If any of the securities being registered on this form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933, check the following box.                                               [ ]

     If this form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering.                      [ ]

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.                                                       [ ]

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering.                                                       [ ]

<TABLE>
<CAPTION>

                         CALCULATION OF REGISTRATION FEE
======================================== ================= ================= ======================= =====================
                                                               Proposed
                                                               maximum
                                                              aggregate         Proposed maximum
 Title of each class of securities to      Amount to be     offering price     aggregate offering         Amount of
             be registered                  registered         per unit              price           registration fee (1)
---------------------------------------- ----------------- ----------------- ----------------------- ---------------------

<S>                                         <C>                  <C>                <C>                      <C>
      Common Stock, no par value            19,425,147           N/A                $643,527                 $170
======================================== ================= ================= ======================= =====================
<FN>

(1)  Pursuant to Rule 457(f)(2), the registration fee has been calculated on the
     basis of the book value of the securities offered hereby, computed on a pro
     forma basis as of the consummation of the merger described herein.

</FN>
</TABLE>



<PAGE>

                  SUBJECT TO COMPLETION, DATED FEBRUARY , 2001

                               [GRAPHIC OMITTED]

                            Travelzoo.com Corporation
                       800 West El Camino Real, Suite 180
                             Mountain View, CA 94040

                      Notice of Special Meeting of Members
                                 , 2001 at          am
                            at                    ,

To the members of Travelzoo.com Corporation:

     We  will  hold  a  special  meeting  of  the  members   (stockholders)   of
Travelzoo.com  Corporation,  a  corporation  organized  under the  International
Business  Companies  Act of the  Bahamas,  on  [---------],  2001 at  ------a.m.
[---------] Time, at [-------------------], for the following purposes:

     1.   To  consider  and vote  upon an  Agreement  and Plan of  Merger  dated
          January 19, 2001 between Travelzoo.com Corporation and Travelzoo Inc.,
          a Delaware corporation,  under which Travelzoo.com Corporation will be
          merged into Travelzoo Inc.; and

     2.   To  transact  any other  business  that may  properly  come before the
          special  meeting or any  adjournment  or  postponement  of the special
          meeting.

     The  proposed  merger is  described in the  attached  proxy  statement  and
prospectus.  Holders of record of Travelzoo.com  Corporation common stock at the
close of  business  on , 2001,  the record  date,  are  entitled  to vote at the
special meeting and any  adjournments or  postponements  of the special meeting.
The approval of the merger  agreement will require the  affirmative  vote of the
holders of a majority of the shares of common  stock  outstanding  on the record
date.

     Your vote is very  important,  regardless  of the number of shares you own.
Please vote as soon as possible to make sure that your shares are represented at
the meeting.  To vote your shares,  you should  complete and return the enclosed
proxy  card.  We  encourage  you to vote on the  Internet  as  described  in the
attached proxy  statement and  prospectus.  You may also complete and return the
form of proxy included with the proxy statement and prospectus,  or you may cast
your vote in person at the special meeting. If you do not vote, it will have the
same effect as voting against the merger.

By Order of the Board of Directors,

TRAVELZOO.COM CORPORATION

Ralph Bartel
President and Secretary

                          , 2001

                                       

<PAGE>




                                Table of Contents

Questions and Answers About The Merger.........................................4
Summary........................................................................7
Selected Combined Historical and Pro forma  Financial Data ...................10
Risk Factors..................................................................11
Forward-Looking Statements....................................................15
The Merger....................................................................16
The Merger Agreement..........................................................19
The Special Meeting...........................................................22
Rights of Dissenters..........................................................23
Information About Travelzoo...................................................25
Legal Proceedings.............................................................32
Market for Our Common Stock...................................................32
Management's Discussion and Analysis of
   Financial Condition and Results of Operations..............................33
Voting Securities and Principal Holders.......................................40
Management....................................................................41
Certain Transactions Between Travelzoo and Its Affiliates ....................43
Travelzoo Delaware Charter and by-Laws........................................45
Description of Capital Stock..................................................45
Book-Entry Share Ownership....................................................47
Indemnification of Directors and officers.....................................47
Comparative Rights of Stockholders............................................48
Where You Can Find Additional Information.....................................56
Legal Opinion ................................................................56
Experts....... ...............................................................56
Index to Financial Statements................................................F-1


                                       

<PAGE>


                     QUESTIONS AND ANSWERS ABOUT THE MERGER

What is the transaction on which we are    We are     asking     the     members
  voting?                                     (stockholders)   to  approve   the
                                              merger      of       Travelzoo.com
                                              Corporation,  the existing Bahamas
                                              corporation,    which    we   call
                                              Travelzoo Bahamas,  into Travelzoo
                                              Inc., a new Delaware  corporation,
                                              which we call Travelzoo  Delaware.
                                              Travelzoo  Bahamas  will no longer
                                              exist and the current stockholders
                                              will, by following the  procedures
                                              specified in the merger agreement,
                                              become  stockholders  of Travelzoo
                                              Delaware.  Travelzoo Delaware will
                                              continue to operate  the  business
                                              now operated by Travelzoo Bahamas.

Why are you proposing the merger?          Travelzoo's  offices  and  operations
                                              are in the  United  States and its
                                              stockholders  are primarily in the
                                              United  States.  We consider it in
                                              the best  interests of our company
                                              to be  incorporated  in the United
                                              States,   and  have  decided  that
                                              Delaware  is  the  most   suitable
                                              state for incorporation.  Delaware
                                              is  the  most   common   state  of
                                              incorporation for public companies
                                              in the United States.

Are my shares of Travelzoo registered      The original  Internet   offering  of
  with the SEC?                               Travelzoo   common  stock  to  our
                                              "Netsurfer  Stockholders"  was not
                                              registered  with the United States
                                              Securities       and      Exchange
                                              Commission.  Although  the SEC has
                                              not asserted any  violation of law
                                              by Travelzoo,  we understand  that
                                              the SEC  takes the  position  that
                                              the issuance of shares such as our
                                              Netsurfer    Stockholder   program
                                              should be registered with the SEC.
                                              In connection with the merger,  we
                                              are   registering  the  shares  of
                                              Travelzoo  Delaware  which  we are
                                              offering    under    this    proxy
                                              statement  and   prospectus.   The
                                              registration  is intended to allow
                                              our  stockholders  to have  freely
                                              tradable and  properly  registered
                                              shares.

What stockholder vote is required to       The approval  by  the  holders of  at
  approve the merger?                         least    a    majority    of   the
                                              outstanding  shares  of  Travelzoo
                                              Bahamas is required. Ralph Bartel,
                                              the   holder   of   52%   of   the
                                              outstanding  shares,  has  already
                                              indicated  that  he  will  vote to
                                              approve the merger, and the merger
                                              has  already   been   approved  by
                                              Travelzoo Delaware.

How do I vote for the merger?              You may vote for the merger in
                                              several ways:

                                           o You may complete a proxy and submit
                                             it via the Internet

                                           o You may complete the attached proxy
                                             which is  included with this  proxy
                                             statement and prospectus and submit
                                             it by mail

                                           o You  may attend the special meeting
                                             and vote in person

After the merger is effective, how do I    Since  Delaware  law  requires  us to
  receive my shares in Travelzoo              maintain  the names and  addresses
  Delaware?                                   of our  stockholders,  you will be
                                              required  to  provide us with your
                                              name  and   address  in  order  to
                                              receive   your    shares.    Share
                                              ownership  will be maintained on a
                                              book-entry  basis and you will not
                                              receive   certificates   for  your
                                              shares.


                                       1

<PAGE>

Will I receive dividends on my shares?     We have  not  paid  dividends  on the
                                              shares of Travelzoo Bahamas and we
                                              do  not  currently  intend  to pay
                                              dividends   on   the   shares   of
                                              Travelzoo Delaware.

Will my shares of Travelzoo Delaware be    The shares of Travelzoo  Bahamas have
  listed on a stock exchange?                 not  been   listed  on  any  stock
                                              exchange  and we do not  have  any
                                              immediate plans to list the shares
                                              of Travelzoo Delaware on any stock
                                              exchange.  We hope to apply  for a
                                              listing of our common stock on the
                                              Nasdaq stock exchange at such time
                                              as we  determine  that we are in a
                                              position   to  meet  the   listing
                                              qualifications.          Following
                                              completion  of  the  merger,   and
                                              prior to any  Nasdaq  listing,  we
                                              expect    that   the   shares   of
                                              Travelzoo  Delaware  will trade on
                                              the over-the-counter market in the
                                              United States.

Can I sell my  shares?                     Your shares of Travelzoo Bahamas were
                                              issued to you without registration
                                              under  the  US  securities   laws.
                                              Accordingly,   transfer  of  those
                                              shares is restricted. You may only
                                              transfer   them   pursuant   to  a
                                              specific       exemption      from
                                              registration.

                                           Shares of Travelzoo  Delaware  issued
                                              in the merger  will be  registered
                                              with    the   SEC   and   may   be
                                              transferred,  although  we  cannot
                                              assure  you that  there will be an
                                              active market for the shares.

How do I know what my shares are worth?    There has been no active  market  for
                                              the shares of  Travelzoo  Bahamas,
                                              and we are unable to predict  what
                                              the price of the  shares of common
                                              stock  would be if there were such
                                              an   active   market.    Financial
                                              statements    of   Travelzoo   are
                                              included  in this proxy  statement
                                              and prospectus.

What are the tax consequences of the       In most cases,  the  exchange of your
  merger to me?                               shares in  Travelzoo  Bahamas  for
                                              shares   in   Travelzoo   Delaware
                                              should be  tax-free  to you for US
                                              federal  income tax  purposes.  To
                                              review  the  tax  consequences  in
                                              more  detail,  see  page 17.   You
                                              should  also   consult   your  tax
                                              advisor.


Where can I find additional information    You can find  additional  information
  about the merger?                           concerning     the    merger    at
                                              http://www.travelzoo.com/delaware.

Can I change my vote after I have          Yes. You can change  your vote at any
  mailed my signed proxy card?                time before your proxy is voted at
                                              the  special  meeting  in  several
                                              ways. You  can  submit a new proxy
                                              on the Internet or send  a written
                                              notice   stating  that  you  would
                                              like to revoke your proxy. Second,
                                              you  can complete and submit a new
                                              proxy. You must submit your notice
                                              of revocation or your new proxy to
                                              the  Secretary  of   Travelzoo.com
                                              Corporation  at  the  address  set
                                              forth below. Third, you can attend
                                              the  special  meeting  and vote in
                                              person.

                                       2

<PAGE>

                                     SUMMARY

     This summary highlights  certain  information  contained  elsewhere in this
proxy  statement  and  prospectus.  This  summary is not  complete  and does not
contain all of the  information  that is  important  to you. You should read the
entire proxy statement and prospectus and attachments carefully,  especially the
merger  agreement.  When we refer to "Travelzoo,"  unless the context  otherwise
indicates,   we  are   referring  to   Travelzoo.com   Corporation,   a  Bahamas
International  Business  Corporation,  when discussing our business as conducted
prior to completion of the merger described  herein,  including the parts of our
operations which have been conducted  through Silicon  Channels  Corporation dba
Travelzoo.com  Sales, Inc. When we refer to our operations  following completion
of the merger,  we are  referring  to Travelzoo  Inc., a Delaware  corporation,.
References to "we," "our" and "us" have the same meanings.

Travelzoo

     Travelzoo provides online marketing solutions for the travel industry.  Our
website,  www.Travelzoo.com,  and our Travelzoo Top 20 newsletter  enable travel
companies to promote their special offers in a fast, flexible and cost-effective
manner. More than 150 companies use our services.  Our customers include:  Alamo
Rent-A-Car,  American Airlines Vacations, Budget Rent A Car, Hertz, Holiday Inn,
Lowestfare.com,  Park Place Entertainment,  Starwood Hotels and United Airlines.
Our offices are located at 800 West El Camino Real,  Suite 180,  Mountain  View,
California 94040. Our telephone number at that location is (650) 943-2400.

Revenues and Profitability

     Our revenues are primarily  derived from  advertising  fees on our website.
Revenues have grown from approximately  $84,000 for the period from May 21, 1998
(inception)  to December 31, 1998,  to  approximately  $2.8 million for the nine
months  ended  September  30,  2000.  We have had nine  consecutive  quarters of
profitability,  with pre-tax income increasing from approximately $35,000 in the
period  ended  December 31, 1998 to  approximately  $744,000 for the nine months
ended September 30, 2000.

Our Market Opportunity

     We  believe  that  the  Internet  provides  better  opportunities  for  the
advertising of special  travel  offers,  and that the industry has not yet taken
full advantage of these opportunities. We believe we are in a position to become
a leading  provider  of online  marketing  solutions  for the  travel  industry,
primarily because:

     o    We have established a successful and profitable identity in the market

     o    We have built a high quality client base which continues to grow

     o    Our solution allows travel companies to

          -    update their listings at any time

          -    remove offers which have sold out

          -    have  real-time  performance  tracking so they can optimize their
               campaigns.

Our History

     Travelzoo  was  founded by Ralph  Bartel in 1998 as a Bahamas  corporation.
Following the  organization of Travelzoo in 1998, we offered shares in Travelzoo
to visitors who registered on our website. We limited the offer to approximately
700,000 "Netsurfer  Stockholders," each of whom received three shares plus up to

                                       3

<PAGE>

an additional  seven shares for referrals.  We completed a two-for-one  split of
our common  stock on December 1, 2000,  which also applied to the shares held by
the Netsurfer Stockholders.

     We believe that our offering was the first  offering of "free  shares" over
the Internet.  Mr.  Bartel,  who was a resident of Germany at the time,  was not
advised by U.S. securities counsel, and believed that the offering of the shares
could be made without any registration or qualification with the U.S. Securities
and Exchange  Commission or other  regulatory body since no payment was received
for the shares.  Although Mr. Bartel  received an inquiry from the SEC about the
issuance of shares to the Netsurfer  Stockholders,  the SEC has not asserted any
violation of law by Travelzoo.  However,  we  understand  that the SEC takes the
position  that  programs for issuing  shares such as our  Netsurfer  Stockholder
program should be registered with the SEC. In connection with the merger, we are
registering  the shares to be offered  in the merger  under the U.S.  Securities
Act.

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
was  incorporated  in  California on September 28, 1998 with Ralph Bartel as the
sole  stockholder.  Silicon Channels did business under the name  "Travelzoo.com
Sales, Inc." On October 10, 1998, Travelzoo.com Corporation and Silicon Channels
Corporation  entered into a letter agreement  whereby Silicon Channels agreed to
manage the technical platform,  marketing,  customer support and billing for the
classified  publishing business of the Travelzoo.com  website in return for a 5%
commission on the quarterly net income from such business.  The October 10, 1998
agreement  was  subsequently  replaced by a Service  Agreement  dated January 2,
1999. In the January 2, 1999 Agreement,  Silicon  Channels agreed to perform all
operation  services with respect to the Travelzoo.com  website in return for 50%
of the income before taxes  generated  from the  operation of the  Travelzoo.com
website.  All  assets,  other than the domain  name  Travelzoo.com,  used in the
operation of the Travelzoo.com website were owned by Silicon Channels.

     As the  Travelzoo  business  continued  to grow,  the  Board  of  Directors
determined  that  it  would  be  advisable  to  combine  Silicon  Channels  with
Travelzoo, in order to avoid the need to address ongoing issues of allocation of
responsibilities,  expenses and revenues,  and the Board  initiated  discussions
with Mr.  Bartel  on the  terms of such a  transaction.  On  January  22,  2001,
pursuant to an agreement between Travelzoo and Silicon Channels,  and based on a
fairness  opinion  received  from  an  independent  investment  banking  firm as
discussed  below  under  "Certain   Transactions   Between   Travelzoo  And  Its
Affiliates--Silicon Channels Corporation" on page 43, Mr. Bartel contributed the
shares of Silicon  Channels to a newly formed  Delaware  corporation,  Travelzoo
Delaware,  which was a wholly-owned  subsidiary of Travelzoo Bahamas.  Travelzoo
Delaware was the surviving  entity in the merger and the business which has been
conducted  by  Silicon  Channels  is  being  continued  by  Travelzoo  Delaware.
Travelzoo  Delaware is now owned 58% by Travelzoo Bahamas and owned 42% by Ralph
Bartel and will be the surviving corporation of the merger as described below.

The Merger

     We are asking the  stockholders of Travelzoo  Bahamas to approve the merger
of Travelzoo Bahamas with and into Travelzoo  Delaware.  Travelzoo  Delaware has
already  approved  the merger.  In the merger,  the  stockholders  of  Travelzoo
Bahamas who follow the procedures specified in the merger agreement will receive
one share of common stock of  Travelzoo  Delaware for each share of common stock
of  Travelzoo  Bahamas  they  hold.  You will be  required  to provide us with a
mailing  address,  because Delaware law requires that we provide certain notices
to our stockholders by mail.

The Special Meeting; Shares Entitled to Vote

     Our special stockholder meeting will be held at [---------] on [---------],
2001 at [--]. The board of directors has fixed  [---------],  2001 as the record
date for determining the stockholders who are eligible to vote at the meeting. A
majority of the  outstanding  shares of our common  stock must be present at the

                                       4

<PAGE>

meeting  in  person or by  proxy,  and  holders  of at least a  majority  of the
outstanding  shares of our common stock must vote to approve the merger in order
for the merger to be completed. Ralph Bartel, who holds approximately 52% of the
outstanding shares of our common stock, has indicated that he intends to vote in
favor of the merger. See "The Special Meeting" on page 22.

Risk Factors

     See "Risk  Factors,"  starting on page  7, to read about factors you should
consider.

Dissenters' Rights of Appraisal

     Any of our  stockholders  who  disapprove of the proposed  transaction  and
follow the  dissent  procedure  under  Section 81 of the  Bahamas  International
Business Companies Act 1989 may be entitled to receive payment of the fair value
of their shares. For a more detailed explanation of these rights, see "Rights of
Dissenters" on page 23.

Tax Consequences of the Transaction

     In most cases,  stockholders who exchange their shares in Travelzoo Bahamas
for shares in Travelzoo  Delaware should not recognize income,  gain or loss for
United States federal income tax purposes in connection  with the exchange.  See
"Certain United States Federal Income Tax Consequences" on page 17.

Accounting Treatment of the Transaction

     The merger will be accounted  for similar to a  pooling-of-interests  under
the "as if pooling"  method for  combinations  of entities under common control.
Under this  method of  accounting,  each of  Travelzoo  Bahamas'  and  Travelzoo
Delaware's historical recorded assets and liabilities will be carried forward to
the  combined  company at their  historical  cost.  In addition,  the  operating
results  reported  in  the  combined   financial   statements  of  Travelzoo.com
Corporation  and  affiliate  presented  elsewhere  in this proxy  statement  and
prospectus  will  become the  historical  results of  operations  for  Travelzoo
Delaware. Costs of the merger will be charged to operations as incurred.

                                       5


<PAGE>


                   SELECTED COMBINED HISTORICAL AND PRO FORMA
                                 FINANCIAL DATA

     The following  selected  financial  data  presents the combined  historical
financial data of Travelzoo.com Corporation and its affiliate,  Silicon Channels
Corporation.  The combined  financial data  represents the historical  financial
data of our business conducted by entities founded by the principal stockholder,
Ralph Bartel.

     The selected combined  financial data as of December 31, 1999 and 1998, the
year ended  December  31, 1999 and the period from May 21, 1998  (inception)  to
December  31,  1998  are  derived  from the  combined  financial  statements  of
Travelzoo.com  Corporation and affiliate,  which financial  statements have been
audited by KPMG LLP,  independent  certified  public  accountants.  The combined
financial statements as of and for the periods ended December 31, 1999 and 1998,
and the auditors'  report thereon,  appear elsewhere in this proxy statement and
prospectus.  The selected  combined  financial data as of September 30, 2000 and
for the nine months  ended  September  30,  2000 and 1999 are  derived  from the
unaudited  condensed  interim  combined  financial  statements of  Travelzoo.com
Corporation  and affiliate  which appear  elsewhere in this proxy  statement and
prospectus.  The results of operations  for the nine months ended  September 30,
2000 are not necessarily indicative of results to be expected for the year ended
December  31,  2000.  The  selected  combined  financial  data should be read in
conjunction with the Travelzoo.com  Corporation and affiliate combined financial
statements  and the  related  notes  thereto  included  elsewhere  in this proxy
statement and prospectus, and "Management's Discussion and Analysis of Financial
Condition  and  Results of  Operations,"  starting on page 33. The pro forma per
share data is unaudited and is calculated on a basis that reflects the effect of
events that have occurred or will occur in connection  with the  consummation of
the mergers as  described  in Note 10 to the combined  financial  statements  of
Travelzoo.com  Corporation  and  affiliate  appearing  elsewhere  in this  proxy
statement and prospectus.


<TABLE>
<CAPTION>
                              
                              Period from May    
                                  21, 1998                               Nine months Ended 
                               (inception) to      Year ended              September 30,   
Combined Statement of           December 31,      December 31,    -----------------------------------
  Operations                        1998              1999             1999              2000
                              ----------------- ----------------- ---------------- ------------------
Revenues:
<S>                              <C>                    <C>              <C>             <C>      
  Advertising                    $     57,327           893,244          405,403         2,688,877
  Commissions                          26,774            61,015           50,243            92,354
                              ----------------- ----------------- ---------------- ------------------
         Total revenues                84,101           954,259          455,646         2,781,231
Cost of revenues                       25,362           132,803           74,849           226,262
                              ----------------- ----------------- ---------------- ------------------
         Gross profit                  58,739           821,456          380,797         2,554,969
                              ----------------- ----------------- ---------------- ------------------
Operating expenses:
  Sales and marketing                   1,595           350,720          156,007         1,141,113
  General and administrative           22,046           326,686          211,818           669,845
                              ----------------- ----------------- ---------------- ------------------
         Total operating               23,641           677,406          367,825         1,810,958
           expenses           ----------------- ----------------- ---------------- ------------------
                              
         Income before income          35,098           144,050           12,972           744,011
           taxes
Income taxes                            6,213            38,646            3,382           307,494
                              ----------------- ----------------- ---------------- ------------------
         Net income              $     28,885           105,404            9,590           436,517
                              ================= ================= ================ ==================
Pro forma per share data:

Pro forma  basic  and  diluted
net income per share             $        --               .01               --                .02
                              ================= ================= ================ ==================
Shares used in computing pro
  forma basic net income per
  share                             9,431,741        19,323,064       19,314,314        19,355,147
                              ================= ================= ================ ==================
Shares used in computing pro
  forma diluted net income
  per share                         9,431,741        19,355,147       19,355,147        19,480,505
                              ================= ================= ================ ==================

Combined Balance Sheet Data:                           As of December 31,          As of September 30,
                                                ---------------------------------- ------------------
                                                      1998             1999              2000
                                                ---------------------------------- ------------------
Working capital                                       $  78,172          171,770           465,856
Total assets                                            107,051          404,796         1,423,547
Long-term debt                                               --               --                --
Stockholders' equity                                     88,885          194,289           643,527
</TABLE>


                                       6

<PAGE>

                                  RISK FACTORS

     You should  carefully  consider the risk factors listed below and the other
information  contained in this proxy statement and prospectus before deciding to
vote for the merger.  Investing  in our common  stock  involves a high degree of
risk. Any or all of the risks listed below could have a material  adverse effect
on our  business,  our  quarterly  and annual  operating  results  or  financial
condition,  which could cause the market  price of our stock to decline or cause
substantial  volatility  in our stock  price,  in which  event the value of your
common stock could decline. You should also keep these risk factors in mind when
you read  forward-looking  statements.  We have  identified  all of the material
risks which we believe may affect our business and the  principal  ways in which
we anticipate that they may affect our business or financial condition.

Risks Related to Our Financial Condition and Business Model

Our limited operating history makes our business difficult to evaluate.

     We  were   incorporated  and  began   generating   revenues  in  May  1998.
Accordingly,  we have only a limited  operating  history for you to evaluate our
business.  As a new  company,  we face risks and  uncertainties  relating to our
ability to  successfully  implement  our business  plan.  You must  consider the
risks,  expenses and uncertainties  that an early stage company like ours faces.
These risks include uncertainty whether we will be able to:

     o    increase awareness of the Travelzoo brand;

     o    attract and retain  additional  travel companies listing their special
          offers with us;

     o    attract additional Internet users to www.Travelzoo.com;

     o    increase the functionality of our products and services;

     o    maintain our current, and develop new, business relationships;

     o    respond effectively to competitive pressures; and

     o    continue to develop and upgrade our technology.

     If we are  unsuccessful in addressing  these risks and  uncertainties,  our
business could be materially adversely affected.

We cannot be sure to sustain profitability.

     Although we have been profitable for nine consecutive quarters, there is no
assurance that we will continue to be profitable. We forecast our future expense
levels based on our operating plans and our estimates of future revenues. We may
find it necessary to accelerate expenditures relating to our sales and marketing
efforts  or  otherwise  increase  our  financial   commitment  to  creating  and
maintaining  brand awareness  among travel  companies and Internet users. If our
revenues  grow at a slower rate than we  anticipate,  or if our spending  levels
exceed our  expectations or cannot be adjusted to reflect slower revenue growth,
we may not generate sufficient revenues to sustain profitability.  In this case,
the value of your shares could be reduced.

You should not rely on prior  operating  results as an  indication of our future
    results because they are subject to significant  fluctuations.  Fluctuations
    in our operating results may negatively impact our stock price.

     Our quarterly  operating results may fluctuate  significantly in the future
due to a variety of factors  that could  affect our  revenues or our expenses in
any particular quarter. You should not rely on quarter-to-quarter comparisons of
our results of operations as an indication of future  performance.  Factors that
may affect our quarterly results include:

                                       7

<PAGE>

     o    mismatches  between  resource  allocation  and customer  demand due to
          difficulties in predicting customer demand in a new market;

     o    the  demand  for and  acceptance  of our  website,  products,  product
          enhancements and services;

     o    changes in general  economic  conditions  that could affect  marketing
          efforts generally and online marketing efforts in particular;

     o    the magnitude and timing of marketing initiatives;

     o    the maintenance and development of our strategic relationships;

     o    the introduction,  development, timing, competitive pricing and market
          acceptance of our products and services and those of our competitors;

     o    our ability to attract and retain key personnel;

     o    our ability to manage our anticipated growth and expansion;

     o    our ability to attract traffic to our website;

     o    our ability to attract travel companies as customers; and

     o    technical  difficulties  or system  downtime  affecting  the  Internet
          generally or the operation of our products and services specifically.

     As a result of the factors listed above and because the online  advertising
market is new and it is difficult  to predict  customer  demand,  it is possible
that in  some  future  periods  our  results  of  operations  may be  below  the
expectations of public market analysts and investors. This could cause our stock
price to decline. In addition,  we plan to significantly  increase our operating
expenses  to expand our sales and  marketing,  administration,  maintenance  and
technical  support and research and development  groups.  If revenues fall below
our expectations in any quarter and we are unable to quickly reduce our spending
in response,  our  operating  results would be lower than expected and our stock
price may fall.

Our business model is unproven and may not be adaptable to a changing market.

     Our current  revenue  model  depends on listing fees from travel  companies
using our website.  Our revenue  model and profit  potential  are  unproven.  If
current  customers  decide not to continue  listing their special offers with us
and we are  unable to  replace  them with new  customers,  our  business  may be
adversely affected. To be successful, we must provide online marketing solutions
that achieve broad market acceptance by travel companies.  In addition,  we must
attract sufficient Internet users with attractive demographic characteristics to
our  website.  It is  possible  that we will be  required  to further  adapt our
business  model in  response  to  additional  changes in the online  advertising
market or if our current business model is not successful. If we are not able to
anticipate  changes in the online advertising market or if our business model is
not successful,  our business could be materially adversely affected which could
reduce the value of your shares.

We  may not be able to  obtain  sufficient  funds to grow our  business  and any
    additional financing may be on terms adverse to your interests.

     We intend to continue to grow our business,  and intend to fund our current
operations  and our  anticipated  growth from the cash flow  generated  from our
operations  and  our  retained  earnings.  However,  these  sources  may  not be
sufficient  to meet our needs.  If we need  financing  from other  sources,  our
ability  to obtain  such  financing  would be  subject  to a number of  factors,
including:

     o    market and economic conditions;

     o    our financial condition and operating performance; and

                                       8


<PAGE>

     o    investor sentiment.

     These  factors  may  make the  timing,  amount,  terms  and  conditions  of
additional  financing  unattractive  for  us.  If  additional  financing  is not
available  when  required or is not  available on  acceptable  terms,  we may be
unable to fund our expansion,  successfully  promote our brand name,  develop or
enhance our products and services,  take advantage of business  opportunities or
respond to  competitive  pressures,  any of which could have a material  adverse
effect on our business and the value of your shares.

     If we choose to raise  additional  funds  through  the  issuance  of equity
securities,  you may experience significant dilution of your ownership interest,
and holders of the additional  equity securities may have rights senior to those
of the holders of our common stock. If we obtain additional financing by issuing
debt securities, the terms of these securities could restrict or prevent us from
paying dividends and could limit our flexibility in making business decisions.

     The cost of the proposed  merger and the  registration of our shares may be
higher than we expect.  We can not be sure that our  estimate of the cost of the
proposed merger and the  registration  of our shares is correct.  If the cost of
the proposed merger and the registration our shares is significantly higher than
we expect,  our capital might not be  sufficient  and we may be required to seek
additional financing.

Our business may be sensitive to recessions.

     The  demand for online  marketing  solutions  may be linked to the level of
economic activity and employment in the U.S. and abroad. A recession could cause
travel companies to reduce or postpone their marketing spending  generally,  and
their  online  marketing  spending  in  particular.  If a  significant  economic
downturn or recession  occurs in the U.S. or abroad,  our business and the value
of your shares could be materially adversely affected.

There has been no active market for our shares.

     Since our shares  have not been  registered  with the U.S.  Securities  and
Exchange  Commission or listed on any stock  exchange,  there has been no active
market for our shares. We cannot assure you that an active market for the shares
of Travelzoo Delaware will develop following completion of the merger.

We are controlled by a principal stockholder.

     Ralph Bartel,  who founded  Travelzoo and who is our Chairman of the Board,
Chief Executive Officer,  President and Secretary,  is our largest  stockholder,
holding  approximately  52% of our outstanding  shares prior to the merger.  Mr.
Bartel will hold  approximately 72% of our outstanding  shares upon consummation
of the merger with  options to increase  his  percentage  ownership  to 75% on a
fully-diluted  basis,  assuming all outstanding  shares of Travelzoo Bahamas are
exchanged for shares of Travelzoo Delaware. Through his share ownership, he will
be in a  position  to  control  Travelzoo  and to  elect  our  entire  board  of
directors.

Risks Related to Our Markets and Strategy

The Internet is not a proven marketing medium.

     The future of our business is dependent on the ongoing acceptance by travel
companies  of the Internet as an effective  marketing  tool,  and on the ongoing
acceptance by consumers of the Internet as a source for valuable  information on
offers from travel companies.  The online  advertising market is new and rapidly
evolving, and we do not yet know how effective online advertising is compared to
traditional  advertising  methods.  The  adoption of online  marketing by travel
companies,   particularly  among  those  that  have  historically   relied  upon
traditional  advertising  methods,  requires  the  acceptance  of a new  way  of
conducting business, marketing and advertising.  Many of our potential customers
have little or no experience using the Internet as a marketing tool, and not all
Internet users have experience using the Internet to look for travel offers.  As
a result,  we cannot be sure that we will be able to  effectively  compete  with

                                       9

<PAGE>

traditional  advertising  methods.  If we are unable to compete with traditional
advertising  methods,  our business and results of  operations  and the value of
your shares could be materially adversely affected.

We will only be able to execute our business model if use of the Internet grows.

     If  Internet  usage  does not  continue  to  grow,  our  business  could be
adversely  affected.  Internet  usage may be inhibited  by any of the  following
factors:

     o    the  Internet  infrastructure  may not be able to support  the demands
          placed on it, or its  performance and reliability may decline as usage
          grows;

     o    websites   may  not  be  able  to  provide   adequate   security   and
          authentication of confidential  information contained in transmissions
          over the Internet; and

     o    the Internet industry may not be able to adequately respond to privacy
          concerns of potential users.

     If Internet usage does not continue to grow, we may not be able to meet our
business objectives, which could decrease the value of your shares.

We may not be able to develop awareness of our brand name.

     We believe that  continuing to build  awareness of the Travelzoo brand name
is  critical  to  achieving  widespread   acceptance  of  our  business.   Brand
recognition is a key differentiating  factor among providers of online marketing
solutions,  and we believe it could become more  important as competition in the
online  advertising  industry  increases.  In order to maintain  and build brand
awareness,  we must  succeed in our  marketing  efforts,  provide  high  quality
services and increase the number of Internet users with  favorable  demographics
using  Travelzoo.  If we fail to  successfully  promote and  maintain our brand,
incur  significant  expenses  in  promoting  our  brand and fail to  generate  a
corresponding  increase  in  revenue  as a result of our  branding  efforts,  or
encounter legal obstacles which prevent our continued use of our brand name, our
business and the value of your shares could be materially adversely affected.

We may not be able to successfully introduce new products and services.

     We expect to introduce  new and enhanced  products and services in order to
generate  additional  revenues,  attract  and retain more  travel  companies  as
customers,   attract  more  Internet   users  to  our  website  and  respond  to
competition.  Any new  product  or service we  introduce  that is not  favorably
received  could damage our  reputation and the perception of our brand name. The
failure of our new  products  and  services  to achieve  market  acceptance  and
generate  revenue could result in a material  adverse effect on our business and
the value of your shares.

We  will not be able to attract travel  companies or Internet users if we do not
    continually enhance and develop the content and features of our products and
    services.

     To remain  competitive,  we must  continually  improve the  responsiveness,
functionality  and features of our products and services.  We may not succeed in
developing features,  functions,  products or services that travel companies and
Internet users find attractive. This could reduce the number of travel companies
and Internet users using  www.Travelzoo.com  and materially adversely affect our
business and the value of your shares.

We may lose business if we fail to keep pace with rapidly changing  technologies
    and customer needs.

     Our  success  is  dependent  on our  ability to  develop  new and  enhanced
software,  services and related products to meet rapidly evolving  technological
requirements for online marketing solutions. Our current technology may not meet

                                       10

<PAGE>

the future technical requirements of travel companies.  Trends that could have a
critical impact on our success include:

     o    rapidly changing technology in online marketing;

     o    evolving  industry  standards,  including  both  formal  and de  facto
          standards relating to online marketing;

     o    developments and changes relating to the Internet;

     o    competing  products and services that offer  increased  functionality;
          and

     o    changes in travel company and Internet user requirements.

     If we are unable to timely  and  successfully  develop  and  introduce  new
products and  enhancements  to existing  products in response to our  industry's
changing technological  requirements,  our business and the value of your shares
could be materially adversely affected.

Our business  and growth will suffer if we are unable to hire and retain  highly
    skilled personnel.

     Our future success depends on our ability to attract,  train,  motivate and
retain highly skilled  employees.  Competition  for highly skilled  employees is
intense,  particularly in the Internet industry.  We may be unable to retain our
skilled  employees  or  attract,  assimilate  and retain  other  highly  skilled
employees in the future. We have from time to time in the past experienced,  and
we expect to continue to  experience  in the  future,  difficulty  in hiring and
retaining highly skilled  employees with appropriate  qualifications.  If we are
unable to hire and retain skilled personnel,  our growth may be restricted,  the
quality  of our  products  and  services  reduced  and the value of your  shares
reduced.

We may not be able to effectively manage our expanding operations.

     We have recently  experienced a period of rapid growth. In order to execute
our business  plan, we must continue to grow  significantly.  As of December 31,
2000,  we had 11  employees.  We expect  that the number of our  employees  will
continue to increase for the foreseeable future. This growth has placed, and our
anticipated  future growth  combined with the  requirements  we face as a public
company will continue to place, a significant strain on our management,  systems
and resources.  We expect that we will need to continue to improve our financial
and managerial controls and reporting systems and procedures.  We will also need
to continue  to expand and  maintain  close  coordination  among our  technical,
accounting, finance and sales and marketing organizations. We may not succeed in
these  efforts.  Our inability to expand our  operations in an efficient  manner
could cause our expenses to grow disproportionately to revenues, our revenues to
decline or grow more slowly than expected and otherwise have a material  adverse
effect on our business and the value of your shares.

Intense  competition  may render our  services  and  products  uncompetitive  or
    obsolete.

     We compete with large  Internet  portal sites,  such as About.com,  America
Online,  Excite, Lycos, MSN and Yahoo!, that offer listings or other advertising
opportunities  for travel  companies.  We also compete  with smaller  sites that
specialize  in  listing  last-minute  offers or list  deals  for  free,  such as
Lastminutetravel.com  and  Smarterliving.com.   In  addition,  we  compete  with
newspapers,  magazines and other traditional media companies that provide online
advertising.  We expect to face additional  competition as other established and
emerging   companies,   including  print  media  companies,   enter  the  online
advertising market.

     Many  of our  current  and  potential  competitors  have  longer  operating
histories,  significantly  greater  financial,  technical,  marketing  and other
resources and larger client bases than we do. In addition, current and potential
competitors   may  make   strategic   acquisitions   or  establish   cooperative
relationships  to  expand  their  businesses  or  to  offer  more  comprehensive
solutions.

                                       11

<PAGE>

     We believe that there will be rapid  business  consolidation  in the online
advertising  industry.  Accordingly,  new  competitors  may emerge  and  rapidly
acquire  significant  market share. In addition,  new  technologies  will likely
increase the  competitive  pressures that we face. The  development of competing
technologies by market  participants or the emergence of new industry  standards
may  adversely  affect our  competitive  position.  Competition  could result in
reduced  margins on our services,  loss of market share or less use of Travelzoo
by travel  companies and  consumers.  If we are not able to compete  effectively
with current or future  competitors as a result of these and other factors,  our
business could be materially adversely affected.

Loss  of any  of our  key  management  personnel  could  negatively  impact  our
   business.

     Our future success depends to a significant extent on the continued service
and  coordination  of  our  management  team,  particularly  Ralph  Bartel,  our
Chairman,  President,  Chief  Executive  Officer  and  Secretary.  The  loss  or
departure of any of our officers or key  employees  could  materially  adversely
affect our ability to implement our business plan. We do not maintain key person
life insurance for any member of our management team. In addition, we expect new
members to join our management team in the future.  These  individuals  will not
previously have worked  together and will be required to become  integrated into
our  management  team.  If our key  management  personnel  are not  able to work
together effectively or successfully, our business could be materially adversely
affected.

We may not be able to successfully  make acquisitions of or investments in other
   companies.

     Our business strategy  includes the pursuit of acquisitions.  In attempting
to execute  this  strategy,  we may be unable to identify  suitable  acquisition
candidates.  If we acquire a company, we could have difficulty  assimilating the
acquired  company's  operations  and  personnel.  If  we  make  other  types  of
acquisitions,  we could have difficulty in assimilating  any acquired  products,
services,  personnel and technologies  into our operations.  These  difficulties
could  disrupt our ongoing  business,  distract our  management  and  employees,
increase our expenses and charges and materially adversely affect our business.

Risks Related to the Internet and Our Technology Infrastructure

We  may experience  reduced  visitor  traffic,  reduced  revenue and harm to our
    reputation in the event of unexpected network interruptions caused by system
    failures.

     Our  servers  and  software  must be able to  accommodate  a high volume of
traffic.  Any substantial  increase in demands on our servers will require us to
expand and adapt our network infrastructure.  If we are unable to add additional
software and  hardware to  accommodate  increased  demand,  we could  experience
unanticipated  system  disruptions and slower response times.  Any  catastrophic
failure  at our  co-location  facility  could  prevent us from  serving  our web
traffic for up to several days, and any failure of our Internet service provider
may  adversely  affect  our  network's  performance.   Our  clients  may  become
dissatisfied  by any system  failure that  interrupts our ability to provide our
products and  services to them or results in slower  response  times.  We do not
maintain business interruption insurance. Any system failure, including network,
software or hardware failure, that causes an interruption in the delivery of our
products and  services or a decrease in  responsiveness  of our  services  could
result in reduced revenue and could  materially  adversely affect our reputation
and brand.

Breaches of our network security could be costly.

     A significant barrier to confidential  communications over the Internet has
been the need for security.  We may incur  significant  costs to protect against
the  threat  of  security  breaches  or to  alleviate  problems  caused by these
breaches.  If unauthorized  persons penetrate our network  security,  they could
misappropriate  proprietary  information or cause interruptions in our services.
As a result,  we may be required  to expend  capital  and  resources  to protect
against  or to  alleviate  these  problems.  In  addition,  we may be  liable to

                                       12

<PAGE>

customers or Internet users who experience losses or damages due to our security
failures. As a result, security breaches could have a material adverse effect on
our business and the value of your shares.

Computer viruses may cause our systems to incur delays or interruptions  and may
    adversely affect our business.

     Computer  viruses  may cause our systems to incur  delays or other  service
interruptions.  In addition,  the inadvertent  transmission of computer  viruses
could expose us to a material risk of loss or litigation and possible liability.
Moreover,  if a computer virus  affecting our system is highly  publicized,  our
reputation could be materially damaged and our visitor traffic may decrease. Any
of these events could materially  adversely affect our business and the value of
your shares.

We may not be able to access third party technology upon which we depend.

     We use  technology  and  software  products  from third  parties  including
Microsoft.  In light of the rapidly evolving nature of Internet  technology,  we
may increasingly need to rely on technology from other vendors.  Technology from
our  current  or  other  vendors  may  not  continue  to be  available  to us on
commercially  reasonable terms, or at all. If we lose the ability to access this
technology,  are unable to gain access to  additional  products or are unable to
integrate new technology with our existing  systems,  we could experience delays
in our  development  and  introduction  of new services and related  products or
enhancements  until  equivalent or replacement  technology  can be accessed,  if
available, or developed internally,  if feasible. If we experience these delays,
our  business  and the  value  of your  shares  could  be  materially  adversely
affected.

Risks Related to Legal Uncertainty

We  may  become  subject  to  burdensome   government   regulations   and  legal
    uncertainties  affecting  the  Internet  which  could  adversely  affect our
    business.

     To date, governmental regulations have not materially restricted use of the
Internet in our markets.  However,  the legal and  regulatory  environment  that
pertains  to the  Internet is  uncertain  and may  change.  Uncertainty  and new
regulations  could  increase  our  costs  of  doing  business,  prevent  us from
delivering our products and services over the Internet or slow the growth of the
Internet.  In addition to new laws and regulations being adopted,  existing laws
may be applied to the  Internet.  New and  existing  laws may cover issues which
include:

     o    user privacy;

     o    consumer protection;

     o    copyright, trademark and patent infringement;

     o    pricing controls;

     o    characteristics and quality of products and services;

     o    sales and other taxes; and

     o    other claims based on the nature and content of Internet materials.

We may be  unable to  protect  our  registered  trademark  or other  proprietary
   intellectual property rights.

     Our success  depends to a  significant  degree upon the  protection  of the
Travelzoo brand name. We rely upon a combination of copyright,  trade secret and
trademark laws and non-disclosure and other contractual  arrangements to protect
our  intellectual  property  rights.  The  steps we have  taken to  protect  our
proprietary rights,  however,  may not be adequate to deter  misappropriation of
proprietary information.

                                       13

<PAGE>

     On June 21, 1999, Mr. Bartel,  our founder,  filed with the U.S. Patent and
Trademark   Office  to  register  the  trademark   "Travelzoo"   for  "providing
information and news in the field of travel via an on-line global communications
network and travel agency services,  namely making  reservations and booking for
transportation,"  "providing  information and news in the field of travel via an
on-line global communications network and travel agency services,  namely making
reservations  and booking for temporary  lodging," and  "promoting the goods and
services of others  through the offer of travel  goods and services and shopping
club  services,  namely  providing  information  on travel goods and services to
members."  The PTO  published  that mark for  opposition on October 31, 2000. On
January  22,  2001,  Mr.  Bartel,  who filed  the  trademark  application  as an
individual,  transferred the ownership of the pending  trademark  "Travelzoo" to
Travelzoo Delaware.  The PTO registered the trademark on January 23, 2001. If we
are unable to protect our rights in the mark,  a key element of our  strategy of
promoting  Travelzoo  as a brand could be disrupted  and our  business  could be
adversely affected. See "Business--Intellectual Property."

     We  may  not  be  able  to  detect  unauthorized  use  of  our  proprietary
information  or take  appropriate  steps to enforce  our  intellectual  property
rights.  In addition,  the validity,  enforceability  and scope of protection of
intellectual  property in  Internet-related  industries  is uncertain  and still
evolving. The laws of other countries in which we may market our services in the
future are  uncertain  and may afford  little or no effective  protection of our
intellectual property.  The unauthorized  reproduction or other misappropriation
of our  proprietary  technology  could enable third  parties to benefit from our
technology and brand name without paying us for them. If this were to occur, our
business could be materially adversely affected.

Defending  against  intellectual  property  infringement  claims  could  be time
    consuming  and  expensive,  and we  may  be  liable  for  infringing  on the
    intellectual  property  rights  of  others.  If we  are  not  successful  in
    defending against these claims,  we could be subject to significant  damages
    and the disruption of our business.

     We cannot be certain that our  products,  content and brand names do not or
will not infringe  valid  patents,  copyrights  or other  intellectual  property
rights held by third parties.  We expect that infringement claims in our markets
will  increase  in number as more  participants  enter  the  markets.  We may be
subject  to legal  proceedings  and  claims  from time to time  relating  to the
intellectual  property of others in the ordinary course of our business.  We may
incur substantial  expenses in defending against these third party  infringement
claims, regardless of their merit. Successful infringement claims against us may
result in  monetary  liability  or a material  disruption  in the conduct of our
business.

We may be liable as a result of information  retrieved from or transmitted  over
   the Internet.

     We  may  be  sued  for  defamation,   negligence,  copyright  or  trademark
infringement or other legal claims relating to information  that is published or
made  available on  www.Travelzoo.com,  the Travelzoo Top 20 newsletter  and the
other sites  linked to our  website.  These  types of claims have been  brought,
sometimes  successfully,  against online  services in the past. The fact that we
distribute our Travelzoo Top 20 newsletter and other  information  via email may
subject us to potential  risks,  such as  liabilities  or claims  resulting from
unsolicited email or spamming, lost or misdirected messages,  security breaches,
illegal or fraudulent use of email or  interruptions or delays in email service.
In addition,  we could incur  significant  costs in investigating  and defending
such claims, even if we ultimately are not liable. If any of these events occur,
our  business  and the  value  of your  shares  could  be  materially  adversely
affected.

                                       14

<PAGE>

                           FORWARD-LOOKING STATEMENTS

     Certain   statements   under  the  captions   "Summary,"   "Risk  Factors,"
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and  "Information  About  Travelzoo"  and  elsewhere  in this proxy
statement and prospectus are "forward-looking  statements" within the meaning of
the Private  Securities  Litigation  Reform Act of 1995.  These  forward-looking
statements  include,  but  are not  limited  to,  statements  about  our  plans,
objectives,   expectations,  prospects  and  intentions,  markets  in  which  we
participate  and  other  statements   contained  in  this  proxy  statement  and
prospectus that are not historical  facts. When used in this proxy statement and
prospectus,  the words "expect," "project," "anticipate," "believe," "estimate,"
"intend,"  "plan,"  "seek" and similar  expressions  are  generally  intended to
identify forward-looking  statements.  Because these forward-looking  statements
involve risks and  uncertainties,  there are important  factors that could cause
actual  results to differ  materially  from those  expressed or implied by these
forward-looking   statements,   including  changes  in  our  plans,  objectives,
expectations,  prospects and intentions and other factors  discussed under "Risk
Factors"  and  elsewhere  in this  proxy  statement  and  prospectus.  We cannot
guarantee any future levels of activity,  performance or  achievements.  We will
update  these  forward-looking  statements,  to the extent  required  by law, to
reflect material changes in the information previously disclosed.


                                       15

<PAGE>

                                   THE MERGER

Background

     Travelzoo.com   Corporation  was  incorporated  on  May  21,  1998  in  the
Commonwealth of The Bahamas under The  International  Business  Companies Act of
1989. Ralph Bartel,  our Chairman of the Board and President,  was initially our
sole stockholder.  As described under  "Information about Travelzoo," in 1998 we
offered shares in Travelzoo to visitors who registered on our website, resulting
in approximately  700,000 "Netsurfer  Stockholders," each of whom received three
shares plus up to an additional seven shares for referrals. The number of shares
held by each Netsurfer Stockholder has been doubled as a result of a two-for-one
stock split which we effected in December 2000.

     Ralph Bartel, who was a resident of Germany at the time,  believed that the
grant of the shares to the  Netsurfer  Stockholders  could be made  without  any
registration or qualification with the U.S.  Securities and Exchange  Commission
or other regulatory body, since no payment was received for the shares. Although
Mr. Bartel  received an inquiry from the SEC about the issuance of shares to the
Netsurfer  Stockholders,  the SEC  has  not  asserted  any  violation  of law by
Travelzoo.  However, we understand that the SEC takes the position that programs
for  issuing  shares  such  as  our  Netsurfer  Stockholder  program  should  be
registered  with the SEC.  We are  registering  the  shares to be offered in the
merger under the U.S.  Securities  Act. This proxy statement and prospectus is a
part of that registration statement.

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
was  incorporated  in  California on September 28, 1998 with Ralph Bartel as the
sole  stockholder.  Silicon Channels did business under the name  "Travelzoo.com
Sales, Inc." On October 10, 1998, Travelzoo.com Corporation and Silicon Channels
Corporation  entered into a letter agreement  whereby Silicon Channels agreed to
manage the technical platform,  marketing,  customer support and billing for the
classified  publishing business of the Travelzoo.com  website in return for a 5%
commission on the quarterly net income from such business.  The October 10, 1998
agreement  was  subsequently  replaced by a Service  Agreement  dated January 2,
1999. In the January 2, 1999 Agreement,  Silicon  Channels agreed to perform all
operation  services with respect to the Travelzoo.com  website in return for 50%
of the income before taxes  generated  from the  operation of the  Travelzoo.com
website.  All  assets,  other than the domain  name  Travelzoo.com,  used in the
operation of the Travelzoo.com website were owned by Silicon Channels.

     As the business of Travelzoo became established,  and following election of
a Board of Directors consisting primarily of independent directors, the Board of
Directors discussed the advisability of reorganizing the business so that all of
the  operations  previously  conducted  through  Travelzoo  Bahamas  and Silicon
Channels would be conducted  through a single company,  which would be organized
as  a  corporation  in  the  United  States.   The  board  also  considered  the
advisability of effecting a registration  with the United States  Securities and
Exchange  Commission of its outstanding  shares,  including the shares which had
been issued to the Netsurfer Stockholders. Following such discussions, and after
considering  the  opinion  provided  by The  Mentor  Group  as  discussed  under
"Exchange  of Shares of Silicon  Channels"  on page 43, the board  approved  the
acquisition of Silicon Channels by Travelzoo  Delaware,  a newly formed Delaware
subsidiary  of  Travelzoo  Bahamas,  in exchange  for shares of common  stock of
Travelzoo  Delaware and options to purchase  shares of common stock of Travelzoo
Delaware,  as described under "Certain  Transactions  between  Travelzoo and its
Affiliates" on page 43. This transaction occurred on January 22, 2001. The board
also approved the transactions described in this proxy statement and prospectus,
including the merger of Travelzoo Bahamas into Travelzoo Delaware.

Merger with Travelzoo Delaware

     We are now  proposing  that  Travelzoo  Bahamas  be merged  into  Travelzoo
Delaware.  We believe  that it is in the best  interests  of our company and our
stockholders  that  Travelzoo be  incorporated  in the United  States,  and have

                                       16

<PAGE>

decided that Delaware is the most suitable state for incorporation.  Delaware is
the most  common  state of  incorporation  for  public  companies  in the United
States.

     In connection with the merger, we are filing a registration  statement with
the SEC relating to the shares of Travelzoo Delaware which will be issued in the
merger.  This is intended to resolve the prior questions  relating to the manner
in which shares of Travelzoo  Bahamas were distributed as referred to above, and
to allow our  stockholders  to have  freely  tradable  and  properly  registered
shares.

     Travelzoo Bahamas and Travelzoo Delaware have entered into an Agreement and
Plan of Merger,  dated  January 19, 2001, a copy of which  appears as Annex A to
this proxy statement and prospectus. Information concerning the merger agreement
is set forth under "The Merger Agreement" on page 19.

Effects of the Merger

     On  completion  of the  merger,  Travelzoo  Bahamas  will  be  merged  into
Travelzoo Delaware, Travelzoo Bahamas will cease to exist as a separate company,
and all the  stockholders  of Travelzoo  Bahamas who comply with the  applicable
provisions  of the merger  agreement  will  receive one share of common stock of
Travelzoo  Delaware  in  exchange  for each share of common  stock of  Travelzoo
Bahamas  they now hold.  The  business  which has been  conducted  by  Travelzoo
Bahamas and its  affiliate,  Silicon  Channels,  will be  continued by Travelzoo
Delaware and its  subsidiary,  Silicon  Channels,  and all of the shares held by
Travelzoo Delaware stockholders will be registered and freely tradable.

Certain United States Federal Income Tax Consequences

     General.

      The following  discussion  summarizes the material U.S. federal income tax
consequences of the merger to certain holders of Travelzoo  Bahamas  securities,
including the receipt of securities of Travelzoo  Delaware in exchange for their
Travelzoo Bahamas securities. The following summary also sets forth the material
U.S.  federal income tax  consequences  of the merger at the corporate  level to
Travelzoo.

     The   discussion   is  based  upon  current  law  and  is  subject  to  the
qualifications  contained therein.  The discussion assumes that the holders hold
their  Travelzoo  Bahamas  securities  as capital  assets  within the meaning of
Section 1221 the U.S. Internal Revenue Code.

     This summary does not purport to discuss all aspects of U.S. federal income
taxation that may be relevant to a particular holder of Travelzoo Bahamas stock.
In particular,  it does not apply to holders entitled to special treatment under
U.S.  federal  income  tax  law  (including,   without  limitation,  dealers  in
securities,  tax-exempt  organizations,  banks or other financial  institutions,
trusts,  insurance companies,  persons that hold Travelzoo Bahamas stock as part
of a  straddle,  a hedge  against  currency  risk or as a  constructive  sale or
conversion  transaction,  persons that have a functional currency other than the
United States dollar,  investors in pass-through  entities and foreign  persons,
including foreign individuals,  partnerships and corporations).  This discussion
also  does not  describe  tax  consequences  arising  out of the tax laws of any
state, local or foreign jurisdiction.

     Further,  this summary does not purport to discuss the U.S.  federal income
taxation of holders of Travelzoo  Bahamas stock who acquired such  securities or
stock  pursuant to the exercise or  cancellation  of employee  stock  options or
otherwise as compensation.

     You are urged to consult your tax advisor as to specific tax considerations
of the merger,  including  your receipt of stock of  Travelzoo  Delaware and the
application  and effect of  federal,  state,  local and foreign tax laws in your
particular circumstances.

                                       17

<PAGE>

     Consequences of the Initial Receipt of the Travelzoo Bahamas Stock.

     In the opinion of Bryan Cave LLP,  our  counsel,  under  current  law,  the
initial  receipt of common stock by our  Netsurfer  Stockholders  was taxable to
them upon  receipt in an amount  equal to the fair market  value of the stock at
the time of  receipt.  Each  holder's  aggregate  tax basis in the common  stock
received  will equal the fair market  value of the stock at the time of receipt.
The holding period of the common stock received began on the day after receipt.

     Consequences of the Merger.

     In the opinion of Bryan Cave LLP, our counsel, under current law:

     o    the merger will  qualify as a  "reorganization"  within the meaning of
          Section 368(a) of the Code,

     o    Travelzoo  Bahamas and  Travelzoo  Delaware will each be a "party to a
          reorganization" within the meaning of Section 368(b) of the Code, and

     o    except as more fully described below, no income,  gain or loss will be
          recognized by Travelzoo  Bahamas or Travelzoo  Delaware as a result of
          the merger.

     This opinion is subject to qualifications set forth herein and assumes that
the merger is consummated in accordance  with the terms of the merger  agreement
and as described in this proxy  statement  and  prospectus.  It also assumes the
accuracy  of the  representations  and  assumptions  set  forth in  certificates
delivered to our counsel. The opinion is based on the Code, Treasury regulations
promulgated   thereunder   and  in  effect  as  of  the  date  hereof,   current
administrative  rulings and practice,  and judicial precedent,  all of which are
subject  to  change,  possibly  with  retroactive  effect.  Any change in law or
failure of the factual  representations  and  assumptions to be true could alter
the tax consequences discussed herein.

     The  merger is not  conditioned  upon a ruling  from the  Internal  Revenue
Service as to any of the U.S.  federal income tax  consequences of the merger or
the distribution of the stock of Travelzoo Delaware.  As a result,  there can be
no  assurance  that the  Internal  Revenue  Service  will not  disagree  with or
challenge any of the conclusions set forth in this discussion.

     Consequences to Holders of Travelzoo Stock.

     This section  sets forth the opinion of Bryan Cave LLP, our counsel,  as to
the material U.S.  federal income tax  consequences  of the merger to holders of
Travelzoo Bahamas stock.

     Exchange of Travelzoo  Bahamas Common Stock.  Holders of Travelzoo  Bahamas
common  stock,  who do not own 10 percent or more of the total  combined  voting
power of our  common  stock,  who  exchange  their  common  stock for  Travelzoo
Delaware  common stock in the merger will not recognize  gain or loss,  assuming
the individual  holders'  Travelzoo Bahamas common stock has a fair market value
of less than $50,000 on the date of the exchange.  Each  holder's  aggregate tax
basis in the Travelzoo  Delaware common stock received in the merger will be the
same as his or her  aggregate tax basis in the  Travelzoo  Bahamas  common stock
surrendered in the merger.  The holding period of the Travelzoo  Delaware common
stock  received in the merger will include the holding  period of the  Travelzoo
Bahamas common stock surrendered in the merger.

     Additional Consequences to Holders of Travelzoo Bahamas Securities.

     This section sets forth  additional U.S. federal income tax consequences of
the merger to holders of Travelzoo Bahamas Securities.

     Dissenter's  Rights.  Holders of Travelzoo Bahamas common stock who receive
cash as a result  of the  exercise  of the  right  to  dissent  from the  merger
(assuming thereafter that, directly or indirectly, such holder owns no Travelzoo
Delaware  capital  stock),  will  recognize gain or loss equal to the difference

                                       18

<PAGE>

between the amount of cash  received  and the  holder's  allocable  tax basis in
stock exchanged  therefor.  That gain or loss generally will constitute  capital
gain or loss. It will  constitute  long-term gain or loss if the holder has held
the Travelzoo Bahamas common stock for more than 12 months.

     Backup  withholding.  Certain  noncorporate  holders of  Travelzoo  Bahamas
common  stock  may be  subject  to backup  withholding  at a rate of 31% on cash
payments  received  upon  exercise of  dissenter's  rights of Travelzoo  Bahamas
common stock unless such holder:

     o    furnishes a correct taxpayer identification number and certifies under
          penalty of perjury that he or she is not subject to backup withholding
          on the substitute  Form W-9 (or successor form) which will be provided
          to holders of Travelzoo  Delaware common stock following  consummation
          of the merger,

     o    provides a  certification  of foreign status on Form W-8 (or successor
          form), or

     o    is otherwise exempt from backup withholding.

     Any amount withheld under these rules will be credited against the holder's
U.S. federal income tax liability.

     Because of the complexity of the tax laws, and because the tax consequences
to any  particular  holder of Travelzoo  Bahamas common stock may be affected by
matters not discussed  herein,  each holder of Travelzoo Bahamas common stock is
urged to consult his or her personal tax advisor concerning the applicability to
him or her of the foregoing discussion, as well as of any other tax consequences
of the merger.

                              The MERGER AGREEMENT

     The  following  is a summary of the merger  agreement,  and is qualified by
reference to the  complete  text of the merger  agreement,  which is attached as
Annex A to this proxy  statement  and  prospectus.  We urge you to read the full
text of the merger agreement.

Structure of the Merger

     On the  effectiveness  of the  merger,  Travelzoo  Bahamas  will merge into
Travelzoo  Delaware,  and Travelzoo Delaware will be the surviving  corporation.
Travelzoo  Bahamas will cease to exist,  and Travelzoo  Delaware will succeed to
all of the rights, powers,  properties and assets of Travelzoo Bahamas, and will
continue to operate the business which has been  conducted by Travelzoo  Bahamas
and will continue to own all outstanding shares of Silicon Channels.

Exchange of Shares

     The merger  agreement  provides that, on the  effectiveness  of the merger,
each  outstanding  share of common stock of Travelzoo  Bahamas will be converted
into the right to receive one share of common stock of Travelzoo  Delaware.  The
shares of Travelzoo  Delaware  which are now held by  Travelzoo  Bahamas will be
cancelled.  The shares of Travelzoo  Delaware which are now held by Ralph Bartel
will  remain  outstanding,  and his  shares of  Travelzoo  Bahamas  will also be
exchanged  for  additional  shares  of  Travelzoo  Delaware,  and he  will  hold
approximately 72% of the outstanding shares.

      In order to receive shares of common stock of Travelzoo Delaware, you will
be required to:

     o    Identify  yourself as a stockholder of Travelzoo  Bahamas by providing
          us with your name, the email address you have  registered with us, and
          a new password which we will send to your registered email address. If
          you do not have  access  to your  registered  email  address,  and are
          unable to receive  your new  password,  you will be required to update
          you  registered  email  address by giving us a written  request  which
          includes your name, a copy of your passport or other photo id, as well

                                       19

<PAGE>

          as either your current  registered email address or the serial numbers
          of your Travalzoo  shares,  which were assigned to you at the time you
          received your shares.

     o    Provide us with a mailing address.

     o    Advise us whether you consent to receiving by electronic  transmission
          any notices to be given by Travelzoo Delaware to its stockholders,  in
          accordance with Section 323 of the Delaware General Corporation Law.

     o    Advise us whether you consent to receiving by electronic  transmission
          our proxy  statements,  annual  reports  and other  information  to be
          provided  to you in  accordance  with  the  requirements  of the  U.S.
          Securities and Exchange Commission.

Although we have not previously  required our Netsurfer  Stockholders to provide
us  with  a  mailing  address,  we  will  require  a  mailing  address  for  all
stockholders  of  Travelzoo  Delaware.  Even though we intend to use  electronic
delivery of stockholder  communications  whenever possible, the Delaware General
Corporation  Law and the rules and  regulations  of the SEC  require  us,  under
certain  circumstances,  to provide  notices  to our  stockholders  by mail.  We
strongly  encourage  all our  shareholders  to  consent  to  receive  electronic
communications.

     You may provide us with the  information  described above over the Internet
at http://www.travelzoo.com/delaware, and we encourage you to use this method of
communication.  You may also  use the  form  which  is  attached  to this  proxy
statement  and  prospectus  as  Annex D,  which  you may fax to us or mail to us
following the  instructions on the form. If you attend the meeting in person you
may also deliver the form to us at the meeting.

Book-Entry

     The share register of Travelzoo Bahamas has been maintained electronically,
and  share  certificates  have not  been  issued.  Ownership  of the  shares  of
Travelzoo  Delaware will also be on a book-entry  basis  initially,  and we will
encourage our  shareholders to continue holding their shares in book entry form.
See "Book-Entry Share Ownership" on page 47.

Conditions to the Merger

     The obligations of Travelzoo Bahamas and Travelzoo Delaware to complete the
merger  are  subject  to the  satisfaction  or waiver of  specified  conditions,
including the following:

     o    the approval of the merger agreement by the affirmative vote of:

          -    the holders of a majority of the outstanding  shares of Travelzoo
               Bahamas common stock; and

          -    the holder of the outstanding shares of Travelzoo Delaware common
               stock (which has already taken place);

     o    the  absence  of  any  law,  order  or  injunction   prohibiting   the
          consummation of the merger;

     o    the receipt of all approvals and the completion of filings, or notices
          necessary for completion of the merger;

     o    the declaration of effectiveness of the registration statement on form
          S-4, of which this proxy statement and prospectus forms a part, by the
          SEC,  and the  absence  of any stop  order or  threatened  or  pending
          proceedings seeking a stop order.

Termination

     The merger  agreement may be terminated at any time prior to the completion
of the  merger,  whether  before or after the  stockholder  approvals  have been
obtained:

                                       20

<PAGE>

     o    by mutual consent of Travelzoo Bahamas and Travelzoo Delaware;

     o    by either  Travelzoo  Bahamas or  Travelzoo  Delaware  if any  decree,
          permanent injunction,  judgment, order or other action by any court of
          competent  jurisdiction,  any arbitrator or any governmental authority
          preventing or prohibiting consummation of the merger shall have become
          final and non-appealable;

     o    by either Travelzoo Bahamas or Travelzoo  Delaware if the merger shall
          not have been consummated before May 1, 2001 unless the failure of the
          effective  time to occur by such date  shall be due to the  failure of
          the party seeking to terminate the merger  agreement in performing its
          covenants and agreements in the merger agreement;

     o    by either Travelzoo Bahamas or Travelzoo  Delaware if the transactions
          contemplated  by the  merger  agreement  shall  fail  to  receive  the
          requisite vote for approval by the stockholders of Travelzoo Bahamas;

     o    by Travelzoo  Bahamas if its board of directors  shall have  withdrawn
          its approval or  recommendation  of the merger in connection  with the
          exercise of its fiduciary duties; or

     o    by either  Travelzoo  Bahamas or  Travelzoo  Delaware  if the board of
          directors of either company determines that the number of shareholders
          requesting  paper  delivery  (as opposed or in addition to  electronic
          delivery) of this proxy statement and prospectus  makes it inadvisable
          to proceed with the merger.

Representations and Warranties

     The merger agreement contains  representations  and warranties of Travelzoo
Bahamas and Travelzoo Delaware relating to, among other things:

     o    corporate organization and good standing;

     o    capitalization; and

     o    authorization.

Completion and Effectiveness of the Merger

     The merger will become  effective  when a certificate of merger is filed in
the State of Delaware in  accordance  with  Sections 252 and 103 of the Delaware
General  Corporation  Law. We anticipate  that we will file the  certificate  of
merger promptly following the stockholder meeting to approve the merger.

                                       21

<PAGE>

                               THE SPECIAL MEETING

General

     This  proxy  statement  and  prospectus  is being  furnished  to holders of
Travelzoo Bahamas common stock in connection with the special meeting of members
(stockholders)  to be held at  ------------------------  on  ---------,  2001 at
[---------] -.m., [---------] time, and any adjournment or postponement thereof.
This proxy statement and prospectus and the accompanying form of proxy are first
being sent to stockholders of Travelzoo Bahamas on or about ------- --, ------.

Matters to be Considered

     At the Special meeting, the stockholders of Travelzoo Bahamas will be asked
to consider and vote upon a proposal to approve and adopt the merger agreement.

Board of Directors' Recommendation

     THE TRAVELZOO BOARD OF DIRECTORS HAS  UNANIMOUSLY  APPROVED AND ADOPTED THE
MERGER  AGREEMENT AND  RECOMMENDS  THAT THE  STOCKHOLDERS  OF TRAVELZOO VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.

Record Date; Voting Rights

     Our board of directors has fixed the close of business on ------------ ---,
---- as the record  date for  determining  holders  entitled to notice of and to
vote at the special meeting.

     As of the  record  date,  there  were  outstanding  and  entitled  to  vote
11,295,874 shares of Travelzoo Bahamas common stock held by 699,960 stockholders
of record.  Each share of Travelzoo Bahamas common stock is entitled to one vote
on each matter to be voted upon at the special  meeting,  which vote may be cast
either in person or by properly executed proxy.

Quorum

     The  presence  in person or by  properly  executed  proxy of  holders  of a
majority of the issued and outstanding  shares of Travelzoo Bahamas common stock
is necessary to constitute a quorum at the special meeting.

Required Vote

     The approval and adoption of the merger agreement  requires the affirmative
vote of the holders of a majority of the outstanding shares of our common stock.

     Mr.  Bartel holds an aggregate  of  5,910,000  shares of our common  stock,
representing  approximately 52% of the outstanding shares. He has indicated that
he  intends  to vote  in  favor  of the  approval  and  adoption  of the  merger
agreement.

     The approval of the merger also requires the affirmative vote of a majority
of the  outstanding  shares of common  stock of  Travelzoo  Delaware.  Travelzoo
Bahamas and Mr. Bartel, who together hold 100% of the outstanding  shares,  have
already given that approval.

Proxies

     The  proxy  statement  and  prospectus  is  being  furnished  to  Travelzoo
stockholders in connection with the  solicitation of proxies by and on behalf of
the  Travelzoo  board  of  directors  for  use at the  special  meeting,  and is
accompanied by a form of proxy.

     In order for your shares of  Travelzoo  common  stock to be included in the
vote, you must vote your shares by one of the following means:

                                       22

<PAGE>

     o    by proxy by completing  the proxy and following the  instructions  for
          return located on the Internet at http://www.travelzoo.com/Delaware.

     o    by proxy by  completing,  signing  and  dating  the  proxy in the form
          attached hereto and mailing it to the address shown thereon

     o    in person at the special meeting

     If you cannot attend the special  meeting in person,  you are encouraged to
vote by proxy over the Internet.

     All shares of  Travelzoo  common  stock  represented  by properly  executed
proxies  will,  unless such proxies have been  previously  revoked,  be voted in
accordance with the instructions  indicated on such proxies.  If no instructions
are indicated,  such shares of Travelzoo common stock will be voted for approval
and adoption of the merger agreement and, in the discretion of the proxies, with
respect to such other  business as may properly come before the special  meeting
or any adjournment or postponement thereof.

     Travelzoo  does not know of any  matters  other than the merger that are to
come before the special meeting. If any other matters are properly presented for
action at the special  meeting,  the persons named in the enclosed form of proxy
and  acting  thereunder  will have the  discretion  to vote on such  matters  in
accordance with their best judgment, unless such authorization is withheld.

     Mailing the enclosed  proxy card or voting  through the  Internet  does not
preclude  you from  voting in person at the  special  meeting.  You may revoke a
proxy at any time prior to the vote by:

     o    notifying the  Secretary of Travelzoo in writing of the  revocation of
          the proxy;

     o    submitting, via the Internet or through the U.S. mail, a duly executed
          proxy to the Secretary of Travelzoo bearing a later date; or

     o    appearing at the special meeting and voting in person.

     Simply attending the special meeting,  without voting at the meeting,  will
not  constitute  revocation  of a proxy.  Any written  notice of  revocation  or
subsequent  proxy  should be  completed  at  [http://www.------------],  sent to
Travelzoo.com  Corporation,  800 West El Camino Real, Suite 180,  Mountain View,
California 94040,  Attention:  Secretary,  or hand delivered to the Secretary of
Travelzoo at or before the taking of the vote at the special meeting.

                              RIGHTS OF DISSENTERS

     Under Bahamian law, as a result of the merger proposal, you are entitled to
demand  appraisal and, upon  consummation  of the merger,  obtain payment of the
fair value of your shares.  In order to exercise the right to dissent,  you must
give written notice to Travelzoo Bahamas at or before the stockholders'  meeting
described above under "The Special Meeting" on page 22. Such written notice must
include a statement  that you  propose to demand  payment for your shares if the
merger is approved.

     Within 20 days after the date of the  special  meeting,  Travelzoo  Bahamas
will give written notice of the  authorization  of the merger to you if you gave
written  objection.  Within 20 days after the date on which the copy of the plan
of merger or an outline  thereof was given to you, you must give written  notice
to Travelzoo  Bahamas of your  decision to elect to dissent,  provided  that you
must dissent with respect of all shares that you hold in Travelzoo Bahamas. Such
notice must state:

     o    your name and address;

     o    the  number  and  classes  or series of shares in respect of which you
          dissent; and

     o    a demand for payment of the fair value of your shares.


                                       23

<PAGE>

     Upon giving  notice of election to dissent,  you will no longer have any of
the rights of a stockholder of Travelzoo Bahamas except the right to be paid the
fair value of your shares.  Within 7 days immediately  following the date of the
expiration  of the period  within  which you may give your notice of election to
dissent,  or within 7 days immediately  following the date on which the proposed
merger is put into effect,  whichever is later,  Travelzoo  Delaware will make a
written offer to you to purchase your shares at a specified price that Travelzoo
Delaware  determines  to be their fair  value.  If,  within 30 days  immediately
following the date on which the offer is made, you and Travelzoo  Delaware agree
upon the price to be paid for your shares,  Travelzoo  Delaware will pay you the
amount in money  upon your  signing  and  delivering  to  Travelzoo  Delaware  a
document  satisfactory to Travelzoo Delaware in which you acknowledge  surrender
and cancellation of your shares.

     If you and  Travelzoo  Delaware  fail within such 30 day period to agree on
the price to be paid for your shares,  within 20 days immediately  following the
date on which the 30 day period expires, the following shall apply:

     o    you and Travelzoo Delaware will each designate an appraiser;

     o    the 2 designated appraisers together will designate a third appraiser;

     o    the 3  appraisers  will fix the fair  value of your  shares  as of the
          close of  business  on the day prior to the date of the  stockholders'
          meeting,  and that value is binding on you and Travelzoo  Delaware for
          all purposes; and

     o    Travelzoo will send to you, by check mailed to the address you provide
          to us, the amount of the fair value of the shares.


                                       24

<PAGE>



                           INFORMATION ABOUT TRAVELZOO

Our History

     Travelzoo Bahamas

     Travelzoo.com   Corporation  was  incorporated  on  May  21,  1998  in  the
Commonwealth of The Bahamas under The  International  Business  Companies Act of
1989. Ralph Bartel,  our Chairman of the Board and President,  was initially our
sole stockholder.

     Our principal  business office is located at 800 West El Camino Real, Suite
180, Mountain View, California 94040.

     Internet Stock Offering

     Following the organization of Travelzoo  Bahamas in 1998, we offered shares
in Travelzoo to visitors who registered on our website.  We limited the offer to
approximately  700,000  "Netsurfer  Stockholders,"  each of whom received  three
shares plus up to an  additional  seven shares for  referrals.  We required each
Netsurfer  Stockholder  to provide us with their  first and last  names,  e-mail
address,  country of residence and a PIN number, and to represent that he or she
was at least 18 years old and a  resident  of the United  States or Canada.  The
number of shares held by each Netsurfer Stockholder has been doubled as a result
of a two-for-one stock split which we effected in December 2000.

     We believe that our offering was the first  offering of "free  shares" over
the Internet.  Mr.  Bartel,  who was a resident of Germany at the time,  was not
advised by U.S.  securities  counsel,  and believed that the grant of the shares
could be made without any registration or qualification with the U.S. Securities
and Exchange  Commission or other  regulatory body since no payment was received
for the shares.  Although Mr. Bartel  received an inquiry from the SEC about the
issuance of shares to the Netsurfer  Stockholders,  the SEC has not asserted any
violation of law by Travelzoo.  However,  we  understand  that the SEC takes the
position  that  programs for issuing  shares such as our  Netsurfer  Stockholder
program should be registered  with the SEC. We are  registering the shares to be
offered in the merger under the U.S. Securities Act.

     Silicon Channels Corporation

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
was  incorporated  in  California on September 28, 1998 with Ralph Bartel as the
sole  stockholder.  Silicon Channels did business under the name  "Travelzoo.com
Sales, Inc." On October 10, 1998, Travelzoo.com Corporation and Silicon Channels
Corporation  entered into a letter agreement  whereby Silicon Channels agreed to
manage the technical platform,  marketing,  customer support and billing for the
classified  publishing business of the Travelzoo.com  website in return for a 5%
commission on the quarterly net income from such business.  The October 10, 1998
agreement  was  subsequently  replaced by a Service  Agreement  dated January 2,
1999. In the January 2, 1999 Agreement,  Silicon  Channels agreed to perform all
operation  services with respect to the Travelzoo.com  website in return for 50%
of the net income before taxes generated from the operation of the Travelzoo.com
website.  All  assets,  other than the domain  name  Travelzoo.com,  used in the
operation  of the  Travelzoo.com  website  were  owned by Silicon  Channels.  On
January 22, 2001 Silicon Channels became a subsidiary of Travelzoo  Delaware,  a
newly-formed  subsidiary  of  Travelzoo  Bahamas,  as described  under  "Certain
Transactions between Travelzoo and Its Affiliates" on page 43.

     Merger with Travelzoo Delaware

     Travelzoo Inc. was  incorporated  as a Delaware  corporation on January 18,
2001.  The initial  stockholder  of Travelzoo  Delaware was  Travelzoo  Bahamas.
Following the  contribution  of the shares of Silicon  Channels  Corporation  to
Travelzoo  Delaware,  Travelzoo Bahamas owns 58% of Travelzoo Delaware and Ralph

                                       25

<PAGE>

Bartel owns 42% of Travelzoo Delaware.  On completion of the merger described in
this proxy  statement  and  prospectus,  Travelzoo  Bahamas  will be merged into
Travelzoo Delaware, Travelzoo Bahamas will cease to exist as a separate company,
and all the  stockholders  of Travelzoo  Bahamas who comply with the  applicable
provisions  of the merger  agreement  will  receive one share of common stock of
Travelzoo  Delaware  in  exchange  for each share of common  stock of  Travelzoo
Bahamas they now hold.

Our Business

     Travelzoo provides online marketing solutions for the travel industry.  Our
website,  www.Travelzoo.com,  and our Travelzoo Top 20 newsletter  enable travel
companies to promote their special offers in a fast, flexible and cost-effective
manner. By solving many of the problems  associated with newspaper  advertising,
which is currently the main advertising  medium for travel  companies,  we allow
travel companies to more effectively promote their special offers. More than 150
companies use our services.  Our customers include:  Alamo Rent-A-Car,  American
Airlines Vacations, Budget Rent A Car, Hertz, Holiday Inn, Lowestfare.com,  Park
Place Entertainment, Starwood Hotels and United Airlines.

     Our  advertising  revenues are  primarily  derived from listing fees on our
website,  www.Travelzoo.com.  Our  listing  management  software  allows  travel
companies  to add,  update,  and delete  special  offer  listings on a real-time
basis.  Our software also provides travel  companies with real-time  performance
tracking, enabling them to optimize their marketing campaigns.

     Revenue  from  our  listing  services  has  grown  rapidly  since  we began
operations in 1998, primarily driven by an increasing number of travel companies
listing their special offers on  www.Travelzoo.com.  Our revenues increased from
approximately  $84,000 for the period from May 21, 1998  (inception) to December
31, 1998, to  approximately  $954,000 for the year ended  December 31, 1999. Our
revenues for the nine months ended  September 30, 2000 were  approximately  $2.8
million.

Industry Background

     Market for Advertising Special Offers

     We believe  that travel  companies  require  efficient  and  cost-effective
advertising of special offers.  Promoting  special offers helps travel companies
to sell excess  inventory and travel  services to consumers that otherwise might
not travel.  According to the Newspaper Association of America, travel companies
spent $1.5 billion in 1999 on national  advertising in local newspapers (Source:
Market  and  Business  Analysis,  NAA,  June  2000).  Newspapers  are  the  main
advertising medium for travel companies.

     We believe that several  factors are causing and will  continue to cause an
increase in spending on advertising special offers:

     o    Online Advertising Opportunities. The Internet allows travel companies
          to advertise  their special offers in an efficient and  cost-effective
          manner that has not been possible before. We believe this will lead to
          greater  expenditures  by  travel  companies  on  advertising  special
          offers.

     o    Suppliers  Selling  Directly.  We believe  that many travel  suppliers
          prefer to sell their  travel  services  directly to  consumers,  as an
          alternative  to  more  costly  distribution   through  travel  agents.
          Promotion of special offers allows them to sell directly to consumers.

     Prior to the advent of the Internet,  travel companies traditionally relied
on  newspaper   advertising  for  promoting  their  special  offers.   Newspaper
advertising  suffers  from a number  of  limitations  which do not  apply to the
Internet:

     o    typically  ads must be submitted 2 to 5 days prior to the  publication
          date, which makes it difficult to advertise last-minute inventory;

                                       26

<PAGE>

     o    once an ad is published, it cannot be updated or deleted when an offer
          is sold out;

     o    once an ad is published, the travel company cannot change a price;

     o    newspaper  industry is not very  competitive,  resulting in high rates
          for newspaper advertising; and

     o    the medium offers no performance reporting.

     Market Opportunity

     We believe that the opportunities created by the Internet and the desire of
many travel  suppliers to sell  directly to consumers  will cause an  increasing
percentage  of these  expenditures  to be directed to  Internet  advertising  of
special offers.

     We believe that the advantages offered by Internet  technology have not yet
been fully realized and applied to the marketing of special  travel offers,  and
that  Travelzoo  has an  opportunity  to  become a  leading  provider  of online
marketing solutions for the travel industry.

The Travelzoo Solution

     We  offer  travel  companies  a  flexible,  effective,  and  cost-efficient
solution for promoting their special offers to consumers.  Our solutions include
listings on our website, www.Travelzoo.com,  and listing in our Travelzoo Top 20
newsletter.  As travel  companies  increasingly  utilize the Internet to promote
their special offers,  we believe that our solution will enable our customers to
leverage  the lower cost and  real-time  communication  enabled by the  Internet
while  retaining  many of the positive  attributes  of  traditional  advertising
methods.

     Benefits to Travel Companies

     We  offer  travel  companies  a  flexible,  effective,  and  cost-efficient
solution for promoting  their special  offers to consumers.  Key features of our
solution for travel companies include:

     o    Real-Time  Listings of Special  Offers.  Our technology  allows travel
          companies to list new special offers on a real-time basis.

     o    Real-Time  Updates.  Our technology  allows travel companies to update
          their listings on a real-time basis.

     o    Real-Time  Performance  Reports.  We  provide  travel  companies  with
          real-time tracking of the performance of their listings.  Our solution
          enables  travel  companies to optimize  their  promotion  campaigns by
          removing  or  updating   unsuccessful  listings  and  further  promote
          successful listings.

     o    Access to a Large  Number of Travel  Shoppers.  Through  our  website,
          www.Travelzoo.com,  we offer  travel  companies  access  to more  than
          600,000  unique  visitors per month (Source:  Media Metrix,  September
          2000).  In  addition,  our  Travelzoo  Top 20  newsletter  reaches 1.2
          million subscribers, which are not measured in audience ratings.

     o    National  Reach.  Through  our  website,  www.Travelzoo.com,  and  our
          newsletter, we offer travel companies access to travel shoppers across
          the U.S.

     Benefits to Consumers

     Our website, www.Travelzoo.com, and our Travelzoo Top 20 newsletter provide
travel  shoppers  information on current special offers at no cost to the travel
shopper. Key features of our solution for consumers include:

     o    Offers  From  More  Than  One  Hundred   Companies   Aggregated.   Our
          www.Travelzoo.com  site offers  consumers  aggregated  information  on
          current  special offers from more than one hundred  travel  companies.
          This saves time.

                                       27

<PAGE>

     o    Current  Information.  Compared to newspaper ads, we provide consumers
          more  current   information,   since  our  technology  enables  travel
          companies to update their listings on a real-time basis.

     o    Search  tools.  We provide  consumers  with the  ability to search for
          specific  special offers.  Additionally,  each listing includes a date
          stamp,  giving the consumer  information about the age of a particular
          listing.

The Travelzoo Strategy

     Our  objective is to become the leading  provider of  solutions  for online
promotion of special offers for travel  companies.  Key elements of our strategy
include:

     o    Build Brand Awareness.  We believe that it is essential to establish a
          strong brand. We utilize a marketing program, including advertising on
          other websites.  In addition, we believe that we build brand awareness
          by product excellence that is promoted by word-of-mouth.  We intend to
          expand our public relations and other marketing programs.

     o    Increase  Number of Travel  Companies  Listing their Special Offers on
          www.Travelzoo.com.  We intend to accelerate the growth of our customer
          base by  expanding  the size of our  sales  force.  See  "--Sales  and
          Marketing."

     o    Increase Number of Consumers Using the  www.Travelzoo.com  Website. In
          order to attract  more users to our  website,  we intend to expand our
          advertising  on other  websites.  We believe  that we also can attract
          more users by product excellence that is promoted by word-of-mouth.

     o    Continue  to Enhance  Our  Technology.  We intend to provide  the best
          available tools to travel companies to more  effectively  manage their
          promotion  campaigns.  We intend to dedicate a  significant  amount of
          engineering time to continue enhancements of our technology.

     o    Expand Our Services Into Other Areas. We intend to expand our services
          in other areas.  We plan to accomplish this by developing new products
          and  services  within our company and by  evaluating  acquisition  and
          investment  opportunities.  We intend to launch a service  for  online
          marketing of movies and local events in the near future.

Customers

     As of  December  31,  2000,  our  customer  base  included  over 150 travel
companies, including travel suppliers, consolidators, and travel agents. Some of
our customers are:

         Air New Zealand                        Northwest Airlines Vacations
         Alamo Rent-a-Car                       Park Place Entertainment
         America West Vacations                 Skyauction.com
         American Airlines Vacations            Starwood Hotels
         Budget Rent A Car                      Tollman Hundley Travel Services
         Cheap Tickets, Inc.                       International
         Delta Vacations                        Travelocity.com
         Hertz                                  Travelscape.com
         Holiday Inn                            Uniglobe.com
         Lowestfare.com                         United Airlines
         Lufthansa                              Virgin Atlantic Vacations
         Mandalay Resort Group

     For  the  year  ended   December  31,  1999,   Internet   Travel   Network,
Skyauction.com, Travelocity.com, and Travelscape.com accounted for approximately
50% of our  revenues.  For the nine  months  ended  September  30,  2000,  Cheap

                                       28

<PAGE>

Tickets, Skyauction.com, and Travelscape.com accounted for 36% of our revenues.

Sales and Marketing

     As  of  December  31,  2000,  our  direct  sales  force  consisted  of  two
advertising sales managers,  one campaign manager, and our Senior Vice President
Sales and Marketing.  We obtain customers  primarily  through leads generated at
industry  conferences and inquiries received from a form on our website. We plan
to add three to five advertising sales representatives to our sales force in the
near future.

     We utilize a marketing  program  involving  online  advertising  to promote
www.Travelzoo.com  as a leading site for special travel offers. In addition,  we
believe that we build brand awareness by product  excellence that is promoted by
word-of-mouth.  We plan to continue to use key  marketing  events,  coupled with
public relations efforts, to promote awareness of the Travelzoo brand.

     We have entered into an outsourcing  agreement for banner advertising sales
and  ad  serving  with  DoubleClick,   Inc.,  a  leading  advertising   network.
DoubleClick, Inc. sells banner advertising,  serves banner on www.Travelzoo.com,
provides  customers  with  reporting,  and  bills  the  customer  and  remits  a
percentage of the sale to Travelzoo which is reported as net revenue. Our latest
agreement with DoubleClick, Inc. has been in effect since June 23, 2000, and may
be terminated by either party on three months' notice.

Technology

     We have  designed our  technology to serve a large volume of web traffic in
an efficient, scalable and fault-tolerant manner.

     We co-locate our  production  servers with Exodus  Communications,  Inc., a
major  co-location and Internet  service  provider.  Exodus'  facility  includes
features such as power  redundancy,  multiple  egress and peering to other ISPs,
fire  suppression and access to our own separate  physical space. We believe our
arrangements  with Exodus will allow us to grow without being limited by our own
physical and  technological  factors,  and will also provide us with  sufficient
bandwidth  capacity  for our  anticipated  needs.  Because  of the design of our
website, our users are not required to download or upload large files from or to
our website,  which allows us to continue  increasing the number of our visitors
and page views without  adversely  affecting our  performance or requiring us to
make significant additional capital expenditures.

     Our software is written using open standards,  such as Visual Basic Script,
and HTML, and interfaces with products from Microsoft.  We have standardized our
hardware platform on Compaq servers and Cisco switches.

Plans for New Products and Services

     We intend to launch a service  for  online  marketing  of movies  and local
events in the near future.  In December  2000, we purchased the Internet  domain
name "Weekend.com."

Competition

     We compete with large  Internet  portal sites,  such as About.com,  America
Online,  Excite, Lycos, MSN and Yahoo!, that offer listings or other advertising
opportunities  for travel  companies.  We also compete  with smaller  sites that
specialize  in  listing  last-minute  offers or list  deals  for  free,  such as
Lastminutetravel.com  and  Smarterliving.com.   In  addition,  we  compete  with
newspapers,  magazines and other traditional media companies that provide online
advertising.  We expect to face additional  competition as other established and
emerging   companies,   including  print  media  companies,   enter  the  online
advertising market.

                                       29

<PAGE>

     Many  of our  current  and  potential  competitors  have  longer  operating
histories,  significantly  greater  financial,  technical,  marketing  and other
resources and larger client bases than we do. In addition, current and potential
competitors   may  make   strategic   acquisitions   or  establish   cooperative
relationships  to  expand  their  businesses  or  to  offer  more  comprehensive
solutions.

     We believe that there will be rapid  business  consolidation  in the online
advertising  industry.  Accordingly,  new  competitors  may emerge  and  rapidly
acquire  significant  market share. In addition,  new  technologies  will likely
increase the  competitive  pressures that we face. The  development of competing
technologies by market  participants or the emergence of new industry  standards
may  adversely  affect our  competitive  position.  Competition  could result in
reduced  margins  on  our  services,  loss  of  market  share  or  less  use  of
www.Travelzoo.com  by  travel  companies  and  consumers.  If we are not able to
compete  effectively with current or future competitors as a result of these and
other factors, our business could be materially adversely affected.

Government Regulation and Legal Uncertainties

     There are an increasing  number of laws and  regulations  pertaining to the
Internet,  including laws or regulations relating to user privacy, liability for
information  retrieved  from or  transmitted  over the Internet,  online content
regulation,   user  privacy  and  domain  name   registration.   Moreover,   the
applicability  to the  Internet  of  existing  laws  governing  issues  such  as
intellectual property ownership and infringement,  copyright, patent, trademark,
trade secret, obscenity, libel and personal privacy is uncertain and developing.

     Privacy Concerns.

     Government  agencies are  considering  adopting  regulations  regarding the
collection and use of personal identifying information obtained from individuals
when  accessing  web sites.  While we have  implemented  and intend to implement
additional  programs  designed to enhance the  protection  of the privacy of our
users,  these programs may not conform to any  regulations  adopted which may be
adopted by these agencies. In addition, these regulatory and enforcement efforts
may adversely affect our ability to collect demographic and personal information
from  users,  which  could  have an  adverse  effect on our  ability  to provide
advertisers  with  demographic  information.  The European  Union (the "EU") has
adopted a directive  that  imposes  restrictions  on the  collection  and use of
personal data. The directive could impose  restrictions  that are more stringent
than current Internet privacy standards in the United States.  The directive may
adversely affect the activities of entities such as Travelzoo to the extent that
we may seek to collect data from users in EU member countries.

     Domain Names. Domain names are the user's Internet "addresses." The current
system  for  registering,  allocating  and  managing  domain  names has been the
subject of litigation  and of proposed  regulatory  reform.  Although we own the
Travelzoo.com domain name, and have registered "Travelzoo" as a trademark, third
parties may bring claims for  infringement  against us for the use of our domain
name and trademark.  In the event such claims are successful,  we could lose the
ability to use the Travelzoo.com domain name. There can be no assurance that our
domain name will not lose its value, or that we will not have to obtain entirely
new domain names in addition to or in lieu of our current domain name if changes
in overall  Internet domain name rules result in a restructuring  in the current
system of using domain names which include  ".com,"  ".net,"  ".gov," ".edu" and
other extensions.

     Jurisdictions.  Due to the global  nature of the  Internet,  it is possible
that,  although  our  transmissions  over the  Internet  originate  primarily in
California,  the governments of other states and foreign countries might attempt
to  regulate  our  business  activities.  In  addition,  because  our service is
available  over the  Internet in multiple  states and foreign  countries,  these
jurisdictions may require us to qualify to do business as a foreign  corporation
in each of these states or foreign  countries,  which could  subject us to taxes
and other regulations.

                                       30

<PAGE>

Intellectual Property

     Our success  depends to a  significant  degree upon the  protection  of the
Travelzoo brand name. If we were unable to protect the Travelzoo brand name, our
business could be materially  adversely affected.  We rely upon a combination of
copyright,  trade secret and trademark laws to protect our intellectual property
rights. The steps we have taken to protect our proprietary rights,  however, may
not be adequate to deter misappropriation of proprietary information.

     We  may  not  be  able  to  detect  unauthorized  use  of  our  proprietary
information  or take  appropriate  steps to enforce  our  intellectual  property
rights.  In addition,  the validity,  enforceability  and scope of protection of
intellectual  property in  Internet-related  industries  is uncertain  and still
evolving. The laws of other countries in which we may market our services in the
future are  uncertain  and may afford  little or no effective  protection of our
intellectual property.

     We filed with the United States Patent and Trademark office to register the
trademark "Travelzoo" for "providing information and news in the field of travel
via an on-line global communications network and travel agency services,  namely
making reservations and booking for transportation,"  "providing information and
news in the field of travel via an on-line  global  communications  network  and
travel agency  services,  namely making  reservations  and booking for temporary
lodging," and  "promoting  the goods and services of others through the offer of
travel  goods  and  services  and  shopping  club  services,   namely  providing
information  on travel goods and services to members."  The PTO  published  that
mark for  opposition on October 31, 2000.  The mark was registered by the PTO on
January 23, 2001.

Employees

     As of December 31, 2000,  we had 11  employees,  of whom 5 worked in sales,
marketing,  client services,  and business development,  1 in network operations
and 5 were involved in finance,  administration,  and corporate operations. None
of our employees is  represented  under  collective  bargaining  agreements.  We
consider our relations with our employees to be good. Because of our anticipated
further growth combined with the  requirements  we face as a public company,  we
expect  that the number of our  employees  will  continue  to  increase  for the
foreseeable future.

Reports to Security Holders

     We have not in the past filed  reports with the SEC,  although we have made
certain financial information available to our stockholders through our website.
Following  completion  of the  merger,  we will  be  required  to  file  annual,
quarterly  and  other  financial  reports  with the SEC in  accordance  with the
requirements  of the U.S.  Securities  Exchange Act of 1934, as amended,  and we
will be  required  to  provide  an  annual  report  and proxy  statement  to our
stockholders.  We expect to provide  such  reports to our  stockholders,  and to
otherwise  communicate with our  stockholders,  using e-mail or other electronic
communications  to the extent  permitted by the rules and regulations of the SEC
and by the Delaware  General  Corporation Law. A stockholder may receive a paper
copy of any  stockholder  communication  by submitting a written  request to the
Secretary  of  Travelzoo  at the address set forth in this proxy  statement  and
prospectus.  However, as described under "Description of Capital Stock -- Common
Stock" on page 45, we will have the right to redeem  shares of common stock held
by  a   stockholder   who  revokes   such   stockholder's   consent  to  receive
communications and notices from us in electronic form.

     You may  read  and copy any  materials  we file  with the SEC at the  SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain  information on the operation of the Public Reference Room by calling the
Securities  and  Exchange  Commission  at  1-800-SEC-0330.  The  Securities  and
Exchange Commission also maintains an Internet site that contains reports, proxy
and information  statements,  and other information  regarding issuers that file
electronically with the Securities and Exchange Commission.  The address of that
site is http://www.sec.gov.

                                       31

<PAGE>

Facilities

     Our offices are  currently  located in  approximately  3,000 square feet of
office  space in Mountain  View,  California  under an  operating  lease with HQ
Global  Workplaces,  Inc. that expires on December 31, 2001. We believe that our
leased facilities are adequate to meet our current needs;  however, we intend to
expand our sales operations and therefore may require  additional  facilities in
the future. We believe that such additional facilities are available.

                                LEGAL PROCEEDINGS

     There are no  material  legal  proceedings  pending  or, to our  knowledge,
threatened against us.

                           MARKET FOR OUR COMMON STOCK

     Our shares  have not  previously  been  registered,  and our shares are not
listed on any stock  exchange  or included in any  over-the-counter  market.  As
described above under  "Information  About Travelzoo -- Our History" on page 25,
we have  approximately  700,000 Netsurfer  Stockholders who hold an aggregate of
5,155,874 shares of our common stock, or an average of approximately  7.4 shares
per   Netsurfer   Stockholder.   Our   stockholder   register   has  been   kept
electronically,  and no share  certificates have been issued. We cannot estimate
what the trading  price of our common  stock might have been if there had been a
market for the shares.

     Following  completion of the merger,  and the registration  with the SEC of
the shares of Travelzoo  Delaware,  our  stockholders  will be permitted to sell
their shares and a market in our shares may develop.  However,  we cannot assure
you that a significant market for the shares will develop or be maintained.

     We have no  immediate  plans to apply for a listing of our common  stock on
any stock  exchange.  We hope to apply for a listing on our common  stock on the
Nasdaq stock  exchange at such time as we determine that we are in a position to
meet the listing  qualifications.  Following completion of the merger, and prior
to any Nasdaq  listing,  we expect that the shares of  Travelzoo  Delaware  will
trade on the over-the-counter market in the United States.

     At the date of this proxy  statement and  prospectus,  there are 11,295,874
shares of our common stock outstanding.

     We have not paid any  dividends  on our common stock in the past and do not
expect to pay dividends in the foreseeable future.

                                       32

<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The  following  discussion  and  analysis of our  financial  condition  and
results of operations  should be read in  conjunction  with, and is qualified in
its entirety by reference to, the combined financial statements of Travelzoo.com
Corporation  and  affiliate and the notes  thereto  appearing  elsewhere in this
proxy   statement  and  prospectus.   This  discussion  and  analysis   contains
forward-looking  statements  that involve  risks and  uncertainties.  Our actual
results could differ  materially from those  anticipated in the  forward-looking
statements as a result of factors including, but not limited to, those discussed
in "Risk Factors" and elsewhere in this proxy statement and prospectus.

Overview

     We are a provider of online  marketing  solutions for the travel  industry.
Our website,  www.Travelzoo.com,  and our  Travelzoo  Top 20  newsletter  enable
travel  companies  to  promote  their  special  offers in a fast,  flexible  and
cost-effective  manner.  Our revenues  are  primarily  derived from  advertising
placed on our website, www.Travelzoo.com.

     Travelzoo.com  Corporation was  incorporated  in May 1998.  Until September
1998,  Ralph  Bartel,  our founder,  operated the website as an  individual.  In
September 1998, Ralph Bartel  incorporated  Silicon Channels  Corporation d.b.a.
Travelzoo.com  Sales,  Inc. At that time  Travelzoo.com  Corporation  entered an
outsourcing  agreement with Silicon Channels.  In January 1999, Silicon Channels
hired  its first two  employees.  Ralph  Bartel  was the first  employee.  As of
December  31, 2000,  Silicon  Channels  operated  with 11  employees.  Our early
operating  activities  related  primarily to the  development  of the  necessary
technological  infrastructure for the operation of Travelzoo.  In November 1999,
we launched our Travelzoo Top 20 newsletter.

     The following  discussion is based on the combined financial  statements of
Travelzoo.com Corporation and affiliate (Silicon Channels), which represents the
historical  financial  statements  of  the  Travelzoo  business  founded  by our
principal stockholder.

     We classify our revenues as follows:

     o    Advertising  revenues,  consisting  of  listing  fees  paid by  travel
          companies to list their special offers on www.Travelzoo.com and banner
          advertising sales through DoubleClick,  Inc. Listing fees are based on
          placement,  number of listings,  number of  impressions,  or number of
          click-throughs.  Banner advertising rates are based on CPM rates (cost
          per thousand  impressions).  Smaller advertising  agreements-typically
          $2,000 or less per  month-typically  renew automatically each month if
          they are not terminated by the client. Larger agreements are typically
          related to advertising campaigns and are not automatically renewed.

     o    Commissions  revenue,  consisting  of  commissions  paid by e-commerce
          companies for generating sales through www.Travelzoo.com.

     We recognize revenue as follows:

     o    Advertising  Revenues. We recognize advertising revenues in the period
          in which the advertisement is displayed,  provided that evidence of an
          arrangement   exists,   the  fees  are  fixed  and  determinable,   no
          significant   obligations  remain  at  the  end  of  the  period,  and
          collection of the  resulting  receivable  is  reasonably  assured.  If
          advertising is displayed within one month,  revenues are recognized at
          the end of the display period. If advertising is displayed over two or
          more months,  revenues are recognized  ratably over the period. To the
          extent that the minimum guaranteed  impressions are not met during the
          contract period, we defer  recognition of the  corresponding  revenues
          until  the  guaranteed  impressions  are  achieved.  Fees  for  banner

                                       33

<PAGE>

          advertising  are  recognized   based  on  the  number  of  impressions
          displayed or clickthroughs  delivered during the period.  We recognize
          revenues  from  barter  transactions  in the period  during  which the
          advertisements  are  displayed  on  www.Travelzoo.com.  Expenses  from
          barter  transactions  are  recognized  in the period  during which the
          advertisements are displayed on the barter partner's  website.  Barter
          transactions  are  recorded  at the  fair  value  of  the  advertising
          provided  based on cash  received by  Travelzoo  for similar  types of
          advertising within six months.

     o    Commissions.  We record  commissions  as the net amount  received.  We
          recognize  the revenue in the period that the  commissions  earned are
          reported to Travelzoo by the e-commerce partner.  Typically,  it takes
          e-commerce  partners  between  two weeks  and  three  months to report
          commissions to us.

     We classify our cost of revenue and operating expenses as follows:

     o    Cost of  Revenues.  Cost of  revenues  consists  of network  expenses,
          including  fees  we pay  for  co-location  services,  depreciation  of
          network   equipment  and  salary  expenses   associated  with  network
          operations staff.

     o    Sales and Marketing. Sales and marketing expenses consist primarily of
          advertising  and  promotional  expenses,  public  relations  expenses,
          conference expenses,  printing fees, sales and marketing compensation,
          including  base  salary  and  sales  commissions,   and  telemarketing
          communications  expenses.  Sales commissions have remained  relatively
          constant as a percentage of revenues, and we expect this to continue.

     o    General  and  Administrative.   General  and  administrative  expenses
          consist  primarily of compensation  for  administrative  and executive
          staff,  fees for  professional  services,  rent,  bad debt expense and
          general office expense.

     For the year  ended  December  31,  1999,  we  reported  pre-tax  income of
approximately  $144,000.  For the nine  months  ended  September  30,  2000,  we
reported pre-tax income of approximately  $744,000. As of December 31, 1999, and
September  30, 2000,  we had  retained  earnings of  approximately  $134,000 and
$571,000, respectively.

     We  intend  to  devote  significant  resources  to  advertising  and  brand
marketing  programs  designed  to  attract  more site  traffic  and more  travel
companies listing their special offers on www.Travelzoo.com. We expect growth in
the number of travel companies listing their special offers on www.Travelzoo.com
to result in substantial growth in advertising revenues, both in terms of dollar
amounts and as a percentage  of total  revenue.  Our strategy  anticipates  that
revenue from advertising will likely be the single largest source of revenue for
us in the immediate future.

     As a result of our  expansion  plans  and our  expectation  that  operating
expenses will increase  significantly  in the next several years,  especially in
the areas of sales and marketing and brand promotion,  we cannot be sure that we
will sustain profitability.

                                       34

<PAGE>

Results of Operations:

     The  following  table sets forth,  as a percentage of total  revenues,  the
results of our operations for the periods indicated:

<TABLE>
<CAPTION>
                                        Period from
                                        May 21, 1998
                                        (Inception)          Year ended                  Nine months ended
                                      to December 31,       December 31,                   September 30,
                                    ------------------- ---------------------- --------------------- ------------------
                                            1998                1999                 1999                 2000
                                    ------------------- ---------------------- --------------------- ------------------
                                                           (As a Percentage of  Total Revenues)
Revenues:
<S>                                           <C>                  <C>                  <C>                  <C>
   Advertising                                68%                  94%                  89%                  97%
   Commissions                                32                    6                   11                    3
                                    ------------------- ---------------------- --------------------- ------------------
      Total revenues                         100                  100                  100                  100
Cost of revenues                              30                   14                   16                    8
                                    ------------------- ---------------------- --------------------- ------------------
      Gross Profit                            70                   86                   84                   92
Operating expenses:
   Sales and marketing                         2                   37                   34                   41
   General and administrative                 27                   34                   47                   24
                                    ------------------- ---------------------- --------------------- ------------------
      Total operating expenses                29                   71                   81                   65
                                    ------------------- ---------------------- --------------------- ------------------
Income before taxes                           41                   15                    3                   27
Income taxes                                   7                    4                    1                   11
                                    ------------------- ---------------------- --------------------- ------------------
      Net income                              34%                  11%                   2%                  16%
                                    =================== ====================== ===================== ==================
</TABLE>


Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
   1999

     Revenues

     Our total  revenues  increased  to $2.8  million for the nine months  ended
September 30, 2000,  from $456,000 for the nine months ended September 30, 1999.
The  increase  in  our  total  revenues  was  primarily  due to an  increase  in
advertising revenues, particularly listing fees for special offers.

     o    Advertising.  Advertising  revenue  increased  to $2.7 million for the
          nine months  ended  September  30,  2000,  from  $405,000 for the nine
          months  ended  September  30, 1999.  This  increase  resulted  from an
          increase   in  the   number  of  travel   companies   advertising   on
          www.Travelzoo.com and an increase in our rates.

     o    Commissions.  Commissions  revenue  increased  to $92,000 for the nine
          months  ended  September  30,  2000,  from $50,000 for the nine months
          ended  September  30,  1999.  This  increase  was due  primarily to an
          increase in the number of site visitors at www.Travelzoo.com.

     Cost of Revenues

     Our cost of  revenues  increased  to  $226,000  for the nine  months  ended
September 30, 2000,  from $75,000 for the nine months ended  September 30, 1999.
As a percentage of revenue, cost of revenues decreased to 8% for the nine months
ended September 30, 2000, from 16% for the nine months ended September 30, 1999.
This  decrease  resulted  primarily  from an increase  in revenues  that was not
offset by an increase in our network operations costs.

     Operating Expenses

     o    Sales and Marketing.  Sales and marketing  expenses  increased to $1.1
          million for the nine months ended  September  30, 2000,  from $156,000
          for the nine months ended  September  30, 1999.  The increase in sales

                                       35

<PAGE>

          and  marketing  expenses was  primarily due to the expansion of online
          advertising  of the  Travelzoo  brand  and  sponsorships  of  industry
          conferences.  In addition,  sales and marketing expenses increased due
          to the hiring of additional sales personnel.

     o    General  and  Administrative.   General  and  administrative  expenses
          increased to $670,000 for the nine months  ended  September  30, 2000,
          from $212,000 for the nine months ended  September  30, 1999.  General
          and  administrative  expenses  increased  primarily  due to  increased
          salaries  and  related  expenses  associated  with  hiring  additional
          administrative personnel.

     Income Taxes

     For the nine months ended  September  30,  2000,  we recorded an income tax
provision of $307,000. For the nine months ended September 30, 1999, we recorded
an income tax provision of $3,000.  The income tax  provisions  were computed by
applying our  effective  federal and state tax rates to the income  before taxes
for the periods. Our income is generally taxed in the U.S. and our effective tax
rates  reflect the U.S.  federal and state  statutory  rates  applicable  to our
levels of income.

Year Ended  December 31, 1999 Compared to the Period from May 21  (inception) to
   December 31, 1998

     Revenues

     Our total  revenues  increased to $954,000 for the year ended  December 31,
1999,  from $84,000 for the period ended  December 31, 1998. The increase in our
total revenues was primarily due to an increase in advertising revenues.

     o    Advertising.  Advertising  revenue  increased to $893,000 for the year
          ended  December 31, 1999,  from $57,000 for the period ended  December
          31, 1998.  This increase  resulted  primarily  from an increase in the
          number of travel companies advertising on www.Travelzoo.com.

     o    Commissions.  Commissions  revenue  increased  to $61,000 for the year
          ended  December 31, 1999,  from $27,000 for the period ended  December
          31, 1998. This increase was primarily due to an increase of the number
          of users of www.Travelzoo.com.

     Cost of Revenues

     Our cost of revenues  increased to $133,000 for the year ended December 31,
1999,  from $25,000 for the period ended  December 31, 1998.  As a percentage of
revenue, cost of revenues decreased to 14% for the year ended December 31, 1999,
from  30% for the  period  ended  December  31,  1998.  This  decrease  resulted
primarily from an increase in revenues that was not offset by an increase in our
network operations costs.

     Operating Expenses

     o    Sales  and  Marketing.  Sales  and  marketing  expenses  increased  to
          $351,000 for the year ended  December  31,  1999,  from $2,000 for the
          period  ended  December  31, 1998,  and  increased as a percentage  of
          revenue to 37% for the year ended  December  31,  1999 from 2% for the
          period ended  December 31, 1998.  The increase in sales and  marketing
          expenses was primarily due to costs associated with advertising and an
          increase in the number of our sales and marketing personnel.

     o    General  and  Administrative.   General  and  administrative  expenses
          increased  to $327,000  for the year ended  December  31,  1999,  from
          $22,000  for  the  period  ended   December  31,  1998.   General  and
          administrative  expenses increased primarily due to increased salaries
          and related expenses associated with hiring additional personnel.

                                       36

<PAGE>

     Income Taxes

     For the year ended  December 31, 1999,  we recorded an income tax provision
of $39,000.  For the period ended  December 31, 1998,  we recorded an income tax
provision of $6,000.  Our income is  generally  taxed in the U.S. and our income
tax provision  principally  reflects  federal and state rates  applicable to our
levels of income.

Quarterly Results of Operations

     The  following  table  sets  forth  a  summary  of our  unaudited  combined
quarterly  results for 1999 and the first nine months of 2000. This  information
was derived from unaudited  combined interim  financial  statements that, in the
opinion  of  management,  have  been  prepared  on a basis  consistent  with the
financial  statements contained elsewhere in this proxy statement and prospectus
and include all adjustments,  consisting of only normal  recurring  adjustments,
necessary for their fair presentation when read in conjunction with the combined
financial  statements  and notes  thereto.  The  results of  operations  for any
quarter are not  necessarily  indicative  of the results of  operations  for any
future period.


<TABLE>
<CAPTION>
                                                                   Quarter Ended
                                   -------------------------------------------------------------------------------
                                   March 31,    June 30,   Sept 30,   Dec 31,    March 31,    June 30,   Sept 30,
                                     1999         1999       1999      1999        2000         2000       2000
                                   ----------   ---------  ---------  --------   ----------   ---------  ---------
                                                                   (In Thousands)

Revenues:
<S>                                 <C>          <C>        <C>        <C>        <C>          <C>        <C>
    Advertising                     $    55      $ 138      $ 212      $ 488      $   728      $  873     $1,088
    Commissions                          18         15         17         11           19          21         52
                                   ----------   ---------  ---------  --------   ----------   ---------  -----------
      Total revenues                     73        153        229        499          747         894      1,140
Cost of revenues                         25         25         25         58           55          74         97
                                   ----------   ---------  ---------  --------   ----------   ---------  -----------
    Gross profit                         48        128        204        441          692         820      1,043
Operating expenses
    Sales and marketing                  13         59         84        195          309         388        444
    General and administrative           34         66        112        115          147         283        240
                                   ----------   ---------  ---------  --------   ----------   ---------  -----------
      Total operating expenses           47        125        196        310          456         671        684
Income before income taxes                1          3          8        131          236         149        359
      Income taxes                        -          1          2         35           98          63        146
                                   ----------   ---------  ---------  --------   ----------   ---------  -----------
         Net income                 $     1      $   2      $   6      $  96      $   138      $   86     $  213
                                   ==========   =========  =========  ========   ==========   =========  ===========
</TABLE>


     The following table sets forth, as a percentage of revenues, our results of
operations for the quarters indicated.

<TABLE>
<CAPTION>

                                                                   Quarter Ended
                               ---------------------------------------------------------------------------------------
                                March 31,    June 30,    Sept 30,     Dec 31,     March 31,     June 30,    Sept 30,
                                  1999         1999        1999        1999         2000          2000        2000
                               ------------  ----------  ----------  ----------  ------------  -----------  ----------
                                                        (As a Percentage of Total Revenues)
Revenues:
<S>                                  <C>         <C>         <C>         <C>           <C>          <C>         <C>
   Advertising                       75%         90%         92%         98%           98%          98%         95%
   Commissions                       25          10           8           2             2            2           5
                               ------------  ----------  ----------  ----------  ------------  -----------  ----------
      Total revenues                100         100         100         100           100          100         100
Cost of revenues                     34          16          11          12             7            8           8
                               ------------  ----------  ----------  ----------  ------------  -----------  ----------
   Gross profit                      66          84          89          88            93           92          92
Operating expenses
   Sales and marketing               18          39          36          39            41           43          39
   General and administrative        47          43          49          23            20           32          21
                               ------------  ----------  ----------  ----------  ------------  -----------  ----------
     Total operating expenses        65          82          85          62            61           75          60
Income before income taxes            1           2           4          26            32           17          32
     Income taxes                     -           1           1           7            14            7          13
                               ------------  ----------  ----------  ----------  ------------  -----------  ----------
         Net income                   1%          1%          3%         19%           18%          10%         19%
                               ============  ==========  ==========  ==========  ============  ===========  ==========
</TABLE>

                                       37

<PAGE>

     Our revenue has increased in each consecutive  quarter since inception as a
result of increased  market  acceptance  of our  services.  Sales and  marketing
expense increased,  primarily as a result of increased advertising  expenditures
and an  increase  in the  number  of our sales and  marketing  personnel.  Sales
commissions have remained relatively  constant as a percentage of revenues,  and
we expect this to  continue.  However,  the timing and  magnitude  of  marketing
initiatives have caused,  and will continue to cause,  fluctuations in sales and
marketing  expense as a  percentage  of  revenues.  General  and  administrative
expense has  increased in every  quarter  since  inception due to an increase in
personnel,  facilities  and  increased  spending  on  internal  operational  and
financial infrastructure.

     In light of the  evolving  nature of our  business  and  limited  operating
history,  we  believe  that  period  to  period  comparisons  of our  historical
operating  results  may not be  meaningful  and  should  not be  relied  upon as
indications  of future  performance.  Although  we have  experienced  sequential
quarterly  revenue growth since inception,  our historical  revenue growth rates
are not necessarily indicative of future revenue growth rates.

Liquidity and Capital Resources

     As of September  30, 2000,  we had $474,000 in cash.  Cash  increased  from
$11,000 on December 31, 1999  primarily as a result of net income and  increases
in income tax payable and payable to employee  offset by  increases  in accounts
receivable and capital  expenditures  made during the period. As of December 31,
1998, we had $12,000 in cash. Cash remained at a consistent  level at the end of
1999 due to net income for the period and  increases  in  operating  liabilities
offset by increases in  receivables.  We expect that cash flows  generated  from
operations  will continue to be sufficient to provide for working  capital needs
in the near future.

     Since inception,  we financed our activities  primarily  through cash flows
generated from  operations.  In addition,  we sold common stock to Ralph Bartel,
our  founder and Chief  Executive  Officer,  for $60,000 in cash and  received a
non-interest  bearing  loan of $40,000  from Ralph  Bartel.  Ralph  Bartel  owns
approximately   52%   of   our   outstanding    shares.   See   "Related   Party
Transactions--Transactions Involving Ralph Bartel" on page 43.

     Net cash  generated  from  operating  activities was $4,000 during 1999 and
$601,000 for the nine months ended  September 30, 2000.  Net cash generated from
operating  activities  resulted  primarily  from our net  income,  adjusted  for
certain non-cash items, and increases in accounts payable and accrued  expenses,
partly offset by a higher level of accounts  receivable due to increased  sales.
In 1998, net cash used in operating  activities was $24,000,  principally due to
our net income being exceeded by the increase in our accounts receivable.

     Net cash used in investing  activities  was $24,000  during 1998 and $6,000
during 1999. In 1998, net cash was used in investing activities for purchases of
equipment   and  a  loan   provided  to  Ralph   Bartel.   See  "Related   Party
Transactions--Transactions Involving Ralph Bartel" on page 43. In 1999, net cash
was used in investing  activities  for purchases of equipment,  partly offset by
the repayment of the loan by Ralph Bartel.  For the nine months ended  September
30, 2000,  net cash used in  investment  activities  was $181,000 due to capital
expenditures for equipment.

     Net cash  provided by financing  activities  was $60,000  during  1998,  $0
during 1999 and $44,000 for the nine months ended  September  30,  2000.  During
2000, we generated net cash from financing activities by a  non-interest-bearing
loan  received  from Mr.  Ralph  Bartel and by sales of our common  stock to Mr.
Bartel and exercise of stock  options by an employee.  In 1998, we generated net
cash  from  financing  activities  from the sale of common  stock to Mr.  Bartel
described above.

     We believe that our cash flows  generated from  operations will continue to
be sufficient to provide for our working  capital needs in the near future.  Our
capital  requirements  will  depend on a number  of  factors,  including  market
acceptance of our products and  services,  the amount of our resources we devote

                                       38

<PAGE>

to  www.Travelzoo.com  and  expansion  of our  operations  and the amount of our
resources we devote to promoting  awareness of the Travelzoo  brand.  Consistent
with our growth,  we have  experienced a  substantial  increase in our sales and
marketing expenses, capital expenditures since inception, and we anticipate that
these increases will continue for the foreseeable future. In addition, we expect
significant expenses to occur in the fourth quarter of 2000 and first quarter of
2001 related to the  consummation of the merger described herein and the related
registration  of our shares with the SEC. We believe cash on hand and  generated
during those periods will be sufficient to pay such  expenses.  In addition,  we
will  continue to evaluate  possible  investments  in  businesses,  products and
technologies,  the  consummation  of any of which  would  increase  our  capital
requirements.

     Although we currently believe that we have sufficient  capital resources to
meet our anticipated working capital and capital expenditure requirements beyond
the next 12 months,  unanticipated  events and  opportunities  may require us to
sell additional  equity or debt securities or establish new credit facilities to
raise capital in order to meet our capital  requirements.  If we sell additional
equity or convertible  debt  securities,  the sale could dilute the ownership of
our existing stockholders. If we issue debt securities or establish a new credit
facility, our fixed obligations could increase and result in operating covenants
that would  restrict our  operations.  We cannot be sure that any such financing
will be available in amounts or on terms acceptable to us.

Recent Accounting Pronouncements

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities.  SFAS No.
133,  as  amended  by SFAS  No.  137,  Deferral  of the  Effective  Date of FASB
Statement  No.  133,  and  SFAS  No.  138,  Accounting  for  Certain  Derivative
Instruments and Certain Hedging  Activities,  an Amendment of FASB Statement No.
133, established  accounting and reporting standards for derivative  instruments
and requires  recognition  of all  derivatives  as assets or  liabilities in the
statement of financial  position and  measurement  of those  instruments at fair
value.  SFAS No.  133 is  effective  for all  fiscal  quarters  of fiscal  years
beginning  after June 15,  2000.  We will adopt the  standard  no later than the
first quarter of fiscal 2001, and are in the process of  determining  the impact
that adoption will have on the combined financial statements.

     In December 1999, the SEC issued Staff  Accounting  Bulletin (SAB) No. 101,
Revenue  Recognition  in Financial  Statements,  as amended by SAB Nos. 101A and
101B, which provides guidance on the recognition,  presentation,  and disclosure
of revenue in financial  statements filed with the SEC. SAB No. 101 outlines the
basic criteria that must be met to recognize  revenue and provides  guidance for
disclosure related to revenue recognition policies. We will adopt SAB No. 101 in
the fourth quarter of 2000, and have  determined  that adoption will not have an
impact on the combined financial statements.

                                       39

<PAGE>

                     VOTING SECURITIES AND PRINCIPAL HOLDERS

     The  following  table shows,  as of December 31,  2000,  information  about
record and  beneficial  ownership of our shares by our  directors  and executive
officers and by any persons known to us to be the beneficial  owner of more than
5% of our common stock:


<TABLE>
<CAPTION>

                                   Name and Address of          Amount and Nature of
        Title of Class               Beneficial Owner             Beneficial Owner             Percent of Class
----------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                                <C>
Common Stock                   Ralph Bartel                       5,910,000 shares                   52%
                               800 West El Camino Real,
                                 Suite 180
                               Mountain View, CA 94040

Common Stock                   Suzanne L. Durfee                     10,000 (1)                       *
                               2516 Octavia 1
                               San Francisco, CA 94123

Common Stock                   David J. Ehrlich                      10,000 (1)                       *
                               290 Beacon Street
                               San Francisco, CA 94131

Common Stock                   Suzanna Mak                           10,000 (1)                       *
                               1709 Sapphire Court
                               Davis, CA 95616

Common Stock                   Donovan Neale-May                    110,000 (1)                       1%
                               409 Sherman Avenue
                               Palo Alto, CA 94301

Common Stock                   Carol J. S. Roth                      10,000 (1)                       *
                               1643 Johnson Drive, #418
                               Buffalo Grove, IL 60089

Common Stock                   Kelly M. Urso                         10,000 (1)                       *
                               38 Brookwood Drive
                               Newton, CT 06470

Common Stock                   All directors and officers         6,070,000 shares                   54%
                                 as a group

<FN>

* Less than one percent.

(1)  Record and beneficial ownership.
</FN>
</TABLE>


                                       40

<PAGE>

                                   MANAGEMENT

     The following  table sets forth, as of December 31, 2000, the name, age and
position within Travelzoo of each of our directors and executive officers.


<TABLE>
<CAPTION>

                Name                        Age                                 Position
-------------------------------------    -----------     -------------------------------------------------------
<S>                                          <C>
Ralph Bartel                                 34          President, Chief Executive officer, Secretary, and
                                                           Chairman of the Board of Directors
Lisa Su                                      25          Controller
Suzanne L. Durfee                            34          Director
David J. Ehrlich                             38          Director
Suzanna Mak                                  32          Director
Donovan Neale-May                            48          Director
Carol J. S. Roth                             27          Director
Kelly M. Urso                                35          Director
</TABLE>


     Ralph Bartel founded Travelzoo in May 1998 and has served as our President,
Chief Executive  Officer and Chairman of the Board of Directors since inception.
Prior to his founding of  Travelzoo,  from 1996 to 1997,  Mr.  Bartel  served as
Managing Assistant at Gruner + Jahr AG, the magazine division of Bertelsmann AG.
Mr.  Bartel  holds a Ph.D.  in  Communications  from the  University  of  Mainz,
Germany,  an MBA in  Finance  and  Accounting  from  University  of St.  Gallen,
Switzerland,  and a Master's degree in Journalism from University of Eichstaett,
Germany.

     Lisa Su joined  Travelzoo on October 1, 2000.  From April 1999 to September
2000,  Ms. Su was a Treasury  Accountant  for Webvan Group,  Inc. Ms. Su holds a
bachelor's degree in economics/accounting from Claremont McKenna College.

     Suzanne L. Durfee has served as a director since February 1999. Since 1999,
Ms. Durfee has been employed as Director of Sales for BBC, a San Francisco based
catering  service.  From 1996 to 1999,  Ms. Durfee  worked as a Corporate  Sales
Manager  for  Budget  Rent-A-Car.  From  1990 to 1996,  Ms.  Durfee  worked as a
Marketing Director for a regional charter airline. Ms. Durfee holds a bachelor's
degree in communications from Southern Connecticut State University.

     David J. Ehrlich has served as a director since February 1999.  Since 1998,
Mr. Ehrlich has been employed by for Visual  Networks,  Inc., where he currently
holds  the  position  of  Vice  President,   Product  Management  and  Strategic
Partnering.  Mr.  Ehrlich holds a bachelor's  degree in Sociology and a master's
degree  in  Industrial  Engineering  from  Stanford  University  and an MBA from
Harvard Business School.

     Suzanne Mak has served as a director since February 1999. Since March 2000,
she has been employed as a Deputy District  Attorney for Yolo County.  From 1998
to 1999, Ms. Mak served as a Judicial  Officer at Stanford  University.  Ms. Mak
received her  bachelor's  degree from Stanford  University  and her Juris Doctor
degree from Santa Clara University.

     Donovan Neale-May has served as a director since February 1999. Since 1987,
Mr.  Neale-May is President of Neale-May & Partners,  a strategic  marketing and
public   relations   firm  with  80   full-time   communications   professionals
headquartered in Palo Alto, California.

     Carol J. S. Roth has served as a director since February 1999. From 1995 to
July 2000, Ms. Roth was an investment banker at Bank of America  Securities LLC.
In July,  2000,  Ms. Roth  co-founded  Roth Advisors,  Inc., an investment  bank
focusing on  start-ups  and  early-state  growth  companies.  She  received  her
bachelor's  degree from The Wharton  School of  Business  at the  University  of
Pennsylvania.

     Kelly M. Urso has served as a director since February 1999. Since 1997, Ms.
Urso  works at  General  Electric  International,  Inc.,  where  she  leads  the
expatriate  tax  group.   Ms.  Urso  holds  a  bachelor's   degree  in  business

                                       41

<PAGE>

administration  from  University  of  Cincinnati  and a Juris Doctor degree from
Thomas M. Cooley Law School in Lansing, Michigan.

Election of Directors

     The current  members of our board of  directors,  other than Ralph  Bartel,
were  initially   elected  on  November  20,  1999,  at  an  online  meeting  of
stockholders. They had been nominated in response to a request sent by Travelzoo
to its stockholders requesting nominations to serve on the board.

Director Compensation

     Except  as  reflected  above,  we have  not paid  any  compensation  to our
directors  during 2000. In 1999,  each director was granted 5,000 shares (10,000
after the  two-for-one  split) of our  common  stock in  compensation  for their
services as a director.  We  reimburse  directors  for their  reasonable  travel
expenses incurred in connection with attending board meetings.

Employment Agreements

     Ralph Bartel has entered into an employment  agreement with us. His current
employment  agreement  became  effective on October 1, 2000, and provides for an
annual salary of $192,000.  We may terminate the agreement with or without cause
by delivering two weeks' advance written notice to Mr. Bartel.  He may terminate
his employment  agreement with or without cause by delivering two weeks' advance
written notice to us.

     Mr.  Bartel has agreed not to compete  with us,  solicit our  suppliers  or
employees  or  reveal  our  confidential  information  during  the  term  of his
employment  agreement and for one year  thereafter.  In addition,  Mr. Bartel is
bound by a proprietary  inventions  agreement  which  prohibits him from,  among
other things, disseminating or using confidential information about our business
or clients in any way that would be adverse to us.

Executive Compensation

     The  following  table  sets  forth  summary   information   concerning  all
compensation we paid our Chief Executive  officer during the year ended December
31, 1999. We did not pay any other executive officer over $100,000 in 1999.


<TABLE>
<CAPTION>

                           Summary Compensation Table

                                                                              Long Term
                                            Annual Compensation             Compensation
                                       -----------------------------------------------------------
                                                                          Shares Underlying           All Other
      Name and Principal Position       Salary ($)(1)  Bonus ($)(1)          Options (#)             Compensation
----------------------------------------------------------------------------------------------------------------------
Ralph Bartel
<S>                                    <C>            <C>                        <C>                     <C>
   President, Chief Executive Officer,
   Secretary                           $  96,000      $  50,000                  --                      --
<FN>

     (1) This  compensation  was provided by Silicon  Channels.  Mr. Bartel received no compensation  directly from
Travelzoo.
</FN>
</TABLE>



Stock Option Plan

     We do not  currently  have any  stock  option  plan or other  equity  based
compensation  plans in effect.  Management  anticipates  that an employee  stock
option plan may be implemented in the future.

                                       42

<PAGE>

            CERTAIN TRANSACTIONS BETWEEN TRAVELZOO AND ITS AFFILIATES

Silicon Channels Corporation

     Silicon Channels  Corporation,  formerly an affiliate of Travelzoo Bahamas,
was  incorporated  in  California on September 28, 1998 with Ralph Bartel as the
sole  stockholder.  Silicon Channels did business under the name  "Travelzoo.com
Sales, Inc." On October 10, 1998, Travelzoo.com Corporation and Silicon Channels
Corporation  entered into a letter agreement  whereby Silicon Channels agreed to
manage the technical platform,  marketing,  customer support and billing for the
classified  publishing business of the Travelzoo.com  website in return for a 5%
commission on the quarterly net income from such business.  The October 10, 1998
agreement  was  subsequently  replaced by a Service  Agreement  dated January 2,
1999. In the January 2, 1999 Agreement,  Silicon  Channels agreed to perform all
operation  services with respect to the Travelzoo.com  website in return for 50%
of the net income before taxes generated from the operation of the Travelzoo.com
website.  All  assets,  other than the domain  name  Travelzoo.com,  used in the
operation of the Travelzoo.com website were owned by Silicon Channels.

Exchange of Shares of Silicon Channels

     During 2001 the board of directors of Travelzoo Bahamas  determined that it
was advisable to combine the operations of Silicon  Channels with the operations
of Travelzoo.  In  anticipation  of the  combination,  Travelzoo  Bahamas formed
Travelzoo  Delaware,  a  Delaware  company  and  a  wholly-owned  subsidiary  of
Travelzoo  Bahamas.  Because of his position as the  controlling  stockholder of
both Travelzoo Bahamas and Silicon  Channels,  Mr. Bartel requested the board of
directors  of  Travelzoo  Bahamas  to  designate  an  independent  committee  of
disinterested  directors  to evaluate,  negotiate  and approve the terms of such
transaction.  To assist in the process,  Travelzoo  Bahamas  retained The Mentor
Group to prepare a valuation of Travelzoo Bahamas and Silicon  Channels,  and to
render a fairness opinion relating to the transaction.

     Based on discussions with the independent committee, Mr. Bartel submitted a
proposal to Travelzoo Bahamas of the terms on which he was willing to contribute
the shares of Silicon Channels to Travelzoo Delaware. The Mentor Group delivered
its opinion to the independent  committee that, assuming the merger of Travelzoo
Bahamas into Travelzoo  Delaware is consummated,  the  contribution of shares of
Silicon Channels to Travelzoo Delaware was fair, from a financial point of view,
to the  shareholders  of Travelzoo  Bahamas and Travelzoo  Delaware.  The Mentor
Group's  fairness  opinion is more fully described below in the section entitled
"Opinion of Travelzoo Financial Advisor" on page 44.

     After  discussion and  negotiations  between Mr. Bartel and the independent
committee,  and after  considering the opinion provided by The Mentor Group, the
independent  committee  approved the proposal  submitted  by Mr.  Bartel,  under
which:

     o    Mr. Bartel would  contribute all of the outstanding  shares of Silicon
          Channels to Travelzoo Delaware, a newly-formed subsidiary of Travelzoo
          Bahamas;

     o    Travelzoo  Delaware  would issue an aggregate  of 8,129,273  shares of
          common  stock  to Mr.  Bartel,  representing  42%  of the  outstanding
          shares; and

     o    Travelzoo  Delaware  would  issue to Mr.  Bartel  options  to  acquire
          2,158,349 shares of common stock of Travelzoo  Delaware at an exercise
          price of $1.00 per share,  exercisable at any time during the ten-year
          period following the date of issuance.

     Mr.  Bartel and  Travelzoo  Delaware  entered into this  agreement  and the
transaction was completed on January 22, 2001. The shares of Travelzoo  Delaware
which are now held by  Travelzoo  Bahamas  will be  cancelled as a result of the
merger,  as described  under "The Merger" on page 16. Silicon  Channels is now a
wholly-owned subsidiary of Travelzoo Delaware. Travelzoo Bahamas now owns 58% of

                                       43

<PAGE>

Travelzoo Delaware and Mr. Bartel owns 42% of Travelzoo Delaware,  which will be
the surviving  corporation of the merger  described in this proxy  statement and
prospectus.

     On June 21,  1999,  Mr.  Bartel  filed with the U.S.  Patent and  Trademark
Office to register the trademark "Travelzoo," and it was registered with the PTO
on January 23, 2001. On January 22, 2001, Mr. Bartel  transferred  the ownership
of the pending trademark "Travelzoo" to Travelzoo Delaware.

     In 2000, Mr. Bartel loaned Silicon  Channels $40,000 on an unsecured basis.
The loan did not bear interest and was repayable on or before December 31, 2000.
On December 31, 2000, Mr. Bartel agreed to extend the loan until March 31, 2001.

Opinion of Travelzoo Financial Advisor

     Travelzoo  Bahamas  retained  The Mentor  Group to prepare a  valuation  of
Travelzoo  Bahamas  and Silicon  Channels,  and to render its opinion as to such
transaction to the independent  committee of our board of directors.  The Mentor
Group was given the opportunity to review certain financial information relating
to Travelzoo Bahamas and Silicon Channels and to discuss the business operations
and  financial  condition of  Travelzoo  Bahamas and Silicon  Channels  with our
management of each  company.  Based on such review and  discussions,  The Mentor
Group rendered its opinion that,  after taking into account the proposed  merger
of Travelzoo  Bahamas into  Travelzoo  Delaware on the terms  described  herein,
Ralph  Bartel's  contribution  of all of the  issued and  outstanding  shares of
capital  stock of  Silicon  Channels  to  Travelzoo  Delaware  in  exchange  for
8,129,273  shares of common stock of Travelzoo  Delaware and options to purchase
2,158,349  shares  of  common  stock of  Travelzoo  Delaware  was  fair,  from a
financial point of view, to the shareholders of Travelzoo  Bahamas and Travelzoo
Delaware.

                                       44

<PAGE>
                     TRAVELZOO DELAWARE CHARTER AND BY-LAWS

     Upon completion of the merger,  the articles of  incorporation of Travelzoo
Delaware will be in substantially  the form set forth in Annex B and the by-laws
of Travelzoo Delaware will be in substantially in the form set forth on Annex C.
For a summary of the material  provisions of the articles of  incorporation  and
by-laws of, and the rights of stockholders under these articles of incorporation
and by-laws,  see  "Description  of Capital  Stock" and  "Comparative  Rights of
Stockholders."

                          DESCRIPTION OF CAPITAL STOCK

General

     We are authorized to issue 40,000,000  shares of our common stock, $.01 par
value, and 5,000,000 shares of undesignated preferred stock, $.01 par value. The
following  description  of our capital  stock is subject to and qualified by our
certificate of incorporation and by-laws,  which are included as Annexes to this
proxy  statement and  prospectus,  and by the provisions of applicable  Delaware
law.

Common Stock

     The holders of our common  stock are  entitled to one vote per share on all
matters to be voted upon by our stockholders. Subject to preferences that may be
applicable to any outstanding  preferred  stock, the holders of our common stock
are entitled to receive such dividends,  if any, as may be declared from time to
time by our board of directors out of funds legally  available for that purpose.
In the event of our  liquidation,  dissolution or winding up, the holders of our
common stock are entitled to share ratably in all assets remaining after payment
of liabilities,  subject to prior distribution rights of our preferred stock, if
any,  then  outstanding.  The holders of our common stock have no  preemptive or
conversion rights or other subscription rights.

     We will  have the  right to  redeem  all,  and not less  than  all,  of the
outstanding  common stock held by a Triggering  Holder (as defined below) at any
time or times on or after a Triggering  Event (as defined  below) at a price per
share of common stock equal to:

     o    if there is no public  market for our common  stock,  the fair  market
          value  per share of our  common  stock as  determined  by our Board of
          Directors, or

     o    if our common stock has an  established  public  trading  market,  the
          market value per share of the common stock.

     We must  exercise our right to redeem our common  stock by  providing  each
Triggering  Holder  written  notice by electronic  mail,  facsimile or overnight
courier,  after the occurrence of a Triggering  Event.  Such written notice must
indicate the anticipated  date on which we will redeem the shares. 

     A  "Triggering  Event" shall be deemed to have  occurred at such time as we
receive  revocation  by any holder of our common stock of consent to  electronic
notice and  communications  from us. A "Triggering  Holder" is any holder of our
common stock who takes action resulting in a Triggering Event.

Preferred Stock

     Our  board  of  directors  has  the   authority,   without  action  by  the
stockholders,  to designate and issue our preferred  stock in one or more series
and to designate the rights,  preferences  and privileges of each series,  which
may be greater than the rights of our common stock.  It is not possible to state
the actual effect of the issuance of any shares of our preferred  stock upon the
rights of holders of our common  stock until the board of  directors  determines
the specific rights of the holders of our preferred stock.  However, the effects
might include:

     o    restricting dividends on our common stock; 

                                       45

<PAGE>

     o    diluting the voting power of our common stock;

     o    impairing the liquidation rights of our common stock; or

     o    delaying  or  preventing  a change of control  of us  without  further
          action by our stockholders.

     At the completion of the merger,  no shares of our preferred  stock will be
outstanding,  and we have no present  plans to issue any shares of our preferred
stock.

Anti-Takeover  Effects of Our  Certificate  of  Incorporation  and  By-laws  and
    Delaware Law

     Some  provisions of Delaware law and our certificate of  incorporation  and
by-laws could make the following more difficult:

     o    acquisition of us by means of a tender offer;

     o    acquisition of us by means of a proxy contest or otherwise; or

     o    removal of our incumbent officers and directors.

     These provisions are intended to discourage coercive takeover practices and
inadequate  takeover  bids.  These  provisions  also are  designed to  encourage
persons  seeking to acquire  control of us to first  negotiate with our board of
directors.  We believe  that the benefits of  increased  protection  give us the
potential   ability  to  negotiate  with  the  proponent  of  an  unfriendly  or
unsolicited proposal to acquire or restructure us and outweigh the disadvantages
of  discouraging  such proposals  because  negotiation  of such proposals  could
result in an improvement of their terms.

Stockholder Meetings

     Under our  by-laws,  only our Chairman of the Board,  our  President or our
board of directors may call special meetings of our stockholders.

Requirements for Advance Notification of Stockholder Nominations and Proposals

     Our by-laws establish advance notice procedures with respect to stockholder
proposals and  nomination of  candidates  for election as directors,  other than
nominations made by or at the direction of our board of directors.

Delaware Anti-Takeover Law

     Section 203 of the Delaware General  Corporation Law generally  prohibits a
publicly held  Delaware  corporation  from engaging in a "business  combination"
with an "interested  stockholder" for a period of three years following the date
the person became an interested  stockholder,  unless the "business combination"
or the  transaction  in which the person  became an  interested  stockholder  is
approved in a prescribed  manner.  A "business  combination"  includes a merger,
asset or stock sale, or other  transaction  resulting in a financial  benefit to
the  interested  stockholder.  An  "interested  stockholder"  is a  person  who,
together with affiliates and associates, owns or within three years prior to the
determination  of  interested  stockholder  status,  did  own,  15% or more of a
corporation's  voting stock.  Section 203 may have an anti-takeover  effect with
respect to transactions  not approved in advance by our board of directors,  and
may discourage attempts that might result in a premium over the market price for
the shares of common stock held by stockholders.

No Cumulative Voting

     Our certificate of incorporation  and by-laws do not provide for cumulative
voting in the election of directors.

                                       46

<PAGE>

Undesignated Preferred Stock

     The authorization of undesignated preferred stock makes it possible for our
board of directors to issue our  preferred  stock with voting or other rights or
preferences  that could  impede the success of any attempt to change  control of
us.  These  and  other  provisions  may have the  effect  of  deferring  hostile
takeovers or delaying changes of control of our management.

                           BOOK-ENTRY SHARE OWNERSHIP

     The share register of Travelzoo Bahamas has been maintained electronically,
and  share  certificates  have not  been  issued.  Ownership  of the  shares  of
Travelzoo  Delaware will also be on a book-entry  basis  initially,  and we will
encourage our  shareholders to continue holding their shares in book-entry form,
and effecting  any purchases or sales of their shares on a book entry basis.  On
exchange  of your  shares of common  stock of  Travelzoo  Bahamas  for shares of
common stock of Travelzoo Delaware,  your ownership interest will be credited to
an account maintained in your name by the firm we designate as our registrar and
transfer  agent.  Shareholders  will  have  the  right  to  request  that  share
certificates be issued to them, but we expect to charge a fee for such issuance.

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The  Delaware  General  Corporation  Law permits the  indemnification  by a
Delaware  corporation  of its  directors,  officers,  employees and other agents
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in  settlement in  connection  with  specified  actions,  suits or  proceedings,
whether civil, criminal,  administrative or investigative (other than derivative
actions which are by or in the right of the  corporation)  if they acted in good
faith and in a manner  they  reasonably  believed to be in or not opposed to the
best interests of the  corporation,  and, with respect to any criminal action or
proceeding,  had no reasonable  cause to believe  their conduct was unlawful.  A
similar standard of care is applicable in the case of derivative actions, except
that  indemnification  only  extends to  expenses  (including  attorneys'  fees)
incurred in connection with defense or settlement of such an action and requires
court approval before there can be any indemnification  where the person seeking
indemnification has been found liable to the corporation.

     As permitted by Delaware law, the certificate of incorporation of Travelzoo
Delaware  provides  that no  director  will be  personally  liable to  Travelzoo
Delaware or its  stockholders  for monetary damages for breach of fiduciary duty
as a  director,  except for  liability  (a) for any breach of duty of loyalty to
Travelzoo or to its stockholders, (b) for acts or omissions not in good faith or
that involve  intentional  misconduct  or a knowing  violation of law, (c) under
Section 174 of the Delaware General  Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit.

     The certificate of  incorporation  of Travelzoo  Delaware  further provides
that we must  indemnify our  directors and executive  officers and may indemnify
our other officers and employees and agents to the fullest  extent  permitted by
Delaware  law.  We  believe  that  indemnification   under  our  certificate  of
incorporation  covers negligence and gross negligence on the part of indemnified
parties.

     Travelzoo Delaware has entered into indemnification agreements with each of
its directors and officers. These agreements,  among other things, require us to
indemnify such directors and officers for certain expenses (including attorneys'
fees),  judgments,  fines and settlement  amounts incurred by any such person in
any action or proceeding,  including any action by or in the right of Travelzoo,
arising out of such person's services as a director or officer of Travelzoo, any
subsidiary  of Travelzoo or any other  company or enterprise to which the person
provides services at our request.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our  directors,  officers  and  controlling  persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in

                                       47

<PAGE>

the opinion of the Securities and Exchange  Commission such  indemnification  is
against public policy as expressed in the Act and is, therefore, unenforceable.

                       COMPARATIVE RIGHTS OF STOCKHOLDERS

     As a result of the merger,  the  stockholders of Travelzoo  Bahamas,  whose
rights are currently  governed by the Bahamas  International  Business Companies
Act 1989, the  Memorandum and Articles of Association of Travelzoo,  will become
stockholders  of Travelzoo  Delaware,  whose rights will be governed by Delaware
law, the  Travelzoo  Delaware  certificate  of  incorporation  and the Travelzoo
Delaware by-laws. The following discussion is intended only to highlight certain
material differences between the rights of corporate stockholders under Bahamian
law and Delaware law generally and specifically  with respect to stockholders of
Travelzoo  Bahamas and  stockholders  of  Travelzoo  Delaware  pursuant to their
respective  charters and by-laws.  The discussion does not constitute a complete
comparison  of the  differences  between  the  rights  of  such  holders  or the
applicable  provisions of the BIBC, the DGCL, the Travelzoo  Bahamas  Memorandum
and Articles and the Travelzoo Delaware certificate and by-laws.

Election of Directors

     Under  Delaware  law,  directors,  unless  their terms are  staggered,  are
elected at each annual stockholder meeting.  Vacancies on the board of directors
may be filled by the  stockholders  or  directors,  unless  the  certificate  of
incorporation  or a bylaw provides  otherwise.  The certificate of incorporation
may authorize the election of certain directors by one or more classes or series
of shares,  and the  certificate of  incorporation,  an initial bylaw or a bylaw
adopted by a vote of the  stockholders  may provide for staggered  terms for the
directors.  The certificate of  incorporation  or the by-laws also may allow the
stockholders or the board of directors to fix or change the number of directors,
but a corporation must have at least one director.

     The  Travelzoo  Delaware  board of  directors,  which will consist of seven
members  following  completion  of the  merger,  has not been  established  with
staggered  terms for  directors  or  divided  into  classes.  Subject to certain
restrictions,  nominations  to the Travelzoo  Delaware board of directors may be
made by either  the board or  stockholders.  Each  share of  Travelzoo  Delaware
common  stock is entitled to one vote per share with  respect to the election of
directors (and each other matter coming before any meeting of the stockholders).
Under Delaware law, stockholders do not have cumulative voting rights unless the
certificate of incorporation  so provides.  The Travelzoo  Delaware  certificate
does not provide for cumulative voting, so stockholders holding more than 50% of
the outstanding  shares entitled to vote may be able to elect all members of the
board of directors.

     Under Bahamian law,  directors are elected by stockholders for such term as
the  stockholders  may  prescribe.  The  Memorandum or Articles of a company may
authorize  the  directors to elect  directors  for such term as they  prescribe.
Currently, the Travelzoo Bahamas Articles of Association provide that the number
of members of the Travelzoo  Bahamas  board of directors  shall be at least one,
but not more than seven. The Travelzoo Bahamas Memorandum of Association and the
Travelzoo  Bahamas  Articles of Association do not provide for a staggered board
of directors. The Travelzoo Bahamas Articles state that either the directors' or
members'  resolution  for election of any  director  shall state the term of the
directed  thereby.  Under  Bahamian  law,  all shares vote as one class and each
whole share has one vote unless the Memorandum or Articles state otherwise.  The
Travelzoo Bahamas Memorandum and Articles do not provide for cumulative voting.

Removal of Directors

     Under Delaware law,  non-classified  directors,  or the entire board may be
removed with or without  cause,  by the holders of a majority of the shares then
entitled to vote at an election of the directors.

                                       48

<PAGE>

     Under Bahamian law, a director remains in office until his successors takes
office, or until his death, resignation or removal. If the director is a company
then it  remains  in office  until the  making  of an order  for  winding  up or
dissolution  or in the event the  company  becomes  defunct.  A director  can be
removed if not less than three (3) directors  request his resignation in writing
unless the Memorandum or Articles or any unanimous agreement of the stockholders
limit this right.  A director may resign by giving written notice to the company
expressing  the intent to  resign.  The  Travelzoo  Bahamas  Articles  contain a
provision that directors may be removed by resolution of the  stockholders or by
other directors if at least two directors request resignation in writing.

Action by Written Consent

     Delaware  law  provides  that,   unless  limited  by  the   certificate  of
incorporation,  any action that could be taken by  stockholders at a meeting may
be taken without a meeting if a consent (or consents) in writing,  setting forth
the action so taken,  is signed by the  holders of record of  outstanding  stock
having not less than the  minimum  number of votes that  would be  necessary  to
authorize or take such action at a meeting at which all shares  entitled to vote
thereon  were  present  and  voted.  The  Travelzoo   Delaware   certificate  of
incorporation does not limit such action by written consent.

     Bahamian law provides that,  unless limited by the Memorandum,  Articles or
any  unanimous  stockholder  agreement,  any  action  that  may be  taken by the
directors  or a  committee  of  directors  at a  meeting  may also be taken by a
resolution  of directors  or a committee  of directors  consented to in writing,
telex,  telefax,  telegram,  cable or other  written  electronic  communication.
Bahamian law does not require notice under this provision.  Also, unless limited
by the  Memorandum  or  Articles,  stockholders  may take any action that may be
taken by members at a meeting  by  resolution  of all  members  consented  to in
writing,  telex, telefax,  cable or other written electronic  communication.  As
with  consents of directors,  no notice is required  under this  provision.  The
Travelzoo  Bahamas  Memorandum  and Articles do not provide for taking action by
written consent.

Amendments to Charter

     Under Delaware law,  unless a higher vote is required in the certificate of
incorporation, an amendment to the certificate of incorporation of a corporation
may be approved by a majority of the  outstanding  shares  entitled to vote upon
the proposed amendment. The Travelzoo Delaware certificate of incorporation does
not require a higher vote to amend its terms and provisions.

     Under Bahamian law, unless the Memorandum or Articles limit amendment,  the
Articles may be amended by resolution of the directors. A copy of any resolution
authorizing  the  amendment to the Articles  shall be submitted to the Registrar
with proper  authentication.  The amendment will take effect from the time it is
registered  with the  Registrar.  Companies  that  willfully,  and Directors who
knowingly, permit the amendment to not be submitted to the Registrar are subject
to monetary penalties.  The Travelzoo Bahamas Memorandum of Association provides
that the Memorandum may be amended by the directors or the stockholders.

Amendments to By-laws

     Delaware law provides that a  corporation's  by-laws may be amended by that
corporation's stockholders,  or, if so provided in the corporation's certificate
of  incorporation,  the power to amend  the  corporation's  by-laws  also may be
conferred on the corporation's directors. The Travelzoo Delaware by-laws provide
that the board of  directors  may amend,  repeal or alter the  by-laws,  but the
stockholders  may make  additional  by-laws  and may alter or repeal  any by-law
whether or not adopted by the directors.

     Under Bahamian law, unless the Memorandum or Articles limit amendment,  the
Memorandum  may be  amended  by  resolution  of  the  directors.  A copy  of any
resolution authorizing the amendment to the Memorandum shall be submitted to the
Registrar  with proper  authentication.  The amendment will take effect from the

                                       49

<PAGE>

time  it is  registered  with  the  Registrar.  Companies  that  willfully,  and
Directors  who  knowingly,  permit  the  amendment  to not be  submitted  to the
Registrar are subject to monetary  penalties.  The Travelzoo Bahamas Articles of
Association   provide  that  they  may  be  amended  by  the  directors  or  the
stockholders unless the Articles  specifically  provide that a resolution of the
directors  is subject to the  resolution  of the  stockholders.  In such case an
amendment must be approved by a resolution of the stockholders.

Special Meetings of Stockholders

     Delaware  law  provides  that  special  meetings of the  stockholders  of a
corporation  may be called by the  corporation's  board of  directors or by such
other  persons  as  may  be  authorized  in  the  corporation's  certificate  of
incorporation  or by-laws.  The Travelzoo  Delaware by-laws provide that special
meetings may only be called by the Travelzoo  Delaware  board of directors,  the
Chairman of the Travelzoo Delaware board or the President of Travelzoo Delaware.

     Bahamian law provides  that meetings of the  stockholders  may be called by
the  directors  of the  company,  unless the  Memorandum,  Articles or unanimous
stockholder agreement provides otherwise. In addition,  subject to any provision
in the  Memorandum,  Articles or a less than  unanimous  stockholder  agreement,
stockholders  comprising more than 50% of the votes of outstanding shares may by
written  request compel the directors to convene a meeting of the  stockholders.
The Travelzoo  Bahamas  Articles provide that a special meeting may be called by
the Travelzoo  Bahamas board of directors or the holders of more than 50% of all
the outstanding voting shares of Travelzoo Bahamas.

Vote on Extraordinary Corporate Transactions

     Delaware law provides that,  unless otherwise  specified in a corporation's
certificate of  incorporation  or unless the provisions of Delaware law relating
to  "business  combinations"  discussed  below are  applicable,  a sale or other
disposition of all or substantially all of the corporation's assets, a merger or
consolidation  of the corporation  with another  corporation or a dissolution of
the corporation  requires the affirmative vote of the board of directors (except
in certain limited circumstances) plus, with certain exceptions, the affirmative
vote of a majority  of the  outstanding  stock  entitled  to vote  thereon.  The
foregoing provisions apply to Travelzoo Delaware and its stockholders.

     Bahamian law provides  that any sale,  transfer,  lease,  exchange or other
disposition of more than 50%, by value, of the company must first be approved by
the  directors.   Second,   the  directors  must  submit  the  proposal  to  the
stockholders for it to be authorized by a resolution of the  stockholders.  If a
stockholders meeting is to be called all stockholders must receive notice of the
meeting with an outline of the transaction,  whether or not they are entitled to
vote.  If it is  proposed  to obtain  written  consent,  then an  outline of the
transaction must be given to every  stockholder  whether or not she, he or it is
entitled to vote on the transaction.

Rights of Inspection

     Delaware law allows any stockholder of a Delaware corporation, upon written
demand  under oath  stating the purpose  thereof,  to have the right  during the
usual hours for  business to inspect  for any proper  purpose the  corporation's
stock ledger, a list of its stockholders,  and its other books and records,  and
to make  copies  or  extracts  therefrom.  A  proper  purpose  means  a  purpose
reasonably related to such person's interest as a stockholder.

     Bahamian law allows any stockholder,  or his  representative,  of a Bahamas
corporation,  upon written request  specifying the purpose,  in furtherance of a
proper purpose,  the right to inspect the books,  records,  minutes and consents
kept by the company and to make copies or extracts thereof.  The purpose must be
reasonably  related  to the  stockholder's  interest.  If by  resolution  of the
directors,  the company  determines that the request is not in the best interest
of the company may deny the  request.  A  stockholder  has the right to pursue a

                                       50

<PAGE>

judicial  remedy  within 90 days of receiving  notice of a company's  refusal to
provide access to the records.

Dividends

     Subject to any  restrictions  contained in a  corporation's  certificate of
incorporation,  Delaware law generally  provides that a corporation  may declare
and pay dividends out of a surplus (defined as the excess, if any, of net assets
over capital) or, when no surplus exists, out of net profits for the fiscal year
in which the dividend is declared  and/or the preceding  fiscal year.  Dividends
may not be paid out of net  profits if the  capital of the  corporation  is less
than the amount of capital  represented by the issued and  outstanding  stock of
all classes having a preference upon the  distribution of assets.  The Travelzoo
Delaware certificate of incorporation contains no additional restrictions on the
declaration or payment of dividends.

     Under  Bahamian  law,  subject  to any  limitations  in the  Memorandum  or
Articles of a company incorporated under Bahamian law, directors may declare and
pay dividends in money,  shares or property.  The declaration  will be made by a
resolution of the  directors.  The directors  may only make the  declaration  if
immediately  after  paying the  dividend the company will be able to meet all of
its liabilities in the ordinary  course of business and the realizable  value of
the assets  will be equal to or greater  than the total  liabilities  (excluding
deferred  taxes) and its issue and  outstanding  share  capital.  The realizable
value of the  assets as  determined  by the  directors  is  conclusive  unless a
question  of  law  is  involved.   The  Travelzoo   Bahamas   Articles   contain
substantially  similar  provisions as the BIBC,  and also provide that dividends
may be paid to one class of  stockholder  to the  exclusion of other  classes or
paid in unequal amounts.

Indemnification and Limitation of Liability of Directors and Officers

     Delaware law permits a corporation to adopt a provision in its  certificate
of incorporation eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director,  except that such provision shall not limit the liability of
a  director  for:  (i) any  breach  of the  director's  duty of  loyalty  to the
corporation  or its  stockholders,  (ii) acts or omissions  not in good faith or
which  involve  intentional  misconduct  or a knowing  violation  of law,  (iii)
liability  under  Section 174 of the DGCL for  unlawful  payment of dividends or
stock purchases or redemptions,  or (iv) any transaction from which the director
derived an improper  personal  benefit.  The Travelzoo  Delaware  certificate of
incorporation  limits the personal liability of Travelzoo  Delaware's  directors
for monetary damages to the fullest extent permissible under applicable law.

     Under Delaware law, a corporation  may indemnify any person made a party or
threatened to be made a party to any type of proceeding (other than an action by
or in the right of the corporation)  because he is or was an officer,  director,
employee  or agent of the  corporation,  or was  serving  at the  request of the
corporation as a director,  officer, employee or agent of another corporation or
entity,  against  expenses,  judgments,  fines and  amounts  paid in  settlement
actually and reasonably  incurred in connection with such proceeding:  (1) if he
acted in good  faith  and in a manner  he  reasonably  believed  to be in or not
opposed  to the  best  interests  of the  corporation;  or (2) in the  case of a
criminal proceeding,  he had no reasonable cause to believe that his conduct was
unlawful.  A corporation  may indemnify any person made a party or threatened to
be made a party to any threatened,  pending or completed  action or suit brought
by or in the  right of the  corporation  because  he was an  officer,  director,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director,  officer, employee or agent of another corporation or
other entity,  against expenses  actually and reasonably  incurred in connection
with such action or suit if he acted in good faith and in a manner he reasonably
believed  to be in or not  opposed  to the best  interests  of the  corporation,
except that there may be no such  indemnification  if the person is found liable
to the corporation  unless,  in such a case, the court  determines the person is
entitled thereto. A corporation must indemnify a director,  officer, employee or

                                       51

<PAGE>

agent against expenses actually and reasonably  incurred by him who successfully
defends  himself  in a  proceeding  to  which  he was a party  because  he was a
director, officer, employee or agent of the corporation. Expenses incurred by an
officer or director (or other  employees or agents as deemed  appropriate by the
board of directors) in defending a civil or criminal  proceeding  may be paid by
the  corporation  in advance of the final  disposition of such  proceeding  upon
receipt of an  undertaking  by or on behalf of such director or officer to repay
such amount if it shall  ultimately be determined  that he is not entitled to be
indemnified by the  corporation.  The Delaware law  indemnification  and expense
advancement  provisions  are not  exclusive  of any  other  rights  which may be
granted by the  by-laws,  a vote of  stockholders  or  disinterested  directors,
agreement or otherwise.  As described  under  "Indemnification  of Directors and
Officers" on page 47, the Travelzoo Delaware by-laws provide for indemnification
to the fullest extent not prohibited by law.

     Under Bahamian law, subject to any limitations in the Memorandum,  Articles
or in any unanimous stockholder agreement, a company incorporated in the Bahamas
may indemnify certain parties against all expenses, judgments, fines and amounts
paid  in  settlement   and  reasonably   incurred  in  connection   with  legal,
administrative or investigative proceedings in certain situations. Specifically,
any  person  who is or was a  party,  or is  threatened  to be made a party to a
threatened,   pending,   or  completed  civil,   criminal,   administrative   or
investigative proceeding by reason of the fact that they are or were a director,
officer  or  liquidator  may be  indemnified.  Also any person who serves or was
serving as a director officer of liquidator of another company at the request of
the indemnifying company may be indemnified. Persons will only be indemnified if
they acted  honestly  and in good faith with a view to the best  interest of the
company, and with respect to criminal proceedings,  the person had no reasonable
cause to believe that the conduct was unlawful.  Absent  fraud,  the decision of
the   directors  as  to  the  nature  of  the  conduct  of  the  party   seeking
indemnification  is  conclusive  unless  a  question  of  law is  involved.  The
termination of any proceedings by any judgment, order, settlement, conviction or
the refusal of the  plaintiff  or  prosecutor  to continue the case will not, by
itself,  preclude  indemnification.  The successful  defense of any  proceedings
necessarily  lead to the companies  indemnification  of all reasonable  expenses
associated  with  the  judgment,  fines,  and  amounts  paid  in  settlement  in
connection with the  proceedings.  The Travelzoo  Bahamas  Articles  provide for
indemnification  of directors to the fullest extent permitted by applicable law.
The Travelzoo  Bahamas Articles  authorize  indemnification  of its officers and
directors to the fullest extent permitted by Bahamian law.

Appraisal Rights of Dissenting Stockholders

     Under  Delaware law, a stockholder  of a Delaware  corporation is generally
entitled to demand  appraisal and obtain payment of the fair value of his or her
shares  in the  event of any  plan of  merger  or  consolidation  to  which  the
corporation,  the shares of which he or she holds,  is a party.  The corporation
must notify its stockholders at least 20 days prior to the stockholders  meeting
at which the merger will be voted upon that such appraisal rights are available.
In order to exercise the  stockholder's  right to dissent,  the stockholder must
provide the company with a written  demand for appraisal  before the vote on the
merger.

     Within 10 days  after  the  effective  date of the  merger,  the  surviving
corporation  shall notify each dissenting  stockholder who did not vote in favor
of the merger.  Within 20 days after the mailing of such notice any  stockholder
entitled  to  appraisal  rights  may  make a  written  demand  to the  surviving
corporation for appraisal.

     Within 120 days  after the  effective  date of the  merger,  the  surviving
corporation or any stockholder  entitled to appraisal rights may file a petition
in the Delaware Court of Chancery  demanding a determination of the value of the
stock of such stockholders. Also within 120 days after the effective date of the
merger, any stockholder  entitled to appraisal rights is entitled to a statement
from the surviving  corporation  of the aggregate  number of shares not voted in
favor of the merger and with respect to which  demands for  appraisal  have been
received and the aggregate number of holders of such shares.

                                       52

<PAGE>

     At a hearing on any petition filed with the court, the court will determine
which  stockholders  have  complied with the  appraisal  rights  process and are
entitled to appraisal  rights.  After  determining the stockholders  entitled to
appraisal, the court will appraise the shares and determine their fair value and
the  surviving   company  shall  pay  such  fair  value  immediately  for  those
stockholders  without  certificates  and upon surrender of the  certificates for
those stockholders with certificates.

     Like  Delaware  law,  under  Bahamian  law  a  stockholder  of  a  Bahamian
corporation is generally  entitled to demand appraisal and obtain payment of the
fair  value  of his or her  shares  in the  event  of  any  plan  of  merger  or
consolidation to which the corporation,  the shares of which he or she holds, is
a party. In addition, under Bahamian law, stockholders have the right to dissent
in the event of a sale, transfer,  lease,  exchange or other disposition of more
than  50%  of the  assets  of  the  company,  certain  redemptions  of  minority
stockholders and certain  reorganizations with permission of the court. In order
to exercise  the  stockholder's  right to  dissent,  the  stockholder  must give
written notice to the company at or before the stockholders meeting at which the
merger will be voted upon.  Such written  notice shall include a statement  that
the  stockholder  proposes  to demand  payment  for his  shares if the action is
taken.

     Within 20 days after the date on which the vote of stockholders authorizing
the merger is taken, the company shall give written notice of the  authorization
or consent to each stockholder who gave written objection.  Within 20 days after
the date on which the copy of the plan of merger or an outline thereof was given
to the  stockholder,  a dissenting  stockholder  must give written notice to the
company of his decision to elect to dissent,  provided  that a  stockholder  who
dissents  must  dissent with respect of all shares that he holds in the company.
Such notice must state:

     o    his name and address;

     o    the  number  and  classes  or series of shares in  respect of which he
          dissents; and

     o    a demand for payment of the fair value of his shares.

     Upon the giving of a notice of  election to dissent,  the  stockholder  who
gave the notice  will no longer have any of the rights of a  stockholder  of the
company except the right to be paid the fair value of his shares.  Within 7 days
immediately  following  the date of the  expiration  of the period  within which
stockholders  may give their  notices of election  to dissent,  or within 7 days
immediately  following the date on which the proposed merger is put into effect,
whichever is later,  the surviving  company of the merger,  shall make a written
offer to each dissenting stockholder to purchase his shares at a specified price
that the company  determines  to be their fair value.  Unlike  Delaware law, the
parties  may  mutually  agree on the  value of the  shares.  If,  within 30 days
immediately  following the date on which the offer is made,  the company  making
the offer and the dissenting stockholder agree upon the price to be paid for his
shares,  the company shall pay to the  stockholder  the amount in money upon the
surrender of the certificates representing his shares.

     If the company and a dissenting  stockholder fail within such 30 day period
to agree on the price to be paid for the shares owned by the stockholder, unlike
Delaware  law where a court  determines  the value,  within 20 days  immediately
following  the date on which the 30 day  period  expires,  the  following  shall
apply:

     o    the company and the  dissenting  stockholder  shall each  designate an
          appraiser;

     o    the  2  designated   appraisers   together  shall  designate  a  third
          appraiser;

     o    the 3  appraisers  shall fix the fair value of the shares owned by the
          dissenting stockholder as of the close of business on the day prior to
          the date on which the vote of stockholders  authorizing the merger was
          taken,  and that value is binding on the  company  and the  dissenting
          stockholder for all purposes; and

                                       53

<PAGE>

     o    the company shall pay to the  stockholder the amount in money upon the
          surrender by him of the certificates representing his shares.

Preemptive Rights

     Neither Delaware nor Bahamian law provides for preemptive rights to acquire
a corporation's  unissued stock. However, such right may be expressly granted to
the  stockholders in a corporation's  certificate or articles of  incorporation.
Neither the Travelzoo  Delaware  certificate of incorporation  nor the Travelzoo
Bahamas  Memorandum provide for preemptive rights. The Memorandum states that in
the absence of an explicit grant of preemptive  rights in the terms of the issue
of the shares the stockholder will not have preemptive rights.

Stockholder Suits

     Under  Delaware law, a stockholder  may institute a lawsuit  against one or
more  directors,  either on his own  behalf,  or  derivatively  on behalf of the
corporation.  An individual stockholder may also commence a lawsuit on behalf of
himself  or  herself  and  other  similarly   situated   stockholders  when  the
requirements for maintaining a class action under Delaware law have been met. As
noted  above,  Section  102(b)(7)  of the  DGCL  enables  a  corporation  in its
certificate of incorporation  to eliminate or limit, and the Travelzoo  Delaware
certificate of incorporation eliminates, the personal liability of a director to
the corporation and its  stockholders for monetary damages for violations of the
director's  fiduciary  duty,  except (i) for any breach of a director's  duty of
loyalty to the corporation or its  stockholders,  (ii) for acts or omissions not
in good faith or which involve intentional  misconduct or a knowing violation of
law,  (iii) for  liability  pursuant to Section 174 of the DGCL  (providing  for
liability of  directors  for  unlawful  payment of  dividends or unlawful  stock
purchases  or  redemptions)  or (iv) for any  transaction  from which a director
derived an improper personal benefit.

     Bahamian law does not specify stockholder suit causes of actions or methods
of commencing suit.

Business Combination Restrictions

     In general,  Delaware law  prevents an  "Interested  Stockholder"  (defined
generally  as a person with 15% or more of a  corporation's  outstanding  voting
stock,  with the  exception  of any  person who owned and has  continued  to own
shares in excess of the 15% limitation since December 23, 1987) from engaging in
a "Business  Combination" with a Delaware  corporation for three years following
the date  such  person  became an  Interested  Stockholder.  The term  "Business
Combination"  includes mergers or consolidations with an Interested  Stockholder
and  certain  other  transactions  with an  Interested  Stockholder,  including,
without limitation: (i) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (except  proportionately as a stockholder of such corporation)
to or with the Interested  Stockholder of assets  (except  proportionately  as a
stockholder of the corporation) having an aggregate market value equal to 10% or
more of the  aggregate  market  value of all  assets  of the  corporation  or of
certain subsidiaries thereof determined on a consolidated basis or the aggregate
market  value  of all  the  outstanding  stock  of  the  corporation;  (ii)  any
transaction  which results in the issuance or transfer by the  corporation or by
certain  subsidiaries  thereof of stock of the corporation or such subsidiary to
the Interested Stockholder, except pursuant to certain transfers in a conversion
or exchange or a pro rata distribution to all stockholders of the corporation or
certain other transactions,  none of which increase the Interested Stockholder's
proportionate  ownership  of any class or series  of the  corporation's  or such
subsidiary's  stock; (iii) any transaction  involving the corporation or certain
subsidiaries thereof which has the effect, directly or indirectly, of increasing
the  proportionate  share of the stock of any  class or  series,  or  securities
convertible  into stock of the  corporation or any subsidiary  which is owned by
the  Interested  Stockholder  (except as a result of  immaterial  changes due to
fractional share adjustments or as a result of any purchase or redemption of any
shares  of  stock  not  caused   directly  or  indirectly   by  the   Interested
Stockholder);  or (iv) any receipt by the Interested  Stockholder of the benefit

                                       54

<PAGE>

(except  proportionately  as a stockholder  of such  corporation)  of any loans,
advances,  guarantees,  pledges,  or other  financial  benefits  provided  by or
through the corporation or certain subsidiaries.

     The three-year  moratorium may be avoided if: (i) before such person became
an Interested  Stockholder,  the board of directors of the corporation  approved
either the  Business  Combination  or the  transaction  in which the  Interested
Stockholder became an Interested  Stockholder;  or (ii) upon consummation of the
transaction   which   resulted  in  the   stockholder   becoming  an  Interested
Stockholder,  the  stockholder  owned at least  85% of the  voting  stock of the
corporation  outstanding at the time the transaction commenced (excluding shares
held by directors who are also officers of the corporation and by employee stock
ownership  plans  that do not  provide  employees  with the  right to  determine
confidentially  whether  shares  held  subject to the plan will be tendered in a
tender or  exchange  offer);  or (iii) on or  following  the date on which  such
person became an Interested Stockholder, the Business Combination is approved by
the board of directors of the corporation and authorized at an annual or special
meeting of stockholders  (not by written consent) by the affirmative vote of the
stockholders  of at  least  66  2/3%  of the  outstanding  voting  stock  of the
corporation not owned by the Interested Stockholder.

     The  Business  Combination  restrictions  described  above do not apply if,
among other things: (i) the corporation's  original certificate of incorporation
contains a provision expressly electing not to be governed by the statute;  (ii)
the  corporation  by action by the holders of a majority of the voting  stock of
the  corporation  approve an amendment to its  certificate of  incorporation  or
by-laws expressly  electing not to be governed by the statute  (effective twelve
(12)  months  after the  amendment's  adoption),  which  amendment  shall not be
applicable  to any  business  combination  with a person  who was an  Interested
Stockholder at or prior to the time of the amendment;  or (iii) the  corporation
does  not  have a class  of  voting  stock  that  is (a)  listed  on a  national
securities  exchange,  (b)  authorized  for  quotation  on  Nasdaq  or a similar
quotation  system;  or (c) held of record by more than 2,000  stockholders.  The
statute also does not apply to certain Business  Combinations with an Interested
Stockholder when such combination is proposed after the public  announcement of,
and before the consummation or abandonment of, a merger or consolidation, a sale
of 50% or more of the aggregate market value of the assets of the corporation on
a consolidated  basis or the aggregate market value of all outstanding shares of
the  corporation,  or a tender offer for 50% or more of the  outstanding  voting
shares of the corporation,  if the triggering transaction is with or by a person
who either was not an Interested  Stockholder during the previous three years or
who became an  Interested  Stockholder  with board,  and if the  transaction  is
approved or not opposed by a majority  of the  current  directors  who were also
directors  prior to any person  becoming an  Interested  Stockholder  during the
previous three years.  Travelzoo Delaware is subject to the Business Combination
restrictions described above.

     Under Bahamian law there are no  restrictions  on business  combinations of
International  Business  Companies  other  than the  rules  under  extraordinary
transactions.

                                       55

<PAGE>

                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We have filed with the SEC a registration statement on form S-4 to register
the shares of common  stock of  Travelzoo  Delaware  which will be issued in the
merger.  This proxy  statement  and  prospectus  is a part of that  registration
statement. As allowed by the SEC rules, this proxy statement and prospectus does
not contain all the  information you can find in the  registration  statement or
the  exhibits  to that  registration  statement.  For further  information  with
respect to us, reference is made to the registration  statement and the exhibits
to  that  registration  statement.   Statements  in  this  proxy  statement  and
prospectus concerning the contents of any contract or any other document are not
necessarily  complete. If a contract or document has been filed as an exhibit to
the registration statement, we refer you to that exhibit. Each statement in this
proxy  statement and  prospectus  relating to a contract or document filed as an
exhibit to the  registration  statement is qualified by the filed exhibits.  You
can obtain a copy of the  registration  statement  and the exhibits  through the
SEC, at the SEC's public reference rooms at 450 Fifth Street, N.W.,  Washington,
D.C., 20549, Seven World Trade Center, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street,  Suite 1400, Chicago,  Illinois 60661,
or  the  SEC's   website  at   http://www.sec.gov.   Please   call  the  SEC  at
1-800-SEC-0330 for more information on the public reference rooms and their copy
charges.

                                 LEGAL OPINION

     Bryan Cave LLP, St. Louis,  Missouri, as our counsel, has issued an opinion
as to the legality of the common stock of Travelzoo Delaware to be issued in the
merger.

                                    EXPERTS

     The combined balance sheets of  Travelzoo.com  Corporation and affiliate as
of  December  31,  1998  and  1999,  and  the  related  combined  statements  of
operations,  stockholders'  equity,  and cash flows for the period  from May 21,
1998  (inception)  to December 31, 1998 and for the year ended December 31, 1999
have been included herein and in the registration statement in reliance upon the
report  of  KPMG  LLP,  independent  certified  public  accountants,   appearing
elsewhere  herein,  and upon the authority of that firm as experts in accounting
and auditing.




                                       56

<PAGE>


                           TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     INDEX TO COMBINED FINANCIAL STATEMENTS

                                                                            Page

Independent Auditors' Report                                                 F-2

Combined Balance Sheets                                                      F-3

Combined Statements of Operations                                            F-4

Combined Statements of Stockholders' Equity                                  F-5

Combined Statements of Cash Flows                                            F-6

Notes to Combined Financial Statements                                       F-7






                                       F-1

<PAGE>


                          Independent Auditors' Report

The Board of Directors and Stockholders
Travelzoo.com Corporation:


     We have audited the  accompanying  combined balance sheets of Travelzoo.com
Corporation and affiliate (collectively,  the Companies) as of December 31, 1998
and 1999,  and the related  combined  statements  of  operations,  stockholders'
equity,  and cash flows for the period from May 21, 1998 (inception) to December
31, 1998 and for the year ended  December 31,  1999.  These  combined  financial
statements   are  the   responsibility   of  the  Companies'   management.   Our
responsibility is to express an opinion on these combined  financial  statements
based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     The  accompanying  combined  financial  statements  include the accounts of
Travelzoo.com  Corporation  and  affiliate,  as defined in Note 1. The  combined
financial statements present the combined accounts of entities majority-owned by
a  principal  stockholder  engaged  in the  operation  of the  www.Travelzoo.com
website.

     In our opinion, the combined financial statements referred to above present
fairly,  in  all  material   respects,   the  combined   financial  position  of
Travelzoo.com  Corporation  and affiliate as of December 31, 1998 and 1999,  and
the results of their operations and their cash flows for the period from May 21,
1998  (inception) to December 31, 1998 and for the year ended December 31, 1999,
in conformity with accounting principles generally accepted in the United States
of America.



                                                  /s/ KPMG LLP

Mountain View, California
August 6, 2000, except as to Notes 9

  and 10, which are as of January 22, 2001

                                      F-2

<PAGE>

                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                             Combined Balance Sheets

<TABLE>
<CAPTION>

                                                                         December 31,
                                                             -------------------------------------   September 30,
                                                                   1998               1999               2000
                                                             ------------------ ------------------ ------------------
                                                                                                      (Unaudited)

Assets
Current assets:
<S>                                                               <C>                    <C>              <C>
   Cash                                                           $    12,245             11,130            474,319
   Accounts receivable, less allowance for doubtful
      accounts of $10,000 and $42,931 as of December 31,
      1999 and September 30, 2000, respectively
                                                                       56,736            327,542            597,731
   Loan receivable from principal stockholder                          12,000                 --                 --
   Deposits                                                             3,131              8,186            128,639
   Prepayments and other current assets                                 7,699             18,233             28,001
   Deferred tax assets                                                  4,527             17,186             17,186
                                                             ------------------ ------------------ ------------------
                  Total current assets                                 96,338            382,277          1,245,876
Property and equipment, net                                            10,713             22,519            177,671
                                                             ------------------ ------------------ ------------------
                  Total assets                                    $   107,051            404,796          1,423,547
                                                             ================== ================== ==================

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable                                               $     8,476             63,806            151,184
   Accrued expenses                                                        --             22,700             55,789
   Deferred revenue                                                        --              5,800              1,000
   Income tax payable                                                   9,457             43,923            330,862
   Payroll taxes payable                                                   --             54,709             39,921
   Payable to employee                                                     --             16,500            152,547
   Payable to principal stockholder                                        --              1,047             46,695
   Deferred tax liability                                                 233              2,022              2,022
                                                             ------------------ ------------------ ------------------
                  Total current liabilities                            18,166            210,507            780,020
                                                             ------------------ ------------------ ------------------
Stockholders' equity:
   Common stock                                                        60,000             60,000             72,721
   Retained earnings                                                   28,885            134,289            643,806
                                                             ------------------ ------------------ ------------------
                  Total stockholders' equity                           88,885            194,289            643,527
                                                             ------------------ ------------------ ------------------
                  Total liabilities and
                     stockholders'equity                          $   107,051            404,796          1,423,547
                                                             ================== ================== ==================
</TABLE>



See accompanying notes to combined financial statements


                                      F-3

<PAGE>



                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                        Combined Statements of Operations

<TABLE>
<CAPTION>

                                                     Period from                                  Nine months
                                                     May 21, 1998                                    ended
                                                    (inception) to      Year ended               September 30,
                                                     December 31,      December 31,    ----------------------------------
                                                         1998              1999              1999             2000
                                                   ------------------ ---------------- ----------------- ----------------
                                                                                                  (Unaudited)
<S>                                                   <C>               <C>              <C>              <C>
Revenues:
   Advertising                                        $      57,327          893,244           405,403       2,688,877
   Commissions                                               26,774           61,015            50,243          92,354
                                                   ------------------ ---------------- ----------------- ----------------
              Total revenues                                 84,101          954,259           455,646       2,781,231
Cost of revenues                                             25,362          132,803            74,849         226,262
                                                   ------------------ ---------------- ----------------- ----------------
              Gross profit                                   58,739          821,456           380,797       2,554,969
                                                   ------------------ ---------------- ----------------- ----------------
Operating expenses:
   Sales and marketing                                        1,595          350,720           156,007       1,141,113
   General and administrative                                22,046          326,686           211,818         669,845
                                                   ------------------ ---------------- ----------------- ----------------
              Total operating expenses                       23,641          677,406           367,825       1,810,958
                                                   ------------------ ---------------- ----------------- ----------------
              Income before income taxes                     35,098          144,050            12,972         744,011
Income taxes                                                  6,213           38,646             3,382         307,494
                                                   ------------------ ---------------- ----------------- ----------------
              Net income                              $      28,885          105,404             9,590         436,517
                                                   ================== ================ ================= ================
Pro forma net income per share (Note 10):
   Pro forma basic and diluted net income per
      share                                           $       --                0.01             --               0.02
                                                   ================== ================ ================= ================
   Shares used in computing pro forma basic net
      income per share                                    9,431,741       19,323,064        19,314,314      19,355,147
                                                   ================== ================ ================= ================
   Shares used in computing pro forma diluted
      net income per share                                9,431,741       19,355,147        19,355,147      19,480,505
                                                   ================== ================ ================= ================
</TABLE>



See accompanying notes to combined financial statements

                                      F-4

<PAGE>


                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                   Combined Statements of Stockholders' Equity

            Period from May 21, 1998 (inception) to December 31, 1999
                    and nine months ended September 30, 2000


<TABLE>
<CAPTION>

                                                   Common Stock
                                --------------------------------------------------------
                                                                  Silicon Channels
                                 Travelzoo.com Corporation          Corporation                            Total
                                ---------------------------- ---------------------------   Retained    stockholders'
                                   Shares        Amount         Shares        Amount       earnings       equity
                                ------------- -------------- ------------- ------------- ------------- --------------

<S>                              <C>             <C>               <C>       <C>             <C>           <C>   
Issuance of common stock         11,155,874      $10,000           1,000     $  50,000          --         60,000

Net income                             --           --             --             --          28,885       28,885
                                ------------- -------------- ------------- ------------- ------------- --------------

Balances, December 31, 1998      11,155,874       10,000           1,000        50,000        28,885       88,885

Net income                             --           --             --             --         105,404      105,404
                                ------------- -------------- ------------- ------------- ------------- --------------

Balances, December 31, 1999      11,155,874       10,000           1,000        50,000       134,289      194,289

Issuance of common stock upon                                                                               3,500
  exercise of options                70,000        3,500           --             --            --
  (unaudited)

Stock-based compensation
  expense (unaudited)                  --          9,221           --             --            --          9,221

Net income (unaudited)                 --           --             --             --         436,517      436,517
                                ------------- -------------- ------------- ------------- ------------- --------------

Balances, September 30, 2000
  (unaudited)                    11,225,874       22,721           1,000        50,000       570,806      643,527
                                ============= ============== ============= ============= ============= ==============
</TABLE>



See accompanying notes to combined financial statements


                                      F-5

<PAGE>


                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                        Combined Statements of Cash Flows

<TABLE>
<CAPTION>

                                                     Period from                                  Nine months
                                                     May 21, 1998                                    ended
                                                    (inception) to      Year ended               September 30,
                                                     December 31,      December 31,    ----------------------------------
                                                         1998              1999              1999             2000
                                                   ------------------ ---------------- ----------------- ----------------
                                                                                                  (Unaudited)
Cash flows from operating activities:
<S>                                                   <C>                  <C>                 <C>            <C>
   Net income                                         $     28,885          105,404             9,590          436,517
   Adjustments  to  reconcile  net  income to net
      cash  (used  in)   provided  by   operating
      activities:
      Depreciation                                             974            5,795             4,411           26,184
      Deferred taxes                                        (4,294)         (10,870)           (2,371)           --
      Provision for losses on accounts receivable            --              10,000             7,500           32,931
      Stock-based compensation expense                       --                --                --              9,221
      Changes    in    operating    assets    and
        liabilities:
        Accounts receivable                                (56,736)        (280,806)           (9,035)        (303,120)
        Deposits                                            (3,131)          (5,055)             --           (120,453)
        Prepayments and other current assets                (7,699)         (10,534)           (5,040)          (9,768)
        Accounts payable                                     8,476           55,330            (6,056)          87,378
        Accrued expenses                                     --              22,700            10,474           33,089
        Deferred revenue                                     --               5,800              --             (4,800)
        Income tax payable                                   9,457           34,466            (9,097)         286,939
        Payroll taxes payable                                --              54,709            14,873          (14,788)
        Payable to employee                                  --              16,500              --            136,047
        Payable to principal Stockholder                     --               1,047               922            5,648
                                                   ------------------ ---------------- ----------------- ----------------
        Net cash (used in)  provided by operating
           activities                                      (24,068)           4,486            16,171          601,025
                                                   ------------------ ---------------- ----------------- ----------------
Cash flows from investing activities:

   Capital expenditures for property and                   (11,687)         (17,601)          (10,389)        (181,336)
      equipment

   Loan receivable from principal Stockholder              (12,000)          12,000            12,000            --
                                                   ------------------ ---------------- ----------------- ----------------
        Cash  (used  in)  provided  by  investing
           activities                                      (23,687)          (5,601)            1,611         (181,336)
                                                   ------------------ ---------------- ----------------- ----------------
Cash flows from financing activities:

   Proceeds from issuance of common stock                   60,000             --                --              3,500
   Loans from principal stockholder                          --                --                --             40,000
                                                   ------------------ ---------------- ----------------- ----------------
        Cash provided by financing activities               60,000             --                --             43,500
                                                   ------------------ ---------------- ----------------- ----------------
Net increase (decrease) in cash                             12,245           (1,115)           17,782          463,189
Cash at beginning of period/year                             --              12,245            12,245           11,130
                                                   ------------------ ---------------- ----------------- ----------------
Cash at end of period/year                            $     12,245           11,130            30,027          474,319
                                                   ================== ================ ================= ================
Supplemental disclosure of cash flow information:
        Cash paid during  period/year  for income
           taxes                                      $      1,050           15,050            14,850           20,255
                                                   ================== ================ ================= ================
</TABLE>

See accompanying notes to combined financial statements

                                      F-6

<PAGE>


                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE


                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


(1)  Summary of Significant Accounting Policies

     (a)  Description of Business

          The accompanying combined financial statements include the accounts of
          Travelzoo.com   Corporation   and  its  affiliate   Silicon   Channels
          Corporation  dba   Travelzoo.com   Sales,   Inc.   (collectively   the
          Companies).  Travelzoo.com Corporation was incorporated in the Bahamas
          on May 21, 1998, and Silicon Channels  Corporation was incorporated in
          California   on  September  28,  1998.   The  Companies   operate  the
          www.Travelzoo.com  website that provides an on-line advertising medium
          for the travel industry.

     (b)  Basis of Presentation

          These  combined  financial  statements  present  the  Companies  on  a
          combined  basis because of their common  ownership by Mr. Ralph Bartel
          (the  Principal  Stockholder),  and because  these  entities  combined
          represent the historical operations of the  www.Travelzoo.com  website
          business.  As of September 30, 2000, the Principal  Stockholder  owned
          100% of the outstanding  common stock of Silicon Channels  Corporation
          and approximately 53% of the outstanding common stock of Travelzoo.com
          Corporation.  The 47% of  Travelzoo.com  Corporation  common stock not
          owned by the Principal  Stockholder is owned by approximately  700,000
          individual stockholders.

          On October 10, 1998,  Travelzoo.com  Corporation and Silicon  Channels
          Corporation  entered into an agreement whereby Silicon Channels agreed
          to manage the technical  platform,  marketing,  customer support,  and
          billing   for   the    classified    publishing    business   of   the
          www.Travelzoo.com  website  in  return  for  a 5%  commission  on  the
          quarterly  net  income  from  such  business.  The  October  10,  1998
          agreement  was  subsequently  replaced  by a Service  Agreement  dated
          January 2, 1999. In the January 2, 1999  agreement,  Silicon  Channels
          agreed to perform all  operation  services  for the  www.Travelzoo.com
          website in return for 50% of the income before income taxes  generated
          by  the   website.   All   assets,   other  than  the   domain   name,
          www.Travelzoo.com,  used  in the  operation  of the  www.Travelzoo.com
          website are owned by Silicon Channels.  The income share  transactions
          and all  other  intercompany  transactions  have  been  eliminated  on
          combination.

          The accompanying  combined condensed balance sheet as of September 30,
          2000, the combined  condensed  statements of operations and cash flows
          for the  nine  months  ended  September  30,  1999 and  2000,  and the
          combined  condensed  statement  of  stockholders'  equity for the nine
          months ended  September 30, 2000 are unaudited.  In the opinion of the
          Companies'  management,   the  unaudited  interim  combined  condensed
          financial  statements  have  been  prepared  on the same  basis as the
          audited  combined  financial  statements and include all  adjustments,
          consisting only of normal recurring  adjustments,  necessary for their
          fair  presentation.  The  results  for the  nine  month  period  ended
          September 30, 2000, are not  necessarily  indicative of the results to
          be expected for the year ended December 31, 2000.

                                       F-7

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


     (c)  Use of Estimates

          Management  of the  Companies  have  made a number  of  estimates  and
          assumptions  relating to the reporting of assets and  liabilities  and
          the disclosure of contingent  assets and  liabilities to prepare these
          financial   statements  in  conformity  with   accounting   principles
          generally  accepted in the United  States of America.  Actual  results
          could differ from those estimates.

     (d)  Property and Equipment

          Property  and  equipment  is  stated  at  cost,   net  of  accumulated
          depreciation.   Property   and   equipment   are   depreciated   on  a
          straight-line  basis over the estimated  useful lives of the assets of
          three years.

     (e)  Revenue Recognition

          Revenue  consists  of  advertising  and  commissions  from  e-commerce
          transactions.  Advertising  revenues are derived  principally from the
          sale  of  display  advertising,  classified  advertising,  and  banner
          advertising on the www.Travelzoo.com website.  Commissions are derived
          from online  bookings  of travel  services  via the  www.Travelzoo.com
          website.

          Advertising  revenues  are  recognized  in the  period  in  which  the
          advertisement  is displayed,  provided that evidence of an arrangement
          exists,   the  fees  are  fixed  and   determinable,   no  significant
          obligations  remain at the end of the period,  and  collection  of the
          resulting   receivable  is  reasonably   assured.  If  advertising  is
          displayed within one month,  revenues are recognized at the end of the
          display  period.  If advertising is displayed over two or more months,
          revenues are  recognized  ratably over the period.  To the extent that
          the minimum  guaranteed  impressions  are not met during the  contract
          period, the Companies defer recognition of the corresponding  revenues
          until  the  guaranteed  impressions  are  achieved.  Fees  for  banner
          advertising  are  recognized   based  on  the  number  of  impressions
          displayed or clickthroughs delivered during the period.

          The Companies  have  outsourced  part of their  advertising  sales and
          production activities to DoubleClick,  Inc.  (DoubleClick).  Under the
          terms of the  agreement  with  DoubleClick,  the  Companies  receive a
          portion of the revenue  received by DoubleClick from customers for the
          display of advertising on the www.Travelzoo.com website. The Companies
          record these  revenues on a net basis.  The gross revenue  received by
          DoubleClick  from  advertising  on the  www.Travelzoo.com  website was
          $95,170 and $137,159 for the period from May 21, 1998  (inception)  to
          December 31, 1998 and the year ended  December  31, 1999,  and $86,687
          and $202,868 for the nine month periods  ended  September 30, 1999 and
          2000,  respectively.  The Companies'  share of this income,  which has
          been recorded as revenue, was $47,144, and $66,691 for the period from
          May 21,  1998  (inception)  to  December  31,  1998 and the year ended
          December 31, 1999, and $42,019 and $105,008 for the nine month periods
          ended September 30, 1999 and 2000, respectively.

          Commissions  are recorded as the net amount  received by the Companies
          and are recognized in the period in which the  commissions  earned are
          reported to the Companies by the e-commerce partner.

                                       F-8

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)

          Revenues from  advertising  barter  transactions are recognized in the
          period   during  which  the   advertisements   are  displayed  on  the
          www.Travelzoo.com  website.  Expenses  from  barter  transactions  are
          recognized in the period during which the advertisements are displayed
          on the barter partner's website.  Barter  transactions are recorded at
          the fair value of the  advertising  provided based on cash received by
          the Companies for transactions  involving similar types of advertising
          during the six months  preceding the  transaction  in accordance  with
          Emerging  Issues Task Force (EITF)  Issue No.  99-17,  Accounting  for
          Advertising Barter  Transactions.  The amounts included in advertising
          revenues and sales and marketing expenses for barter transactions were
          $-0- and  $83,000  for the period  from May 21,  1998  (inception)  to
          December 31, 1998 and the year ended  December  31, 1999,  and $53,000
          and $37,000 for the nine month  periods  ended  September 30, 1999 and
          2000, respectively.

     (f)  Advertising Costs

          Advertising   costs  are  expensed  as  incurred.   Advertising  costs
          (including barter advertising) amounted to $1,595 and $169,374 for the
          period from May 21, 1998 (inception) to December 31, 1998 and the year
          ended December 31, 1999, and,  $60,812 and $907,520 for the nine month
          periods ended September 30, 1999 and 2000, respectively.

     (g)  Income Taxes

          Income taxes are accounted  for under the asset and liability  method.
          Deferred tax assets and  liabilities are recognized for the future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their   respective  tax  bases  and  operating  loss  and  tax  credit
          carryforwards.  Deferred tax assets and liabilities are measured using
          enacted tax rates  expected to apply to taxable income in the years in
          which those  temporary  differences  are  expected to be  recovered or
          settled. The effect on deferred tax assets and liabilities of a change
          in tax rates is  recognized  in income in the period that includes the
          enactment date.

     (h)  Impairment of Long-Lived  Assets and Long-Lived  Assets to Be Disposed
          Of

          The Companies  account for  long-lived  assets in accordance  with the
          provisions of Statement of Financial  Accounting  Standards (SFAS) No.
          121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
          Long-Lived  Assets to Be  Disposed  Of.  SFAS No.  121  requires  that
          long-lived assets and certain identifiable intangibles be reviewed for
          impairment  whenever events or changes in circumstances  indicate that
          the carrying amount of an asset may not be recoverable. Recoverability
          of  assets  to be held and used is  measured  by a  comparison  of the
          carrying  amount of an asset to future net cash flows  expected  to be
          generated by the asset.  If such assets are considered to be impaired,
          the impairment to be recognized is measured by the amount by which the
          carrying  amount of the assets  exceeds  the fair value of the assets.
          Assets to be  disposed of are  reported  at the lower of the  carrying
          amount or fair value less costs to sell.

     (i)  Stock-Based Compensation

          As allowed under Statement of SFAS No. 123, Accounting for Stock-Based
          Compensation,   the  Companies  have  elected  to  follow   Accounting
          Principles Board Opinion (APB) No. 25,  Accounting for Stock Issued to

                                      F-9

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


          Employees,  and related interpretations in accounting for stock awards
          to employees.  Deferred  compensation for options granted to employees
          is determined as the  difference  between the deemed fair market value
          of the  Companies'  common  stock and the  exercise  price on the date
          options were granted. Expense associated with stock-based compensation
          is amortized over the vesting period of the individual award.

     (j)  Website Development Costs

          Prior to June 30, 2000,  website  development  costs were  expensed as
          incurred.  The Companies adopted EITF Issue No. 00-02,  Accounting for
          Website  Development  Costs,  on June 30,  2000.  The adoption of EITF
          Issue No.  00-02  did not have a  significant  impact on the  combined
          financial statements.

     (k)  Recent Accounting Pronouncements

          In June 1998, the Financial  Accounting  Standards Board (FASB) issued
          SFAS No.  133,  Accounting  for  Derivative  Instruments  and  Hedging
          Activities.  SFAS No. 133, as amended by SFAS No. 137, Deferral of the
          Effective Date of FASB Statement No. 133, and SFAS No. 138, Accounting
          for Certain Derivative Instruments and Certain Hedging Activities,  an
          Amendment  of FASB  Statement  No.  133,  establishes  accounting  and
          reporting   standards   for   derivative   instruments   and  requires
          recognition  of  all  derivatives  as  assets  or  liabilities  in the
          statement of financial  position and measurement of those  instruments
          at fair value.  SFAS No. 133 is effective  for fiscal years  beginning
          after June 15, 2000.  The  Companies  will adopt the standard no later
          than the first  quarter  of fiscal  2001,  and are in the  process  of
          determining  the  impact  that  adoption  will  have  on the  combined
          financial statements.

          In December 1999, the Securities and Exchange  Commission (SEC) issued
          Staff  Accounting  Bulletin  (SAB) No.  101,  Revenue  Recognition  in
          Financial  Statements,  as  amended by SAB Nos.  101A and 101B,  which
          provides guidance on the recognition,  presentation, and disclosure of
          revenue  in  financial  statements  filed  with the SEC.  SAB No.  101
          outlines the basic criteria that must be met to recognize  revenue and
          provides  guidance  for  disclosure  related  to  revenue  recognition
          policies.  The Companies  will adopt SAB No. 101 in the fourth quarter
          of 2000,  and have  determined  that adoption will not have a material
          impact on the combined financial statements.

(2)  Property and Equipment

     Property and equipment consisted of the following:



                                              December 31,
                                    ----------------------------   September 30,
                                        1998            1999           2000
                                    ------------    ------------   ------------
Computer hardware, software,
  and office equipment              $    11,687         29,288        210,624
  Less accumulated depreciation            (974)        (6,769)       (32,953)
                                    ------------    ------------   ------------
     Total                          $    10,713         22,519        177,671
                                    ============    ============   ============

                                      F-10

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


(3)  Payable to Employee

     Payable  to  employee  represents  expense  reimbursements  payable  to  an
     employee.

(4)  Payable to Principal Stockholder

     Payable to principal  stockholder includes unsecured loans payable of $-0-,
     $-0-, and $40,000, and expense  reimbursements payable of $-0-, $1,047, and
     $6,695  as  of  December  31,  1998  and  1999  and   September  30,  2000,
     respectively. The loans do not bear interest and are repayable on or before
     December 31, 2000.

(5)  Common Stock

     (a)  Travelzoo.com Corporation

          As of December 31, 1998 and 1999 and  September  30, 2000,  authorized
          common stock of Travelzoo.com  Corporation  comprises 2,000,000 shares
          of common  stock of series  $0.01 par value and  18,000,000  shares of
          common stock of series $-0- par value.  Issued and outstanding  common
          stock comprises  2,000,000  shares of common stock of series $0.01 par
          value as of December 31, 1998 and 1999 and  September  30,  2000,  and
          9,155,874,  9,155,874 and  9,225,874  shares of common stock of series
          $-0- par value as of  December  31 1998 and 1999,  and  September  30,
          2000,  respectively.  All  series  of  common  stock in  Travelzoo.com
          Corporation have identical rights.

          On  September  2, 1998,  Travelzoo.com  Corporation  issued  2,000,000
          shares of series $0.01 par value and  4,000,000  shares of series $-0-
          par value common stock to the principal  stockholder for cash proceeds
          of $10,000.  On the same date,  Travelzoo.com  Corporation also issued
          for $-0-  consideration,  5,155,874  shares of  series  $-0- par value
          common stock to approximately  700,000 individuals who had applied for
          shares   during   the   period   from   May  to  July   1998  via  the
          www.Travelzoo.com website.

          On  February  20,  1999,  a stock  program for  directors  was adopted
          providing that each director of Travelzoo.com Corporation will receive
          10,000  shares  of   Travelzoo.com   Corporation's   common  stock  as
          compensation  for their  services in the year ended December 31, 1999,
          and that if a director  vacates  his  office  prior to  year-end,  the
          amount of shares of stock will be prorated.  Under this  program,  the
          directors  are  entitled  to a total of  70,000  shares  of stock  for
          services  provided  in 1999.  Compensation  expense  based on the fair
          value of the stock on the date of grant of $4,089  and $5,452 has been
          accrued in the combined  income  statements  for the nine month period
          ended  September  30,  1999  and the year  ended  December  31,  1999,
          respectively.  These  shares of common  stock were  issued in December
          2000. No grant of stock to directors was made in 2000.

          During  2000,  Travelzoo.com  Corporation  granted to an  employee  of
          Silicon  Channels  Corporation  options to purchase  334,676 shares of
          common  stock with an exercise  price of $0.05.  Compensation  expense
          measured  using  the  intrinsic-value   method  and  recognized  on  a

                                      F-11

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


          straight-line  basis  over the two year  vesting  period  of $9,221 is
          included in the combined  income  statement  for the nine months ended
          September 30, 2000. In September  2000,  upon the  termination  of the
          employee, 70,000 options were fully vested under the original terms of
          the grant and the  remaining  unvested  options  were  forfeited.  The
          70,000 vested options  were exercised in September 2000.  There are no
          outstanding stock options as of September 30, 2000.

     (b)  Silicon Channels Corporation

          As of  December  31, 1998 and 1999 and  September  30,  2000,  Silicon
          Channels  Corporation  authorized common stock comprised 10,000 shares
          of $-0- par value.  During 1998,  Silicon Channels  Corporation issued
          1,000 shares of common  stock to the  Principal  Stockholder  for cash
          proceeds of $50,000.  These shares were outstanding as of December 31,
          1998 and 1999 and September 30, 2000.

(6)  Income Taxes

     Income tax expense for the period from May 21, 1998 (inception) to December
     31, 1998 and year ended December 31, 1999, consisted of the following:

                                 Current          Deferred          Total
                               ----------         --------        -------
      1998:
        Federal                $    6,430           (3,630)         2,800
        State                       3,827             (664)         3,163
        Foreign                       250             --              250
                               ----------         ----------     ---------
                               $   10,507           (4,294)         6,213
                               ==========         ==========     =========

      1999:
        Federal                $   35,013           (9,473)        25,540
        State                      14,253           (1,397)        12,856
        Foreign                       250             --              250
                               ----------         ----------     ---------
                               $   49,516          (10,870)        38,646
                               ==========         ==========     =========


     Income tax expense for the period from May 21, 1998 (inception) to December
     31, 1998 and the year ended  December 31, 1999,  differed  from the amounts
     computed by applying the applicable U.S. federal statutory income tax rates
     of  11% and 18% (blended rates) to pretax income for the respective periods
     as a result of the following:

                                                              1998        1999
                                                           ---------   ---------
      Federal tax at statutory rate                        $   3,875      26,195
      State taxes, net of federal income tax benefit           2,088      10,713
      Foreign taxes                                              250         250
      Other                                                       --       1,488
                                                           ---------   ---------
              Total tax expense                            $   6,213      38,646
                                                           =========   =========


                                      F-12

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


     The types of temporary  differences that give rise to significant  portions
     of the  Companies'  deferred tax assets and  liabilities as of December 31,
     1998 and 1999, are as follows:

                                                              1998        1999
                                                           ---------   ---------
     Deferred tax assets:
        Accruals and allowances                                $  --      6,630
        State income taxes                                     1,301      8,046
        Capitalized start-up costs                             3,226      2,510
                                                           ---------   ---------
             Gross deferred tax assets                         4,527     17,186
     Deferred tax liabilities - property and equipment          (233)    (2,022)
                                                           ---------   ---------
             Net deferred tax assets                       $   4,294     15,164
                                                           =========   =========


     No  valuation  allowance  has been  recorded  for the  deferred  tax assets
     because management  believes that the Companies are more likely than not to
     generate  sufficient  future  taxable  income to realize  the  related  tax
     benefits.

(7)  Commitments

     The  Companies  lease office space in Mountain  View,  California,  under a
     short-term  lease which expires in January 2001. The future minimum monthly
     rental under this operating lease as of December 31, 1999, was $8,000.  The
     operating lease arrangement was renewed in December 2000 (see Note 9).

     Rent  expense  was $-0-  and  $75,000  for the  period  from  May 21,  1998
     (inception)  to December 31, 1998 and for the year ended December 31, 1999,
     and $49,000 and $88,000 for the nine month periods ended September 30, 1999
     and 2000, respectively.

(8)  Significant Customer Information and Segment Reporting

     SFAS No.  131,  Disclosure  about  Segments  of an  Enterprise  and Related
     Information,   establishes   standards   for  the   reporting  by  business
     enterprises of information about operating segments, products and services,
     geographic  areas,  and major  customers.  The method for determining  what
     information  to report is based on the way that  management  organizes  the
     operating  segments within a company for making  operational  decisions and
     assessments of financial performance.

     Each of the Companies' chief operating  decision-maker,  as defined in SFAS
     No. 131, is  considered  to be the  principal  stockholder.  The  principal
     stockholder  reviews  separate  financial   information  for  Travelzoo.com
     Corporation and Silicon Channels  Corporation dba Travelzoo.com Sales, Inc.
     Reportable segment information for each company is as follows:

                                      F-13

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)



<TABLE>
<CAPTION>

                                   Period from May 21, 1998 (inception) to December 31, 1998
                                  ----------------------------------------------------------
                                                     Silicon
                                  Travelzoo.com     Channels
                                   Corporation     Corporation    Eliminations      Combined
                                  ------------     -----------    ------------      --------
<S>                                 <C>               <C>            <C>             <C>
Revenue from external
  customers                         $     --           84,101           --            84,101
Revenue from income
  sharing arrangements                  41,823           --          (41,823)           --
                                   -----------      ----------      ----------     ----------

     Total revenues                 $   41,823         84,101        (41,823)         84,101
                                   ===========      ==========      ==========     ==========
Segment income before
  income taxes                      $   33,987          1,111           --            35,098
                                   ===========      ==========      ==========     ==========

Depreciation                        $     --              974           --               974
                                   ===========      ==========      ==========     ==========
Total assets as of
  December 31, 1998                 $   44,766        101,599        (39,314)        107,051
                                   ===========      ==========      ==========     ==========
</TABLE>



<TABLE>
<CAPTION>
                                                  Year ended December 31, 1999
                                  ----------------------------------------------------------
                                                     Silicon
                                  Travelzoo.com     Channels
                                   Corporation     Corporation    Eliminations      Combined
                                  ------------     -----------    ------------      --------
<S>                                 <C>               <C>            <C>             <C>
Revenue from external
  customers                         $     --          954,259            --          954,259
Revenue from income
  sharing arrangements                  89,430           --          (89,430)            --
                                   -----------      ----------      ----------     ----------
     Total revenues                 $   89,430        954,259        (89,430)        954,259
                                   ===========      ==========      ==========     ==========
Segment income before
  income taxes                      $   78,969         65,081            --          144,050
                                   ===========      ==========      ==========     ==========
Depreciation                        $     --            5,795            --            5,795
                                   ===========      ==========      ==========     ==========
Total assets as of
  December 31, 1999                 $  119,647        397,253       (112,104)        404,796
                                   ===========      ==========      ==========     ==========
</TABLE>


                                      F-14

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


<TABLE>
<CAPTION>

                                          Nine month period ended September 30, 1999
                                  ----------------------------------------------------------
                                                     Silicon
                                  Travelzoo.com     Channels
                                   Corporation     Corporation    Eliminations      Combined
                                  ------------     -----------    ------------      --------
<S>                                 <C>               <C>            <C>             <C>

Revenue from external
  customers                         $    --           455,646            --          455,646
Revenue from income
  sharing arrangements                  30,822            --          (30,822)             .
                                   -----------      ----------      ----------     ----------
     Total revenues                 $   30,822        455,646         (30,822)       455,646
                                   ===========      ==========      ==========     ==========
Segment income before
  income taxes                      $   23,996        (11,024)            --          12,972
                                   ===========      ==========      ==========     ==========
Total assets as of
  September 30, 1999                $   58,602        122,477         (53,496)       127,583
                                   ===========      ==========      ==========     ==========

</TABLE>



<TABLE>
<CAPTION>

                                          Nine month period ended September 30, 2000
                                  ----------------------------------------------------------
                                                     Silicon
                                  Travelzoo.com     Channels
                                   Corporation     Corporation    Eliminations      Combined
                                  ------------     -----------    ------------      --------
<S>                                 <C>             <C>            <C>             <C>

Revenue from external
  customers                         $    --         2,781,231           --          2,781,231
Revenue from income
  sharing arrangements                400,340            --        (400,340)              --
                                   -----------      ----------      ----------     ----------
     Total revenues                 $ 400,340       2,781,231      (400,340)        2,781,231
                                   ===========      ==========      ==========     ==========
Segment income before
  income taxes                      $ 240,208         497,974         5,829           744,011
                                   ===========      ==========      ==========     ==========
Total assets as of
   September 30, 2000               $ 359,600       1,417,808      (353,861)        1,423,547
                                   ===========      ==========      ==========     ==========
</TABLE>



     For the period ended  December 31, 1998,  the year ended December 31, 1999,
     and the nine month periods ended September 30, 1999 and 2000, substantially
     all assets and revenues of the Companies were in the United States.

                                      F-15

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)

     Significant customer information is as follows:

<TABLE>
<CAPTION>

                                Percent of total revenue
              ----------------------------------------------------------
               Period from                              Nine month               Percent of accounts receivable
               May 21, 1998                            periods ended           -----------------------------------
              (inception) to     Year ended            September 30,               December 31,      September 30,
                December 31,     December 31,        -------------------       -------------------   -------------
Customer         1998               1999              1999         2000         1998         1999        2000
--------      --------------     ------------        ------       ------       ------       ------   -------------
<S>               <C>               <C>               <C>          <C>           <C>          <C>         <C>
A                 54%                7%                9%           4%           67%          10%          9%
B                 25%                4%                8%          --            --           --          --
C                 --                10%               15%           4%           --           --           6%
D                 --                23%               16%          24%           --           39%          9%
E                 --                10%               10%           5%           --           22%         --
F                 --                 1%               --            4%           --            3%         12%
G                 --                --                --            7%           --           --          18%
</TABLE>


     All of the above customers are based in the United States of America.

(9)  Subsequent Events

     (a)  Stock Split

          In March 2000,  the Board of  Directors of  Travelzoo.com  Corporation
          authorized a 2-for-1 stock split of Travelzoo.com Corporation's common
          stock.  This stock split was  effective  as of  December 1, 2000.  All
          affected  share  amounts  in  the  accompanying   combined   financial
          statements  have been  presented to reflect retroactively   this stock
          split.

     (b)  Issuance of Directors' Shares

          On December 2, 2000, Travelzoo.com Corporation issued 70,000 shares to
          the board of directors for services provided in 1999.

     (c)  Lease Renewal

          On  December  7,  2000,  the  Company  entered  into a  lease  renewal
          agreement  with minimum  rental  payments of $190,145 for the Mountain
          View, California, facility that expires on December 31, 2001.

     (d)  Domain Name Purchase

          In December  2000,  the Companies  purchased the Internet  domain name
          www.Weekend.com for cash of $200,000.

     (e)  Payable to Principal Stockholder

          On December 31, 2000, the Principal  Stockholder  agreed to extend the
          $40,000 loan until March 31, 2001.

     (f)  Combination  of   Travelzoo.com   Corporation  and  Silicon   Channels
          Corporation

          On January 18, 2001,  Travelzoo Inc. was incorporated in Delaware as a
          wholly owned subsidiary of Travelzoo.com  Corporation.  Travelzoo Inc.
          is  authorized  to issue  40,000,000  shares of $0.01 par value common

                                      F-16

<PAGE>
                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)



          stock and 5,000,000 shares of $0.01 par value preferred stock.

          On January 22, 2001,  the Principal  Stockholder  contributed  all the
          outstanding shares of common stock of Silicon Channels  Corporation to
          Travelzoo  Inc. in exchange  for  8,129,273  shares of common stock of
          Travelzoo Inc. and options to acquire 2,158,349 shares of common stock
          of Travelzoo Inc. at $1.00 per share. Travelzoo Inc. was the surviving
          entity in the  merger and the  business  which has been  conducted  by
          Silicon Channels  Corporation is being continued by Travelzoo Inc. The
          transaction  will be accounted for as a combination  of entities under
          common control using "as-if  pooling-of-interests"  accounting.  Under
          this  method of  accounting,  the  assets and  liabilities  of Silicon
          Channels Corporation and Travelzoo Inc. will be carried forward to the
          combined company at their historical costs. In addition, the financial
          statements of Silicon Channels  Corporation and Travelzoo Inc. will be
          restated on a combined basis.

          During  January  2001,   the  Board  of  Directors  of   Travelzoo.com
          Corporation  proposed that  Travelzoo.com  Corporation  be merged with
          Travelzoo Inc.  whereby  Travelzoo Inc. will be the surviving  entity.
          Each   share  of   Travelzoo.com   Corporation   outstanding   at  the
          consummation of the proposed merger will be exchanged for one share of
          Travelzoo Inc. The proposed  merger will be consummated  upon approval
          of the  holders  of a  majority  of the  outstanding  common  stock of
          Travelzoo.com  Corporation and the registration of the common stock of
          Travelzoo Inc. with the U.S. Securities and Exchange  Commission.  The
          proposed  merger will be accounted  for as a  combination  of entities
          under common  control using "as-if  pooling-of-interests"  accounting.
          Under  this  method of  accounting,  the  assets  and  liabilities  of
          Travelzoo.com  Corporation  and Travelzoo Inc. will be carried forward
          to the combined  company at their historical  costs. In addition,  the
          financial  statements of Travelzoo.com  Corporation and Travelzoo Inc.
          will be restated on a combined basis.


(10) Pro Forma Net Income Per Share (Unaudited)

     Pro forma net income per share gives effect to the merger  between  Silicon
     Channels  Corporation  and Travelzoo Inc. which was  consummated on January
     22, 2001 and the proposed merger between Silicon  Channels  Corporation and
     Travelzoo Inc.  described in Note 9 as if the mergers had been  consummated
     on May 21, 1998 using the actual and proposed exchange ratios.

     Pro forma basic net income per share is computed using the weighted-average
     number of  outstanding  shares of common stock and shares  vested under the
     board of  directors'  share  program  (see Note 5). Pro forma  diluted  net
     income  per  share  is  computed  using  the  weighted-average   number  of
     outstanding  shares of common stock described above and dilutive  potential
     common  stock from  options to purchase  common  stock  using the  treasury
     method  and  unvested  shares  issuable  under the  directors'  program.  A
     reconciliation  of the  weighted-average  basic  number of  shares  and the
     weighted-average diluted number of shares used in the calculations follows:

                                      F-17

<PAGE>

                            TRAVELZOO.COM CORPORATION
                                  AND AFFILIATE

                     Notes to Combined Financial Statements

                           December 31, 1998 and 1999

              (All information as of and for the nine months ended
                   September 30, 1999 and 2000 is unaudited.)


<TABLE>
<CAPTION>
                                                                                   Nine month periods ended
                                     Period from             Year ended                   September 30,
                               May 21, 1998 (inception)      December 31,          ------------------------
                                 to December 31, 1998            1999                  1999         2000
                               ------------------------      ------------          -----------   ----------
<S>                                   <C>                      <C>               <C>             <C>
Weighted-average basic
   number of shares                   9,431,741                19,323,064        19,314,314      19,355,147
Effect of directors'
   shares vesting                          --                      32,083            40,833            --
Effect of employee
   stock options                           --                        --                --           125,358
                                      ---------                ----------        ----------      ----------
Weighted-average diluted
  number of shares                    9,431,741                19,355,147        19,355,147      19,480,505
                                      =========                ==========        ==========      ==========

</TABLE>


     As of all periods presented, 2,158,349 options to purchase shares of common
     stock at $1.00 per share were not included in the  calculation of pro forma
     diluted income per share because their effect was antidilutive.


                                      F-18

<PAGE>
                                                                         Annex A





                          AGREEMENT AND PLAN OF MERGER

                                 BY AND BETWEEN

                           TRAVELZOO.COM CORPORATION,
             a corporation organized under the Bahamas International
                          Business Companies Act 1989,

                                       and

                                 TRAVELZOO INC.,
                        a corporation organized under the
                General and Business Corporations Law of Delaware


                                   DATED AS OF

                                January 19, 2001








--------------------------------------------------------------------------------

<PAGE>
 
                               Table of Contents
                                                                            Page
                                                                            ----
ARTICLE I. THE MERGER; CLOSING.................................................1
         1.1. The Merger.......................................................1
         1.2. Directors and Officers...........................................2
         1.3. Certificate of Incorporation and Bylaws..........................2
ARTICLE II. EFFECT OF THE MERGERS ON SECURITIES OF TRAVELZOO DELAWARE 
            AND TRAVELZOO BAHAMAS..............................................2
         2.1. Conversion of Common Stock.......................................2
         2.2. Surrender and Payment............................................3
         2.3. Withholding Rights...............................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TRAVELZOO DELAWARE..............4
         3.1. Organization and Good Standing...................................4
         3.2. Capitalization...................................................4
         3.3. Authorization; Binding Agreement.................................4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TRAVELZOO BAHAMAS................5
         4.1. Organization and Good Standing...................................5
         4.2. Capitalization...................................................5
         4.3. Authorization; Binding Agreement.................................5
ARTICLE V.  ADDITIONAL COVENANTS OF TRAVELZOO BAHAMAS..........................6
         5.1. Shareholder Approval.............................................6
         5.2. Reasonable Best Efforts..........................................6
         5.3. Compliance.......................................................6
ARTICLE VI. ADDITIONAL COVENANTS OF TRAVELZOO DELAWARE AND TRAVELZOO
             BAHAMAS...........................................................6
         6.1. Director and Officer Liability...................................6
         6.2. Registration Statement; Prospectus/Proxy Statement...............7
         6.3. Tax Treatment....................................................8
ARTICLE VII. CONDITIONS........................................................8
         7.1. Conditions to Each Party's Obligations...........................8
              7.1.1. Shareholder Approvals.....................................8
              7.1.2. No Injunction or Action...................................8
              7.1.3. Governmental Approvals....................................8
              7.1.4. Registration Statement....................................9
         7.2. Conditions to Obligations of Travelzoo Delaware..................9
              7.2.1. Travelzoo Bahamas Representations and Warranties..........9
              7.2.2. Performance by Travelzoo Bahamas..........................9
         7.3. Conditions to Obligations of Travelzoo Bahamas...................9
              7.3.1. Travelzoo Delaware Representations and Warranties.........9
              7.3.2. Performance by Travelzoo Delaware.........................9
ARTICLE VIII. TERMINATION AND ABANDONMENT......................................9
         8.1. Termination......................................................9
         8.2. Effect of Termination...........................................10
ARTICLE IX. MISCELLANEOUS.....................................................11
         9.1. Amendment and Modification......................................11
         9.2. Waiver of Compliance; Consents..................................11
         9.3. Survival of Representations and Warranties......................11
         9.4. Notices.........................................................11
         9.5. Binding Effect; Assignment......................................12
         9.6. Expenses........................................................12
         9.7. Governing Law...................................................13
         9.8. Counterparts....................................................13
         9.9. Entire Agreement................................................13
         9.10. Third Parties..................................................13

                                       

<PAGE>

                            GLOSSARY OF DEFINED TERMS
                            -------------------------
                                                    
                                                                    Page Where
                                                                    Term Defined



Agreement......................................................................1
Articles of Merger.............................................................2
Closing........................................................................1
Closing Date...................................................................1
Code...........................................................................1
DGCL...........................................................................1
Dissenting Shares..............................................................2
Effective Time.................................................................2
Exchange Agent.................................................................3
Form S-4.......................................................................7
IBCA...........................................................................2
Indemnified Losses.............................................................6
Indemnified Person.............................................................6
Merger.........................................................................1
Merger Consideration...........................................................2
Plan of Merger.................................................................1
Proxy Statement/Prospectus.....................................................7
Surviving Corporation..........................................................1
Travelzoo Bahamas..............................................................1
Travelzoo Bahamas Common Stock.................................................2
Travelzoo Bahamas Shareholders Meeting.........................................6
Travelzoo Delaware.............................................................1
Travelzoo Delaware Common Stock................................................2
Travelzoo Delaware Shareholders Meeting........................................7
                                       

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

     This  Agreement  and Plan of Merger (the  "Agreement")  is made and entered
into as of  January  19,  2001,  by and  between  Travelzoo.com  Corporation,  a
corporation  organized under the Bahamas  International  Business  Companies Act
1989 ("Travelzoo  Bahamas"),  and its subsidiary,  Travelzoo Inc., a corporation
organized  under  the  General  and  Business  Corporations  Law of the State of
Delaware, United States of America ("Travelzoo Delaware").

                                    Recitals

     A.  The  respective  Boards of Directors of Travelzoo Bahamas and Travelzoo
Delaware have approved and deem it advisable and in the best  interests of their
respective  companies and  shareholders  to consummate the merger (the "Merger")
provided  for herein,  pursuant to which  Travelzoo  Bahamas will be merged into
Travelzoo Delaware. Upon consummation of the Merger, the current shareholders of
Travelzoo Bahamas will become shareholders of Travelzoo Delaware.

     B.  For federal income tax purposes, it is intended that the Merger qualify
as a  reorganization  described in Section 368(a) of the United States  Internal
Revenue Code of 1986, as amended (the "Code").

     C.  Travelzoo  Delaware  and  Travelzoo  Bahamas  desire  to  make  certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger.

     NOW,   THEREFORE,   in   consideration   of  the  foregoing,   and  of  the
representations,  warranties,  covenants and agreements  contained  herein,  the
parties hereto agree as follows:

                                   ARTICLE I.
                               THE MERGER; CLOSING

     1.1. The  Merger.Pursuant  to the plan of merger, in substantially the form
attached hereto as Exhibit A (the "Plan of Merger"),  upon the terms and subject
to the conditions set forth in this Agreement and in the Plan of Merger:

     (a) Travelzoo  Bahamas shall be merged with and into Travelzoo  Delaware in
accordance with the applicable  provisions of the Delaware  General  Corporation
Law (the "DGCL").  Travelzoo  Delaware shall be the surviving  corporation  (the
"Surviving  Corporation")  in  the  Merger  and  shall  continue  its  corporate
existence under the laws of the State of Delaware.  The effects and consequences
of the Merger shall be as set forth in the Plan of Merger.

     (b) Subject to the terms and conditions of this  Agreement,  the closing of
the Merger  (the  "Closing")  shall take place (a) at the  offices of  Travelzoo
Bahamas, at 800 West El Camino Real, Suite 180, Mountain View, California 94040,
at 10:00 a.m.  local time, on the fifth  Business Day following the day on which
the last to be fulfilled or waived of the  conditions  set forth in Article VIII
(excluding conditions that, by their terms cannot be satisfied until the Closing
Date,  but subject to the  fulfillment  or waiver of such  conditions)  shall be
fulfilled or waived in  accordance  herewith or (b) at such other time,  date or
place as Travelzoo  Delaware and Travelzoo  Bahamas may agree. The date on which
the  Closing  occurs  is  hereinafter   referred  to  as  the  "Closing   Date."

     (c) As soon as  practicable  following  the Closing,  the parties shall (i)
file  articles of merger with  respect to each of the Merger (the  "Articles  of
Merger") in such form as is required by and executed in accordance with the DGCL
and (ii) make all other  filings or  recordings  required  under the laws of the
Commonwealth of the Bahamas.  The Merger shall become effective at such time and
date  (the  "Effective  Time")  which is the date and time of the  filing of the
Articles of Merger with respect to the Merger in the office of the  Secretary of
State of  Delaware  (or such  other  date and time as may be  specified  in such
certificate as may be permitted by the DGCL).  

     1.2. Directors and  Officers.  The  directors  and  officers  of  Travelzoo
Delaware  immediately prior to the Effective Time shall remain the directors and
officers of the Surviving  Corporation  as of the Effective Time and until their
successors are duly appointed or elected in accordance with the laws of Delaware
or until their earlier death, resignation or removal.

     1.3. Certificate of Incorporation and Bylaws. The articles of incorporation
and bylaws of Travelzoo  Delaware  immediately prior to the Effective Time shall
be the articles of incorporation and bylaws of the surviving  corporation of the
Merger as of the Effective Time.

                                       A-1

<PAGE>

                                   ARTICLE II.
          EFFECT OF THE MERGERS ON SECURITIES OF TRAVELZOO DELAWARE AND
                               TRAVELZOO BAHAMAS

     2.1. Conversion of Common Stock.

     (a)  Subject to the provisions of this  Agreement, at  the  Effective  Time
each issued and outstanding share of common stock, par value U.S.$.01 per share,
and each outstanding share of common stock, no par value per share, of Travelzoo
Bahamas (the  "Travelzoo  Bahamas  Common  Stock"),  shall be converted into the
right to receive one (1) share of common stock, par value U.S.$.01 per share, of
Travelzoo Delaware (the "Travelzoo Delaware Common Stock"), subject to the terms
and conditions set forth herein (the "Merger Consideration").

     (b) As a result of the  Merger  and  without  any action on the part of the
holder  thereof,  at the Effective  Time all shares of Travelzoo  Bahamas Common
Stock shall cease to be outstanding  and shall be canceled and retired and shall
cease to exist,  and each holder of shares of  Travelzoo  Bahamas  Common  Stock
shall  thereafter  cease to have any  rights  with  respect  to such  shares  of
Travelzoo Bahamas Common Stock,  except the right to receive,  without interest,
the applicable Merger  Consideration  upon the delivery to Travelzoo Delaware of
the  information  required  pursuant to Section  2.2 hereof.  To the extent that
dissenting  shareholders'  rights are available  under Section 81 of The Bahamas
International  Business Companies Act 1989 (the "IBCA"), and the shareholders of
Travelzoo Bahamas properly take all actions necessary under the IBCA to exercise
and perfect  such rights in respect of their shares (the  "Dissenting  Shares"),
such  Dissenting  Shares shall not be converted into the right to receive Merger
Consideration at or after the Effective Time unless and until the holder of such
shares  subsequently  fails to or becomes  ineligible  to exercise  such rights.
Travelzoo  Bahamas shall give prompt notice to Travelzoo  Delaware of any demand
received by  Travelzoo  Bahamas from a  dissenting  shareholder  pursuant to the
IBCA.

     (c) Notwithstanding anything contained in this Section to the contrary, any
shares of Travelzoo  Bahamas Common Stock issued and held in Travelzoo  Bahamas'
treasury immediately prior to the Effective Time shall, by virtue of the Merger,
cease to be outstanding and shall be canceled and retired without payment of any
consideration  therefor  and will not be  deemed  outstanding  for  purposes  of
Section 2.2.

     2.2. Surrender and Payment.

     (a)  Prior to the Effective Time, Travelzoo  Delaware and Travelzoo Bahamas
shall  appoint an agent (the  "Exchange  Agent")  for the purpose of issuing the
Merger  Consideration in exchange for the outstanding  shares of Common Stock of
Travelzoo  Bahamas.  Prior to or promptly  after the Effective  Time,  Travelzoo
Bahamas  will send,  or will cause the  Exchange  Agent to send,  to each record
holder of shares of Travelzoo  Bahamas Common Stock  instructions for exercising
such holder's right to receive the Merger  Consideration,  which shall include a
requirement that the shareholder send a communication to Travelzoo Delaware,  by
electronic mail, Internet  communication,  written communication or other method
to be  specified  in such  instructions,  which  shall (i)  include the name and
country of residence of the  shareholder,  the  shareholder's  registered  email
address and the  shareholder's  password (ii) provide a mailing  address for the
shareholder  and (iii)  indicate  whether such  shareholder  consents to receive
communications  from Travelzoo  Delaware,  including notices,  reports and other
communications  required  under the DGCL and under the rules and  regulations of
the  United   States   Securities   and  Exchange   Commission,   by  electronic
transmission.  If the  shareholder no longer has access to his or her registered
email address, such shareholder will be required to update his or her registered
email address by making a written request to Travelzoo  Delaware,  by electronic
mail,  Internet  communication,  written  communication  or other  method  to be
specified  in  the   exercise   instructions,   which  shall   include  (x)  the
shareholder's  name,  (y) a copy of the  shareholder's  passport  or other photo
identification,  and (z)  either  the  shareholder's  current  registered  email
address or the serial  numbers of the  shareholder's  Travelzoo  Bahamas  Common
Stock issued to the  shareholder  when he or she received the Travelzoo  Bahamas
Common Stock.

     (b) Upon  delivery  to the  Exchange  Agent of a  notice  substantially  in
accordance with the instructions to be provided in accordance with paragraph (a)
above,   the  Exchange  Agent  shall  cause  to  be  issued  to  the  applicable
shareholders,  by book entry,  the shares of Common Stock of Travelzoo  Delaware
representing the Merger  Consideration  which they shall be entitled  hereunder,
and shall advise the shareholder of such issuance by electronic communication or
other method approved by Travelzoo Delaware.

     (c) Any holder of Common Stock of Travelzoo  Bahamas who has not  exchanged
such  holder's  shares  for the Merger  Consideration  in  accordance  with this
Section 2.2 within six months after the  Effective  Time shall  thereafter  look


                                       A-2

<PAGE>

only to Travelzoo Delaware for issuance of the Merger  Consideration,  and shall
not be entitled to any  dividends  or  distributions,  or any other  rights of a
holder of the Common Stock of Travelzoo  Delaware,  for any period prior to such
issuance,  and shall in any  event  not be  entitled  to any  interest  or other
consideration  in respect of the delay in  issuance to such  shareholder  of the
Merger  Consideration.  Travelzoo  Delaware shall not be liable to any Travelzoo
Bahamas Holder for any amounts paid or shares transferred to any public official
pursuant to applicable  abandoned property,  escheat or similar laws. Any rights
to receive the Merger Consideration remaining unclaimed by the former holders of
the Common Stock of  Travelzoo  Bahamas two years after the  Effective  Time (or
such  earlier  date,  immediately  prior to such  time  when the  amounts  would
otherwise escheat to or become property of any Governmental Authority) shall, to
the extent permitted by applicable law, be cancelled.

     2.3. Withholding Rights. Travelzoo Delaware shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this
Article 2 such amounts as it is required to deduct and withhold  with respect to
the making of such  payment  under any  provision  of federal,  state,  local or
foreign tax law. If Travelzoo Delaware so withholds amounts,  such amounts shall
be  treated  for all  purposes  of this  Agreement  as  having  been paid to the
Travelzoo  Bahamas  Holder in  respect  of which  Travelzoo  Delaware  made such
deduction and withholding.


                                  ARTICLE III.
              REPRESENTATIONS AND WARRANTIES OF TRAVELZOO DELAWARE

     Travelzoo  Delaware  represents and warrants to Travelzoo  Bahamas that the
statements  contained  in this  Article  III are  true  and  correct  except  as
otherwise expressly contemplated by this Agreement.

     3.1. Organization and Good  Standing.  Travelzoo  Delaware is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware.

     3.2. Capitalization. As of the date hereof, the authorized capital stock of
Travelzoo  Delaware consists of 40,000,000  shares of Travelzoo  Delaware Common
Stock,  par value  $.01 per share and  5,000,000  shares of  Travelzoo  Delaware
preferred stock, par value $.01 per share. Of such authorized  shares, as of the
date hereof,  there are 100 shares of Travelzoo Delaware Common Stock issued and
outstanding,  and no shares of  Travelzoo  Delaware  Common Stock are issued and
held in the treasury of Travelzoo Delaware,  and no shares of Travelzoo Delaware
preferred  stock are issued or  outstanding.  As of the date hereof there are no
options to purchase Travelzoo  Delaware Common Stock  outstanding.  There are no
other outstanding  rights,  subscriptions,  warrants,  puts, calls,  unsatisfied
preemptive  rights,  options or other  agreements of any kind relating to any of
the authorized but not issued or unauthorized shares of the capital stock or any
other  security  of  Travelzoo  Delaware,  and there is no other  authorized  or
outstanding  security of any kind  convertible into or exchangeable for any such
capital stock or other security.

     3.3. Authorization; Binding Agreement. Travelzoo Delaware has all requisite
corporate  power and  authority  to execute and deliver  this  Agreement  and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Travelzoo Delaware's Board of Directors, and
the Merger has been approved by the holder of all  outstanding  shares of Common
Stock of Travelzoo Delaware in accordance with the requirements of the DGCL, and
no other corporate  proceedings on the part of Travelzoo  Delaware are necessary
to authorize the execution and delivery of this  Agreement or to consummate  the
transactions  contemplated  hereby.  This  Agreement  has been duly and  validly
executed and delivered by Travelzoo  Delaware and constitutes  the legal,  valid
and binding  obligation of Travelzoo  Delaware,  enforceable  against  Travelzoo
Delaware in accordance with its terms,  except to the extent that enforceability
thereof may be limited by applicable bankruptcy,  insolvency,  reorganization or
other similar laws affecting the enforcement of creditors'  rights generally and
by principles of equity.

                                   ARTICLE IV.
               REPRESENTATIONS AND WARRANTIES OF TRAVELZOO BAHAMAS
 
     Travelzoo  Bahamas  represents and warrants to Travelzoo  Delaware that the
statements contained in this Article IV are true and correct.

     4.1. Organization  and  Good Standing.  Travelzoo  Bahamas is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
Commonwealth of the Bahamas.

     4.2. Capitalization.  As  of the date hereof, the authorized capital stock 
of Travelzoo  Bahamas consists of 20,000,000  shares of Travelzoo Bahamas Common
Stock. Of such authorized  shares,  as of the date hereof,  there are issued and

                                       A-3

<PAGE>

outstanding no shares of Travelzoo  Bahamas Common Stock,  11,295,874  shares of
Travelzoo  Bahamas Common Stock are issued and held in the treasury of Travelzoo
Bahamas,  and  no  other  capital  stock  of  Travelzoo  Bahamas  is  issued  or
outstanding. All issued and outstanding shares of Travelzoo Bahamas Common Stock
are  duly   authorized,   validly  issued  and   outstanding,   fully  paid  and
nonassessable.  There are no outstanding rights, subscriptions,  warrants, puts,
calls,  unsatisfied  preemptive rights,  options or other agreements of any kind
relating to any of the authorized but not issued or  unauthorized  shares of the
capital  stock or any  other  security  of  Travelzoo  Bahamas,  and there is no
authorized or outstanding  security of any kind convertible into or exchangeable
for any such capital stock or other security.

     4.3. Authorization;  Binding Agreement. Travelzoo Bahamas has all requisite
corporate  power and  authority  to execute and deliver  this  Agreement  and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Travelzoo  Bahamas' Board of Directors,  and
no other corporate proceedings on the part of Travelzoo Bahamas are necessary to
authorize  the execution  and delivery of this  Agreement or to  consummate  the
transactions  contemplated  hereby (other than the approval and adoption of this
Agreement,  the Plan of Merger and the transactions  contemplated  hereby by the
shareholders of Travelzoo Bahamas in accordance with the IBCA and the Memorandum
of Association and Articles of Association of Travelzoo Bahamas). This Agreement
has been duly and  validly  executed  and  delivered  by  Travelzoo  Bahamas and
constitutes  the legal,  valid and  binding  obligation  of  Travelzoo  Bahamas,
enforceable  against Travelzoo  Bahamas in accordance with its terms,  except to
the extent that enforceability  thereof may be limited by applicable bankruptcy,
insolvency,  reorganization  or other similar laws affecting the  enforcement of
creditors' rights generally and by principles of equity.


                                   ARTICLE V.
                    ADDITIONAL COVENANTS OF TRAVELZOO BAHAMAS

     Travelzoo Bahamas covenants and agrees as follows:

     5.1. Shareholder Approval.  As soon as practicable,  Travelzoo Bahamas will
take all steps  necessary  to duly  call,  give  notice of,  convene  and hold a
meeting of its shareholders (the "Travelzoo Bahamas  Shareholders  Meeting") for
the purpose of  approving  this  Agreement  and the Merger and the  transactions
contemplated  hereby.  Except as otherwise  contemplated  by this  Agreement and
subject to the  exercise of their  fiduciary  duties,  the Board of Directors of
Travelzoo  Bahamas will recommend to the shareholders of Travelzoo  Bahamas that
they approve the Merger.

     5.2.  Reasonable Best  Efforts.Subject  to the terms and conditions  herein
provided,  Travelzoo  Bahamas agrees to use its reasonable best efforts to take,
or cause to be taken,  all actions,  and to do, or cause to be done,  all things
necessary,  proper or advisable to consummate  and make effective as promptly as
practicable  the  Merger  and  the  other  transactions   contemplated  by  this
Agreement.  Upon the terms  and  subject  to the  conditions  hereof,  Travelzoo
Bahamas agrees to use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things  necessary to satisfy the
other conditions of the Closing set forth herein.

     5.3.   Compliance.   In  consummating   the  Merger  and  the  transactions
contemplated  hereby,  Travelzoo Bahamas shall comply, in all material respects,
with all applicable Laws.

                                   ARTICLE VI.
        ADDITIONAL COVENANTS OF TRAVELZOO DELAWARE AND TRAVELZOO BAHAMAS

     Travelzoo  Delaware and Travelzoo Bahamas covenant and agree that they will
take the  necessary  actions  prior  to the  Effective  Time to cause  Travelzoo
Delaware to do the following:

     6.1. Director and Officer Liability.

     (a) The Surviving Corporation shall indemnify and hold harmless and advance
expenses to the present and former officers and directors of Travelzoo  Delaware
and Travelzoo  Bahamas,  and each person who prior to the Effective Time becomes
an officer or  director of  Travelzoo  Delaware or  Travelzoo  Bahamas  (each an
"Indemnified  Person"),  in  respect  of acts  or  omissions  by  them in  their
capacities  as such  occurring  at or prior to the  Effective  Time  (including,
without  limitation,  for acts or omissions  occurring in  connection  with this
Agreement and the consummation of the Merger) to the fullest extent  permissible
under applicable law (collectively,  the "Indemnified Losses"). Without limiting
the generality of the foregoing, the Indemnified Losses shall include reasonable
costs of prosecuting a claim under this Section. The Surviving Corporation shall

                                       A-4

<PAGE>

periodically  advance or reimburse  each  Indemnified  Person for all reasonable
fees and expenses of counsel  constituting  Indemnified  Losses as such fees and
expenses are  incurred;  provided  that such  Indemnified  Person shall agree to
promptly repay to the Surviving Corporation the amount of any such reimbursement
if it shall be judicially determined by judgment or order not subject to further
appeal or discretionary  review that such Indemnified  Person is not entitled to
be indemnified by the Surviving Corporation in connection with such matter.

     (b) For at least  three  years  after the  Effective  Time,  the  Surviving
Corporation  shall  provide  officers'  and  directors'  liability  insurance in
respect of acts or omissions  occurring prior to the Effective Time  (including,
without  limitation,  for acts or omissions  occurring in  connection  with this
Agreement and the  consummation  of the Merger)  covering each such  Indemnified
Person  currently  covered by  Travelzoo  Delaware's  officers'  and  directors'
liability  insurance policy (with respect to officers and directors of Travelzoo
Delaware) or by Travelzoo Bahamas' officers' and directors'  liability insurance
policy (with  respect to officers and  directors of Travelzoo  Bahamas) on terms
with  respect to coverage and amount  (including  with respect to the payment of
attorney's  fees) no less  favorable  than those of such policy in effect on the
date hereof.

     (c) The  rights of each  Indemnified  Person and his or her heirs and legal
representatives  under this  Section 7.1 shall be in addition to any rights such
Person may have  under the  articles  of  incorporation  or bylaws of  Travelzoo
Delaware (with respect to the Travelzoo  Delaware officers and directors) or the
Memorandum of Association or Articles of Association of Travelzoo  Bahamas (with
respect  to  the  Travelzoo  Bahamas  officers  and  directors),  any  agreement
providing for indemnification,  or under the laws of the State of Delaware,  the
IBCA or any other applicable  Laws.  These rights shall survive  consummation of
the Merger and are  intended  to  benefit,  and shall be  enforceable  by,  each
Indemnified  Person.  

     6.2. Registration Statement; Prospectus/Proxy Statement.

     Travelzoo  Delaware and  Travelzoo  Bahamas  shall  cooperate  and promptly
prepare and Travelzoo  Delaware shall file with the SEC as soon as practicable a
Registration  Statement  on Form S-4 or other  applicable  form (the "Form S-4")
under the  Securities  Act,  with  respect to  Travelzoo  Delaware  Common Stock
issuable in the Merger,  a portion of which  Registration  Statement  shall also
serve as the joint proxy  statement with respect to the meeting of the Travelzoo
Delaware  shareholders  held for the purpose of approving this Agreement and the
Merger  and  the  transactions  contemplated  hereby  (the  "Travelzoo  Delaware
Shareholders  Meeting") and Travelzoo Bahamas  Shareholders  Meeting (the "Proxy
Statement/Prospectus").   The   respective   parties   will   cause   the  Proxy
Statement/Prospectus  and the  Form  S-4 to  comply  as to form in all  material
respects with the applicable  provisions of the Securities Act, the Exchange Act
and the rules and  regulations  thereunder.  Travelzoo  Delaware  and  Travelzoo
Bahamas will  cooperate  to have the Form S-4  declared  effective by the SEC as
promptly  as  practicable  and to keep  the  Form  S-4  effective  as long as is
necessary  to  consummate  the  Merger.  Travelzoo  Delaware  shall use its best
efforts to obtain,  prior to the  effective  date of the Form S-4, all necessary
state  securities  law or "Blue Sky" permits or approvals  required to carry out
the  transactions  contemplated  by this  Agreement  and will  pay all  expenses
incident   thereto.   Travelzoo   Delaware   shall   ensure   that   the   Proxy
Statement/Prospectus  and each amendment or supplement  thereto will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated  therein or necessary to make the statements  therein,  in light of
the circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue  statement
of a material  fact or omission to state a material  fact was made by  Travelzoo
Delaware in reliance upon and in conformity with written information  concerning
Travelzoo  Bahamas   furnished  to  Travelzoo   Delaware  by  Travelzoo  Bahamas
specifically for use in the Proxy  Statement/Prospectus.  Travelzoo Delaware and
Travelzoo  Bahamas  agree  that the  written  information  provided  by them for
inclusion in the Proxy  Statement/Prospectus  and each  amendment or  supplement
thereto will not include an untrue statement of a material fact or omit to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

     6.3. Tax Treatment. The Surviving Corporation shall use its reasonable best
efforts to cause the  Merger to qualify as either,  and will not take any action
which to its knowledge  could  reasonably be expected to prevent the Merger from
qualifying as either, a reorganization under Section 368(a) of the Code.

                                  ARTICLE VII.
                                   CONDITIONS

     7.1.Conditions to Each Party's Obligations.  The respective  obligations of
each party to effect the Merger shall be subject to the fulfillment or waiver on
or prior to the Closing Date of the following conditions:
 
                                       A-5

<PAGE>

                 7.1.1.   Shareholder  Approvals.  The  Merger  shall  have been
         approved  at or prior to the Effective  Time by the  requisite  vote of
         the shareholders of  Travelzoo  Bahamas in accordance with the IBCA and
         Travelzoo Bahamas' Memorandum of Association.

                  7.1.2.  No  Injunction  or Action.  No order,  statute,  rule,
         regulation, executive order, stay, decree, judgment or injunction shall
         have been  enacted,  entered,  promulgated  or enforced by any court or
         other   Governmental   Authority,   which  prohibits  or  prevents  the
         consummation of the Merger and which has not been vacated, dismissed or
         withdrawn by the  Effective  Time.  Travelzoo  Delaware  and  Travelzoo
         Bahamas  shall use their  reasonable  best  efforts  to have any of the
         foregoing vacated,  dismissed or withdrawn on or prior to the Effective
         Time.

                  7.1.3.     Governmental   Approvals.   All  Consents  of   any
         Governmental Authority required for the consummation of the  Merger and
         the  transactions  contemplated  by  this  Agreement  shall  have  been
         obtained.

                  7.1.4.  Registration  Statement.  The  Registration  Statement
         shall have been  declared  effective and no stop order  suspending  the
         effectiveness of the Registration  Statement shall have been issued and
         no action,  suit,  proceeding or  investigation  for that purpose shall
         have been initiated or threatened by any Governmental Authority.

     7.2. Conditions to  Obligations  of Travelzoo  Delaware.  The obligation of
Travelzoo  Delaware to effect the Merger shall be subject to the  fulfillment on
or prior to the Closing Date of the following additional  conditions,  which may
be waived by Travelzoo Delaware:

                  7.2.1.     Travelzoo  Bahamas Representations and  Warranties.
         As of the Closing Date, none of  the  representations  or warranties of
         Travelzoo  Bahamas  contained  in  this  Agreement  shall be  untrue or
         incorrect in any material respect as of the Closing Date.

                  7.2.2.  Performance by Travelzoo  Bahamas.  Travelzoo  Bahamas
         shall  have  performed  and  complied  with  all of the  covenants  and
         agreements  in all  material  respects  and  satisfied  in all material
         respects  all  of the  conditions  required  by  this  Agreement  to be
         performed or complied  with or  satisfied  by  Travelzoo  Bahamas on or
         prior to the Closing Date.

     7.3. Conditions to Obligations  of Travelzoo  Bahamas.  The  obligations of
Travelzoo Bahamas to effect the Travelzoo Bahamas Merger shall be subject to the
fulfillment  on or  prior  to  the  Closing  Date  of the  following  additional
conditions, which may be waived by Travelzoo Bahamas:

                  7.3.1.  Travelzoo  Delaware  Representations  and  Warranties.
         As of the  Closing Date, none of the  representations  or warranties of
         Travelzoo  Delaware  contained  in  this  Agreement  shall be untrue or
         incorrect in any material respect as of the Closing Date.

                  7.3.2.  Performance by Travelzoo Delaware.  Travelzoo Delaware
         shall have performed and complied with all the covenants and agreements
         in all material respects and satisfied in all material respects all the
         conditions  required by this Agreement to be performed or complied with
         or satisfied by Travelzoo Delaware on or prior to the Closing Date.


                                  ARTICLE VIII.
                           TERMINATION AND ABANDONMENT

     8.1. Termination. This Agreement may be terminated at any time prior to the
Effective  Time,  whether  before or after  approval of this  Agreement  and the
Merger  by the  shareholders  of  Travelzoo  Delaware  and the  shareholders  of
Travelzoo Bahamas:

     (a)  by mutual consent of Travelzoo Delaware and Travelzoo Bahamas;

     (b)  (1) by  Travelzoo  Delaware (provided  that Travelzoo  Delaware is not
then in  material  breach of any  representation,  warranty,  covenant  or other
agreement  contained herein), if there has been a breach by Travelzoo Bahamas of
any of its  representations,  warranties,  covenants or agreements  contained in
this  Agreement,  or any such  representation  and  warranty  shall have  become
untrue, and such breach or condition has not been cured within 30 days following
receipt by Travelzoo Bahamas of written notice of such breach;  (2) by Travelzoo
Bahamas  (provided that Travelzoo  Bahamas is not then in material breach of any
representation,  warranty,  covenant or other agreement  contained  herein),  if

                                       A-6

<PAGE>

there has been a breach by  Travelzoo  Delaware  of any of its  representations,
warranties,  covenants or agreements  contained in this  Agreement,  or any such
representation  and  warranty  shall  have  become  untrue,  and such  breach or
condition  has not been cured  within 30 days  following  receipt  by  Travelzoo
Delaware of written notice of such breach;

     (c) by either  Travelzoo  Bahamas  or  Travelzoo  Delaware  if any  decree,
permanent injunction,  judgment, order or other action by any court of competent
jurisdiction,  any  arbitrator  or  any  Governmental  Authority  preventing  or
prohibiting   consummation   of  the  Merger   shall  have   become   final  and
nonappealable;

     (d) by either Travelzoo  Bahamas or Travelzoo  Delaware if the Merger shall
not have been consummated before May 1, 2001 unless the failure of the Effective
Time to occur by such date shall be due to the  failure of the party  seeking to
terminate  this  Agreement  to perform or observe in all  material  respects the
covenants and agreements of such party set forth herein;

     (e) by either Travelzoo  Bahamas or Travelzoo  Delaware if the transactions
contemplated  by this  Agreement  shall fail to receive the  requisite  vote for
approval  and  adoption (1) by the  shareholders  of  Travelzoo  Delaware at the
Travelzoo  Delaware  Shareholders  Meeting or any  adjournment  or  postponement
thereof or (2) by the shareholders of Travelzoo Bahamas at the Travelzoo Bahamas
Shareholders Meeting or any adjournment or postponement  thereof;  provided that
the right to terminate  this  Agreement  under this Section  9.1(e) shall not be
available  to any party  whose  failure to  fulfill  any  obligation  under this
Agreement has been the cause of, or resulted in, the failure of such approval to
have been obtained;

     (f) By either  Travelzoo  Delaware or  Travelzoo  Bahamas,  if the Board of
Directors of the other shall have withdrawn,  or modified or changed in a manner
adverse to the terminating  party its approval or  recommendation  of the Merger
and/or the Travelzoo Delaware or Travelzoo Bahamas  Proposals,  each as the case
may be; or

     (g) by either  Travelzoo  Bahamas  or  Travelzoo  Delaware  if the Board of
Directors of either company  determines,  in its discretion,  that the number of
shareholders  requesting paper delivery (as opposed or in addition to electronic
delivery)  of the Proxy  Statement/Prospectus  impairs  the  feasibility  of the
consummation of the Merger.

     8.2.  Effect  of  Termination.  In the  event  of the  termination  of this
Agreement by either Travelzoo  Delaware or Travelzoo Bahamas pursuant to Section
8.1, this Agreement  shall  forthwith  become void,  there shall be no liability
under this Agreement on the part of Travelzoo Bahamas or Travelzoo Delaware.

                                   ARTICLE IX.
                                  MISCELLANEOUS

     9.1. Amendment and Modification. To the extent permitted by applicable Law,
this  Agreement  may be  amended,  modified  or  supplemented  only by a written
agreement  among  Travelzoo  Delaware and Travelzoo  Bahamas,  whether before or
after approval of this Agreement and the Plan of Merger by the  shareholders  of
Travelzoo Delaware and Travelzoo Bahamas,  except that following approval by the
shareholders of either Travelzoo Delaware or Travelzoo  Bahamas,  there shall be
no  amendment  or change to the  provisions  hereof  with  respect to the Merger
Consideration  without further approval by such approving  shareholders,  and no
other  amendment  shall be made which by law requires  further  approval by such
shareholders without such further approval.

     9.2. Waiver of Compliance;  Consents.  Any failure of Travelzoo Delaware on
the one hand,  or  Travelzoo  Bahamas  on the  other  hand,  to comply  with any
obligation,  covenant,  agreement or condition herein may be waived by Travelzoo
Bahamas on the one hand,  or  Travelzoo  Delaware on the other  hand,  only by a
written  instrument signed by the party granting such waiver, but such waiver or
failure  to  insist  upon  strict  compliance  with such  obligation,  covenant,
agreement  or  condition  shall not  operate  as a waiver of, or  estoppel  with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in  writing  in a manner  consistent  with  the  requirements  for a  waiver  of
compliance as set forth in this Section.

     9.3.   Survival  of   Representations   and   Warranties.   The  respective
representations  and  warranties  of Travelzoo  Delaware and  Travelzoo  Bahamas
contained herein or in any certificates or other documents delivered prior to or
at the Closing  shall  survive the  execution  and  delivery of this  Agreement,
notwithstanding  any  investigation  made or  information  obtained by the other
party, but shall terminate at the Effective Time.

                                       A-7

<PAGE>

     9.4. Notices.  All notices and other  communications  hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile, receipt confirmed, or on the next business day when sent by overnight
courier or on the second  succeeding  business  day when sent by  registered  or
certified mail (postage  prepaid,  return  receipt  requested) to the respective
parties at the  following  addresses  (or at such other  address  for a party as
shall be specified by like notice): 

                (i)  if to Travelzoo Delaware,  to: 

                     Travelzoo Inc.  
                     800 West El Camino Real,  Suite 180
                     Mountain View,  CA 94040
                     Attention: Chairman of the Board, Chief Executive  
                                Officer and President 
                     Fax  650-943-2433

                with a copy to:

                     Bryan Cave LLP
                     211 North Broadway, Suite 3600
                     St. Louis, Missouri 63102-2750
                     Attention: Denis P. McCusker, Esq.
                     Telecopy:  (314) 259-2020

                and

                (ii) if to Travelzoo Bahamas, to:

                     Travelzoo.com Corporation
                     800 West El Camino Real, Suite 180
                     Mountain View, CA 94040
                     Attention:  Chairman of the Board, Chief Executive
                                 Officer and President
                     Fax 650-943-2433 

                with a copy to:

                     Bryan Cave LLP
                     211 North Broadway, Suite 3600
                     St. Louis, Missouri 63102-2750
                     Attention:  Denis P. McCusker, Esq.
                     Telecopy:   (314) 259-2020


     9.5.  Binding Effect; Assignment.  This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties  hereto and
their respective  successors and permitted  assigns.  Neither this Agreement nor
any of the rights,  interests or obligations  hereunder shall be assigned by any
of the parties  hereto prior to the  Effective  Time  without the prior  written
consent  of the other  parties  hereto.  

     9.6.  Expenses.  All costs and expenses  incurred in  connection  with this
Agreement and the  transactions  contemplated  hereby shall be paid by the party
incurring  such costs or  expenses,  provided,  however,  that each of Travelzoo
Bahamas and  Travelzoo  Delaware  shall pay one-half of the expenses  related to
printing,  filing and  mailing the  registration  statement  and  related  prosy
statement for the Merger, the fees and expenses of Bryan Cave LLP and all filing
fees  incurred in  connection  with the Merger or the issuance of the  Travelzoo
Delaware Common Stock.

     9.7.  Governing Law. This  Agreement  shall be deemed to be made in, and in
all respects shall be  interpreted,  construed and governed by and in accordance
with the internal laws of, the State of Delaware, and the parties hereto consent
to the  jurisdiction  of the courts of or in the State of Delaware in connection
with any dispute or controversy relating to or arising out of this Agreement and
the transactions contemplated hereby.

                                       A-8

<PAGE>

     9.8. Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

     9.9. Entire Agreement.  This Agreement and the other agreements,  documents
or instruments  referred to herein or executed in connection herewith embody the
entire  agreement  and  understanding  of the  parties  hereto in respect of the
subject  matter  contained   herein.   There  are  no  restrictions,   promises,
representations,  warranties,  covenants,  or  undertakings,  other  than  those
expressly set forth or referred to herein.  This Agreement  supersedes all prior
agreements  and the  understandings  between  the parties  with  respect to such
subject matter.

     9.10. Third  Parties.  Nothing  contained  in   this  Agreement  or in  any
instrument or document executed by any party in connection with the transactions
contemplated  hereby  shall  create  any  rights  in,  or be deemed to have been
executed  for the benefit of, any person that is not a party  hereto or thereto,
or, a successor or permitted assign of such a party; provided, however, that the
parties  hereto  specifically  acknowledge  that the  provisions  of Section 6.1
above,  are  intended to be for the benefit  of, and shall  enforceable  by, the
officers and directors of Travelzoo Delaware and of Travelzoo Bahamas and/or the
Travelzoo   Bahamas   Subsidiaries   affected   thereby   and  their  heirs  and
representatives.

                  [Remainder of Page Intentionally Left Blank]


     IN WITNESS WHEREOF,  Travelzoo  Delaware and Travelzoo  Bahamas have caused
this Agreement to be signed and delivered by their  respective  duly  authorized
officers as of the date first above written.

                                             TRAVELZOO.COM CORPORATION

                                             By: /s/ Ralph Bartel
                                                --------------------------------
                                                 Name:  Ralph Bartel
                                                 Title:  Chief Executive Officer


                                             TRAVELZOO INC.

                                             By: /s/ Ralph Bartel
                                                --------------------------------
                                                 Name:  Ralph Bartel
                                                 Title:  Chief Executive Officer










                                      A-9

<PAGE>
                                                                         Annex B

                          CERTIFICATE OF INCORPORATION
                                       OF
                                 TRAVELZOO INC.

         FIRST:   The name of the Corporation is TRAVELZOO INC.

         SECOND:  Its  registered  office in the State of Delaware is located at
2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19808.
The name and address of its  registered  agent is Corporation  Service  Company,
2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

         THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which  corporations may be organized under the General  Corporation
Law of the State of Delaware ("GCL").

         FOURTH:

         A.   Classes and Number of Shares.

         The total  number of shares of stock which the  Corporation  shall have
authority  to issue is  40,000,000  shares of  common  stock of the par value of
$0.01  each,  amounting  in the  aggregate  to  Four  Hundred  Thousand  Dollars
($400,000) ("Common Stock"),  and 5,000,000 shares of preferred stock of the par
value of $0.01 each, amounting in the aggregate to $50,000 ("Preferred Stock").

         B.   Preemptive Rights.

         Except as may otherwise be provided by agreement among  stockholders of
the Corporation,  no stockholder of any class of stock of the Corporation  shall
have any  preemptive  right to  acquire  any  additional  shares of stock of the
Corporation  of any  class  or  series  or any  security  convertible  into,  or
exercisable or exchangeable for, such stock.

         C.   Terms of Common Stock.

         The  voting  powers and  relative,  participating,  optional  and other
special  rights of the Common Stock,  and the  qualifications,  limitations  and
restrictions thereof, are as follows:

              1.  Voting Rights and Powers.  Except as provided in the GCL,  the
     holders of shares of the Common Stock shall vote together as a single class
     (with  the  holders  of all  series of  Preferred  Stock  entitled  to vote
     together  with the holders of the shares of Common Stock) on all matters as
     to which such holders are entitled to vote.

              2.  Dividend  Rights.  No cash  dividends may be declared and paid
     upon the  Common  Stock  so long as any  Preferred  Stock  is  outstanding.
     Thereafter,  cash  dividends may be declared and paid upon the Common Stock
     in such amounts and at such times as the Board of Directors may  determine.
     Funds  otherwise  legally  available  for the payment of  dividends  on the
     Common  Stock shall not be  restricted  or reduced by reason of there being
     any excess of the aggregate  preferential amount of any series of Preferred
     Stock outstanding over the aggregate par value thereof.

              3.  Liquidation   Rights.   In   the  event  of  any  liquidation,
     dissolution  or  winding  up  of  the  Corporation,  whether  voluntary  or
     involuntary,  after  there shall have been paid or set apart for payment of
     holders of any outstanding  shares of Preferred Stock the full preferential
     amounts to which they are entitled,  the entire  remaining assets and funds
     of the  Corporation  legally  available  for  distribution,  if any, to its
     shareholders  shall be distributed  ratably among the holders of the Common
     Stock in proportion to the shares of Common Stock then held by them.

              4.  Redemption.

                  (a) Redemption at the  Corporation's  Election Upon Triggering
     Event.  At any time or times on or after a  Triggering  Event  (as  defined
     below),  the Corporation  shall have the right in its sole  discretion,  to
     require  that all, but not less than all, of the  outstanding  Common Stock
     held by a Triggering Holder (as defined below) (the "Redemption Shares") be
     redeemed ("Redemption Election") at a price per share of Common Stock equal
     to (A) if there is no public market for the Common  Stock,  the fair market
     value per share of the Common Stock as determined by the Board of Directors
     of the  Corporation,  or (B) if the Common Stock has an established  public
     trading  market,  the  market  value per share of the  Common  Stock (the "
     Redemption  Price").  The  Corporation  shall  exercise its right to make a
     Redemption  Election by providing  each  Triggering  Holder  written notice
     ("Notice  of  Redemption")  by  electronic  mail,  facsimile  or  overnight
     courier,  after  the  occurrence  of a  Triggering  Event.  The  Notice  of
     Redemption  shall indicate the  anticipated  date on which the  Corporation
     shall redeem the Redemption Shares ("Redemption  Date"). If the Corporation
     has exercised its right of Redemption  Election and the  conditions to such
     Redemption  Election have been  satisfied then all such  Redemption  Shares
     outstanding shall be redeemed as of the Redemption Date by payment by or on
     behalf of the Corporation to each Triggering Holder of Redemption Shares of
     the Redemption  Price. If the Corporation  fails to pay the full Redemption
     Price with respect to any  Redemption  Shares on the  Redemption  Date, the
     Redemption  Election shall be null and void with respect to such Redemption
     Shares and the Holder of such  Redemption  Shares  shall be entitled to all
     the  rights  of a Holder  of  outstanding  Common  Stock  set forth in this
     Certificate of Incorporation.
                                      

<PAGE>

                  (b) "Triggering  Event". A "Triggering  Event" shall be deemed
     to have occurred at such time as the  occurrence  of the  revocation by any
     holder of Common Stock of consent to electronic  notice and  communications
     from the Corporation.  A "Triggering  Holder" shall be any holder of Common
     Stock who takes action resulting in a Triggering Event.

     D.  Preferred Stock.

         Subject  to the  requirements  of the GCL and  the  provisions  of this
Certificate of Incorporation,  the Board of Directors is expressly authorized to
cause any number of the authorized and undesignated shares of Preferred Stock to
be issued from time to time in one or more series of  Preferred  Stock with such
voting  powers,  full or limited,  or no voting powers,  and such  designations,
preferences and relative,  participating,  optional or other special rights, and
qualifications,  limitations or  restrictions  thereof,  if any, as the Board of
Directors  may fix by resolution  or  resolutions,  prior to the issuance of any
shares of such series of Preferred  Stock,  each of which series may differ from
any and all other  series,  including,  without  limiting the  generality of the
foregoing, the following:

              (i)  The number of  shares constituting  such series of  Preferred
         Stock and the designation thereof;

              (ii)   The dividend  rate, if any, on the shares of such series of
         Preferred  Stock,  whether  and the extent to which any such  dividends
         shall be cumulative or non-cumulative, the relative rights of priority,
         if any, of payments of any dividends,  and the times at which,  and the
         terms and conditions on which, any dividends shall be paid;

              (iii)  The right,  if any, of the holders of shares of such series
         of  Preferred  Stock to vote and the  manner of  voting,  except as may
         otherwise be provided by the GCL;

              (iv)   The right, if any, of the holders of shares of  such series
         of Preferred  Stock to convert the same into, or the right,  if any, of
         the  Corporation  to exchange the same for,  another class or series of
         stock of the Corporation  and the terms and  conditions,  including any
         provision  for future  adjustment in the  conversion or exchange  rate,
         under which said shares may be converted or exchanged;

              (v)    The redemption or purchase price or prices of the shares of
         such series of Preferred Stock, if any, and the times at which, and the
         terms and  conditions on which,  the shares of such series of Preferred
         Stock may be redeemed or purchased;

              (vi)   The terms of the sinking fund, if any, to be  provided  for
         such  series of  Preferred  Stock,  and the  terms  and  amount of such
         sinking fund;

              (vii)  The  rights  of the holders  of  shares  of such  series of
         Preferred Stock in the event of a voluntary or involuntary liquidation,
         dissolution or winding up of the Corporation and the relative rights of
         priority, if any, of such holders with respect thereto; and

              (viii) Any other relative powers,  preferences and rights, and any
         qualifications,   limitations  or  restrictions,   of  such  series  of
         Preferred Stock.

         FIFTH: The name and mailing address of the incorporator is Elizabeth A.
Creamer, 211 N. Broadway, Suite 3600, St. Louis, Missouri 63102.

         SIXTH: All corporate powers of the Corporation shall be exercised by or
under the  direction  of the Board of  Directors  except as  otherwise  provided
herein or by applicable  law. In furtherance and not in limitation of the powers
conferred by law, the Board of Directors is expressly authorized:

                  (i) to adopt,  amend or  repeal  By-laws  of the  Corporation,
         subject to the right of the stockholders of the Corporation entitled to
         vote with respect thereto to adopt, amend or repeal By-laws made by the
         Board of Directors; and

                  (ii)  from  time  to  time to  determine  whether  and to what
         extent,  at  what  time  and  place,  and  under  what  conditions  and
         regulations the accounts and books of the Corporation,  or any of them,
         shall be open to the inspection of any stockholder;  and no stockholder
         shall have any right to inspect  any account or book or document of the
         Corporation  except as provided by applicable law or the By-laws of the
         Corporation or as authorized by resolution of the stockholders or Board
         of Directors of the Corporation.

         SEVENTH:  No director of the Corporation  shall be personally liable to
the  Corporation  or its  stockholders  for  monetary  damages for any breach of
fiduciary  duty by such  director as a  director;  provided,  however,  that the
foregoing  shall not be deemed to eliminate or limit the liability of a director
to the extent  provided by applicable  law (i) for any breach of the  director's
duty of  loyalty  to the  Corporation  or its  stockholders,  (ii)  for  acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General  Corporation Law of the
State of Delaware,  or (iv) for any transaction  from which the director derived
an improper  personal  benefit.  This  provision is not intended to eliminate or
narrow any defenses to or protection  against liability  otherwise  available to
directors of the  Corporation.  No amendment to or repeal of this Article  shall

                                       B-2

<PAGE>

apply to or have  any  effect  on the  liability  or  alleged  liability  of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.

         EIGHTH:

         A.  Every  person who was or is a party or is  threatened  to be made a
party to or is involved in any threatened,  pending or completed action, suit or
proceeding, whether civil, criminal,  administrative or investigative, by reason
of the  fact  that  such  person  or a person  of whom  such  person  is a legal
representative  is or was a director or officer of the  Corporation or is or was
serving at the  request of the  Corporation  or for its  benefit as a  director,
officer, employee or agent of any other corporation, or as the representative of
the Corporation in a partnership, joint venture, trust or other entity, shall be
indemnified  and held harmless by the  Corporation to the fullest extent legally
permissible  under the  General  Corporation  Law of the State of  Delaware,  as
amended  from  time to  time,  against  all  expenses,  liabilities  and  losses
(including attorneys' fees,  judgments,  fines and amounts paid or to be paid in
settlement)  reasonably paid or incurred by such person in connection therewith.
Such right of indemnification  shall be a contract right that may be enforced in
any manner desired by such person.  Such right of indemnification  shall include
the right to be paid by the Corporation  the expenses  incurred in defending any
such action, suit or proceeding in advance of its final disposition upon receipt
of an  undertaking  by or on  behalf  of such  person  to repay  such  amount if
ultimately  it  should be  determined  that such  person is not  entitled  to be
indemnified by the Corporation under the General Corporation Law of the State of
Delaware.  Such right of  indemnification  shall not be  exclusive  of any other
right which such directors,  officers or  representatives  may have or hereafter
acquire and,  without  limiting the generality of such statement,  they shall be
entitled  to their  respective  rights  of  indemnification  under  any  By-law,
agreement, vote of stockholders, provision of law or otherwise, as well as their
rights under this Article.

         B. The  Board of  Directors  may adopt  By-laws  from time to time with
respect to indemnification  to provide at all times the fullest  indemnification
permitted by the General  Corporation  Law of the State of Delaware,  as amended
from time to time,  and may cause  the  Corporation  to  purchase  and  maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
or for its  benefit  as a  director,  officer,  employee  or agent of any  other
corporation, or as the representative of the Corporation in a partnership, joint
venture, trust or other entity, against any expense,  liability or loss asserted
against or incurred  by any such  person in any such  capacity or arising out of
any  such  status,  whether  or not the  Corporation  would  have  the  power to
indemnify such person against such expense, liability or loss.

         NINTH: To the maximum extent permitted by law, in the event that either
the Corporation or any stockholder of the Corporation  acquires knowledge of any
potential  transaction,  agreement,  arrangement or other matter which may be an
opportunity  for  both  the  Corporation  and  such  stockholder,   neither  the
Corporation nor such stockholder will have any duty to communicate or offer such
opportunity  to the  other  and  such  stockholder  will  not be  liable  to the
Corporation  for breach of any  fiduciary  or other duty,  as a  stockholder  or
otherwise, and the Corporation will not be liable to such stockholder, by reason
of the  fact  that  the  Corporation  or such  stockholder,  as the case may be,
pursues or acquires such  opportunity  for itself or does not  communicate  such
opportunity or information regarding such opportunity to such stockholder or the
Corporation, as the case may be.

         TENTH: The Corporation  reserves the right to amend,  alter,  change or
repeal any  provision  contained in this  Certificate  of  Incorporation  in the
manner now or hereafter  prescribed by statute,  and all rights  conferred  upon
stockholders,  directors  and  officers  herein  are  granted  subject  to  this
reservation.






                                       B-3

<PAGE>

                                                                         Annex C


                                     BY-LAWS
                                       OF
                                 TRAVELZOO INC.

                                    ARTICLE I

                                  Stockholders

          Section 1.1. Annual Meetings.  An annual meeting of stockholders shall
be held for the election of directors at such date, time and place either within
or without the State of Delaware as may be  designated by the Board of Directors
from time to time.  Stockholders  may, unless the  certificate of  incorporation
otherwise  provides,  act by  written  consent  to  elect  directors;  provided,
however,  that, if such consent is less than  unanimous,  such action by written
consent  may  be in  lieu  of  holding  an  annual  meeting  only  if all of the
directorships  to which  directors could be elected at an annual meeting held at
the effective time of such action are vacant and are filled by such action.  Any
other proper business may be transacted at the annual meeting.

          Section 1.2. Special Meetings. Special meetings of stockholders may be
called at any time by the Chairman of the Board,  if any,  the Vice  Chairman of
the Board,  if any, the President or the Board of Directors,  to be held at such
date,  time and place  either  within or without the State of Delaware as may be
stated in the notice of the meeting.

          Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place,  if any,  date,  hour of the meeting,  the
means of remote  communications,  if any, by which stockholders and proxyholders
may be deemed to be present in person and vote at such  meeting and, in the case
of a special  meeting,  the purpose or purposes for which the meeting is called.
Unless  otherwise  provided by law, the written  notice of any meeting  shall be
given not less than ten nor more than sixty days  before the date of the meeting
to each  stockholder  entitled to vote at such meeting.  If mailed,  such notice
shall be deemed to be given when  deposited in the United  States mail,  postage
prepaid, directed to the stockholder at his address as it appears on the records
of the Corporation.

          Section  1.4.  Remote  Communication.   The  Board  of  Directors  may
authorize,  subject to such  guidelines and procedures as the Board of Directors
may adopt,  stockholders and proxyholders not physically present at a meeting of
stockholders to, by means of remote  communication,  participate in a meeting of
stockholders and be deemed present in person.  Stockholders and proxyholders may
vote by means of remote  communication at a meeting of stockholders whether such
meeting  is to be held at a  designated  place or  solely  by  means  of  remote
communication.

          Section  1.5.  Adjournments.  Any meeting of  stockholders,  annual or
special,  may adjourn  from time to time to  reconvene at the same or some other
place,  and notice need not be given of any such  adjourned  meeting if the time
and  place  thereof  and  means  of  remote  communications,  if any,  by  which
stockholders  and proxyholders may be deemed to be present in person and vote at
such meeting, are announced at the meeting at which the adjournment is taken. At
the adjourned  meeting,  the  Corporation  may transact any business which might
have been  transacted at the original  meeting.  If the  adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned  meeting,  a notice of the  adjourned  meeting  shall be given to each
stockholder of record entitled to vote at the meeting.

          Section 1.6.  Quorum.  At each meeting of  stockholders,  except where
otherwise  provided by law or the certificate of incorporation or these by-laws,
the  holders  of a  majority  of the  outstanding  shares of each class of stock
entitled  to vote at the  meeting,  present in person or  represented  by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be  considered a single  class if the holders  thereof are
entitled to vote together as a single class at the meeting.  In the absence of a
quorum,  the stockholders so present may, by majority vote,  adjourn the meeting
from time to time in the manner provided by Section 1.5 of these by-laws until a
quorum shall  attend.  Shares of its own capital  stock  belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the  shares  entitled  to vote in the  election  of  directors  of such other
corporation is held, directly or indirectly,  by the Corporation,  shall neither
be entitled to vote nor be counted for quorum purposes;  provided, however, that
the  foregoing  shall  not limit the  right of the  Corporation  to vote  stock,
including but not limited to its own stock, held by it in a fiduciary capacity.

          Section 1.7. Organization.  Meetings of stockholders shall be presided
over by the  Chairman  of the  Board,  if any,  or in his  absence  by the  Vice
Chairman of the Board,  if any, or in his  absence by the  President,  or in his
absence by a Vice  President,  or in the absence of the  foregoing  persons by a
chairman  designated  by the  Board  of  Directors,  or in the  absence  of such
designation  by a chairman  chosen at the meeting.  The  Secretary  shall act as
secretary  of the  meeting,  but in his absence the  chairman of the meeting may
appoint any person to act as secretary of the meeting.

          Section  1.8.  Voting;  Proxies.  Unless  otherwise  provided  in  the
certificate of incorporation,  each stockholder  entitled to vote at any meeting
of  stockholders  shall be  entitled to one vote for each share of stock held by
him  which has  voting  power  upon the  matter in  question.  Each  stockholder
entitled to vote at a meeting of  stockholders  or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
                                       

<PAGE>

persons to act for him by proxy,  but no such proxy shall be voted or acted upon
after three years from its date,  unless the proxy provides for a longer period.
A duly executed  proxy shall be  irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable  power.  A stockholder  may revoke any proxy which is not
irrevocable  by  attending  the  meeting  and  voting  in person or by filing an
instrument in writing  revoking the proxy or another duly executed proxy bearing
a later  date with the  Secretary  of the  Corporation.  Voting at  meetings  of
stockholders  need  not be by  written  ballot  and  need  not be  conducted  by
inspectors  unless the  holders of a majority of the  outstanding  shares of all
classes of stock entitled to vote thereon  present in person or by proxy at such
meeting shall so determine.  At all meetings of stockholders for the election of
directors, a plurality of the votes cast shall be sufficient to elect. All other
elections  and  questions  shall,  unless  otherwise  provided  by law or by the
certificate of  incorporation  or these  by-laws,  be decided by the vote of the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote  thereon  present in person or by proxy at the  meeting,  provided  that
(except as otherwise required by law or by the certificate of incorporation) the
Board of Directors may require a larger vote upon any election or question.

          Section 1.9. Fixing Date for  Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders  entitled to notice
of or to vote at any meeting of stockholders or any adjournment  thereof,  or to
express consent to corporate action in writing without a meeting, or entitled to
receive  payment of any  dividend  or other  distribution  or  allotment  of any
rights, or entitled to exercise any rights in respect of any change,  conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.  If no record date is fixed:  (1) the record date for
determining  stockholders  entitled  to  notice  of or to vote at a  meeting  of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given,  or, if notice is waived,  at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining  stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is necessary, shall
be the day on which the first written  consent is expressed;  and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto. A
determination  of  stockholders  of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.

          Section 1.10.  List of  Stockholders  Entitled to Vote.  The Secretary
shall prepare and make, at least ten days before every meeting of  stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical  order,  and showing the address of each stockholder and the number
of shares registered in the name of each stockholder.  Nothing contained in this
Section 1.10 shall require the Corporation to include  electronic mail addresses
or other electronic contact information on such list. Such list shall be open to
the  examination  of any  stockholder,  for any purpose  germane to the meeting,
during ordinary  business hours,  for a period of at least ten days prior to the
meeting,  either (i) on a reasonably  accessible  electronic network,  which the
information  required  to gain  access to such list is provided in the notice of
the meeting,  or (ii) at the principal place of business of the corporation.  If
the meeting is to be held at a place,  then the list shall be produced  and kept
at the time and place of the meeting  during the whole time thereof,  and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of  remote  communication,  then  the  list  shall  also be open to the
examination  of any  stockholder  during  the  whole  time of the  meeting  on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting.

          Section  1.11.  Consent of  Stockholders  in Lieu of  Meeting.  Unless
otherwise  provided in the certificate of incorporation,  any action required by
law to be  taken  at any  annual  or  special  meeting  of  stockholders  of the
Corporation,  or any action which may be taken at any annual or special  meeting
of such stockholders,  may be taken without a meeting,  without prior notice and
without a vote,  if a consent  in  writing,  setting  forth the action so taken,
shall be signed by the  holders of  outstanding  stock  having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares  entitled  to vote  thereon  were  present  and
voted.  Prompt notice of the taking of the corporate action without a meeting by
less than unanimous  written  consent shall be given to those  stockholders  who
have not consented in writing.

                                   ARTICLE II

                               Board of Directors

          Section 2.1. Powers; Number; Qualifications.  The business and affairs
of the Corporation shall be managed by the Board of Directors,  except as may be
otherwise  provided by law or in the  certificate  of  incorporation.  The Board
shall consist of one or more members,  the number thereof to be determined  from
time to time by the Board. Directors need not be stockholders.

          Section  2.2.  Election;   Term  of  Office;   Resignation;   Removal;
Vacancies.  Each  director  shall  hold  office  until  the  annual  meeting  of
stockholders next succeeding his election and until his successor is elected and
qualified or until his earlier  resignation or removal.  Any director may resign
at any time upon written notice to the Board of Directors or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time

                                      C-2

<PAGE>

specified therein,  and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective.  Unless otherwise  provided
in the  certificate  of  incorporation  or these  by-laws,  vacancies  and newly
created  directorships  resulting from any increase in the authorized  number of
directors  or from any other cause may be filled by a majority of the  directors
then in office, although less than a quorum, or by the sole remaining director.

          Section  2.3.  Regular  Meetings.  Regular  meetings  of the  Board of
Directors may be held at such places within or without the State of Delaware and
at  such  times  as the  Board  may  from  time  to  time  determine,  and if so
determined, notice thereof need not be given.

          Section  2.4.  Special  Meetings.  Special  meetings  of the  Board of
Directors  may be held at any time or  place  within  or  without  the  State of
Delaware  whenever  called by the  Chairman  of the Board,  if any,  by the Vice
Chairman  of the  Board,  if any,  by the  President  or by any  two  directors.
Reasonable  notice  thereof shall be given by the person or persons  calling the
meeting.

          Section  2.5.   Telephonic   Meetings   Permitted.   Unless  otherwise
restricted by the certificate of incorporation or these by-laws,  members of the
Board of Directors, or any committee designated by the Board, may participate in
a  meeting  of the Board or of such  committee,  as the case may be, by means of
conference telephone or similar  communications  equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting  pursuant to this  by-law  shall  constitute  presence in person at such
meeting.

          Section 2.6. Quorum;  Vote Required for Action. At all meetings of the
Board of Directors  one-third of the entire Board shall  constitute a quorum for
the transaction of business.  The vote of a majority of the directors present at
a meeting at which a quorum is present  shall be the act of the Board unless the
certificate of  incorporation or these by-laws shall require a vote of a greater
number.  In case at any meeting of the Board a quorum shall not be present,  the
members of the Board  present may adjourn the meeting  from time to time until a
quorum shall attend.

          Section 2.7. Organization. Meetings of the Board of Directors shall be
presided  over by the  Chairman  of the Board,  if any, or in his absence by the
Vice Chairman of the Board,  if any, or in his absence by the  President,  or in
their absence by a chairman  chosen at the meeting.  The Secretary  shall act as
secretary  of the  meeting,  but in his absence the  chairman of the meeting may
appoint any person to act as secretary of the meeting.

          Section 2.8. Informal Action by Directors. Unless otherwise restricted
by the  certificate of  incorporation  or these by-laws,  any action required or
permitted  to be taken at any  meeting  of the  Board  of  Directors,  or of any
committee thereof, may be taken without a meeting if all members of the Board or
of such  committee,  as the case may be,  consent  thereto in  writing,  and the
writing or writings  are filed with the minutes of  proceedings  of the Board or
committee.

                                   ARTICLE III

                                   Committees

          Section 3.1.  Committees.  The Board of Directors may designate one or
more  committees,  each  committee to consist of one or more of the directors of
the  Corporation.  The Board may  designate  one or more  directors as alternate
members of any committee,  who may replace any absent or disqualified  member at
any meeting of the  committee.  The  by-laws may provide  that in the absence or
disqualification  of a member of a committee,  the member or members  present at
any  meeting and not  disqualified  from  voting,  whether or not such member or
members constitute a quorum, may unanimously appoint another member of the board
of  directors  to  act at the  meeting  in the  place  of  any  such  absent  or
disqualified  member.  Any  such  committee,  to  the  extent  provided  in  the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and  authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the  Corporation  to be affixed to all papers  which may require it;
but no such  committee  shall have the power or  authority  in  reference to the
following   matter:   (i)  approving  or  adopting,   or   recommending  to  the
stockholders,  any action or matter  expressly  required by these  by-laws to be
submitted to stockholders  for approval or (ii) adopting,  amending or repealing
any by-law of the Corporation.

          Section 3.2. Committee Rules.  Unless the Board of Directors otherwise
provides,  each  committee  designated  by the Board may make,  alter and repeal
rules for the conduct of its  business.  In the  absence of a  provision  by the
Board or a provision in the rules of such committee to the contrary,  a majority
of the entire  authorized number of members of such committee shall constitute a
quorum for the  transaction  of business,  the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present  shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board  conducts its business  pursuant to
Article II of these by-laws.

                                       C-3

<PAGE>

                                   ARTICLE IV

                                    Officers

          Section  4.1.  Officers;  Election;  Qualification;  Term  of  Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual meeting
of stockholders in each year, the Board of Directors shall elect a President and
a  Secretary,  and it may, if it so  determines,  elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents,  one or more Assistant Vice Presidents, one or more
Assistant Secretaries,  a Treasurer and one or more Assistant Treasurers and may
give any of them such further  designations or alternate  titles as it considers
desirable.  Each such officer  shall hold office until the first  meeting of the
Board after the annual meeting of stockholders next succeeding his election, and
until his successor is elected and qualified or until his earlier resignation or
removal.  Any officer may resign at any time upon written notice to the Board or
to the President or the Secretary of the  Corporation.  Such  resignation  shall
take  effect at the time  specified  therein,  and  unless  otherwise  specified
therein  no  acceptance  of  such  resignation  shall  be  necessary  to make it
effective.  The Board may remove any officer with or without  cause at any time.
Any such removal shall be without  prejudice to the  contractual  rights of such
officer,  if any, with the  Corporation,  but the election or  appointment of an
officer shall not of itself create contractual rights. Any number of offices may
be  held  by the  same  person.  Any  vacancy  occurring  in any  office  of the
Corporation  by death,  resignation,  removal or otherwise may be filled for the
unexpired portion of the term by the Board at any regular or special meeting.

          Section 4.2. Powers and Duties of Executive Officers.  The officers of
the  Corporation  shall have such  powers and  duties in the  management  of the
Corporation  as may be prescribed  by the Board of Directors  and, to the extent
not so provided,  as generally pertain to their respective  offices,  subject to
the control of the Board.  The Board may require any officer,  agent or employee
to give security for the faithful performance of his duties.

                                    ARTICLE V

                                      Stock

          Section 5.1.  Certificates.  Every holder of stock in the  Corporation
shall  be  entitled  to  have a  certificate  signed  by or in the  name  of the
Corporation  by the Chairman or Vice Chairman of the Board of Directors,  if any
or the  President  or a Vice  President,  and by the  Treasurer  or an Assistant
Treasurer,  or the  Secretary or an  Assistant  Secretary,  of the  Corporation,
certifying  the  number  of  shares  owned  by him in the  Corporation.  If such
certificate  is manually  signed by one officer or manually  countersigned  by a
transfer agent or by a registrar,  any other signature on the certificate may be
a facsimile. In case any officer,  transfer agent or registrar who has signed or
whose facsimile  signature has been placed upon a certificate  shall have ceased
to be such  officer,  transfer  agent or registrar  before such  certificate  is
issued,  it may be issued by the Corporation  with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.

          Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New  Certificates.  The  Corporation may issue a new certificate of stock in the
place of any  certificate  theretofore  issued by it, alleged to have been lost,
stolen or  destroyed,  and the  Corporation  may  require the owner of the lost,
stolen  or  destroyed  certificate,  or his  legal  representative,  to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the  alleged  loss,  theft or  destruction  of any such
certificate or the issuance of such new certificate.

                                   ARTICLE VI

                                  Miscellaneous

          Section 6.1. Fiscal Year. The fiscal year of the Corporation  shall be
determined by the Board of Directors.

          Section 6.2.  Seal.  The  Corporation  may have a corporate seal which
shall have the name of the  Corporation  inscribed  thereon and shall be in such
form  as may be  approved  from  time to time by the  Board  of  Directors.  The
corporate seal may be used by causing it or a facsimile  thereof to be impressed
or affixed or in any other manner reproduced.

          Section 6.3. Waiver of Notice of Meetings of  Stockholders,  Directors
and  Committees.  Whenever  notice is  required  to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof,  signed by the person  entitled to notice,  whether before or after the
time stated  therein,  shall be deemed  equivalent  to notice.  Attendance  of a
person at a meeting shall constitute a waiver of notice of such meeting,  except
when the person attends a meeting for the express  purpose of objecting,  at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully  called or convened.  Neither the business to be transacted  at,
nor the  purpose  of,  any  regular  or  special  meeting  of the  stockholders,
directors,  or members of a committee  of  directors  need be  specified  in any
written waiver of notice unless so required by the certificate of  incorporation
or these by-laws.

          Section 6.4. Indemnification of Directors, Officers and Employees. The
Corporation  shall have power to indemnify to the full extent  authorized by law
any  person  made  or  threatened  to be  made a party  to any  action,  suit or
proceeding, whether criminal, civil, administrative or investigative,  by reason
of the fact that he, his testator or intestate is or was a director,  officer or

                                       C-4

<PAGE>

employee of the  Corporation or any  predecessor of the Corporation or serves or
served any other enterprise as a director, officer or employee at the request of
the Corporation or any predecessor of the Corporation.

          Section 6.5. Interested Directors;  Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation  and any other  corporation,  partnership,  association or other
organization  in which one or more of its directors or officers are directors or
officers,  or have a financial  interest,  shall be void or voidable  solely for
this  reason,  or solely  because  the  director  or  officer  is  present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose,  if: (1) the material facts as to his  relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board or the committee,  and the Board or committee in good faith authorizes the
contract  or  transaction  by  the  affirmative  votes  of  a  majority  of  the
disinterested directors,  even though the disinterested directors be less than a
quorum;  or (2) the material facts as to his  relationship or interest and as to
the  contract or  transaction  are  disclosed  or are known to the  stockholders
entitled to vote  thereon,  and the  contract  or  transaction  is  specifically
approved  in good  faith by vote of the  stockholders;  or (3) the  contract  or
transaction  is  fair as to the  Corporation  as of the  time it is  authorized,
approved or ratified,  by the Board,  a committee  thereof or the  stockholders.
Common or interested  directors may be counted in determining  the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.

          Section  6.6.  Form  of  Records.   Any  records   maintained  by  the
Corporation in the regular  course of its business,  including its stock ledger,
books of account and minute  books,  may be kept on, or be in the form of, punch
cards,  magnetic tape,  photographs,  microphotographs  or any other information
storage device,  provided that the records so kept can be converted into clearly
legible  form within a reasonable  time.  The  Corporation  shall so convert any
records so kept upon the request of any person entitled to inspect the same.

          Section  6.7.  Amendment of By-Laws.  These  by-laws may be altered or
repealed, and new by-laws made, by the Board of Directors,  but the stockholders
may make  additional  by-laws and may alter or repeal any by-law  whether or not
adopted by them.

                                      C-5

<PAGE>

                                                                        Annex D

                Proxy For The Special Meeting Of Shareholders Of

                            Travelzoo.com Corporation

                      To Be Held _____________ _____, 2001

     I am a holder of shares of common  stock of  Travelzoo.com  Corporation,  a
Bahamas  corporation  ("Travelzoo").  I hereby appoint Ralph Bartel as my proxy,
with full power of  substitution,  to  represent  me at the  special  meeting of
members   (stockholders)   of  Travelzoo   to  be  held  at   _________________,
_______________,  on  __________ , 2001 at _______ a.m.  local time,  and at any
adjournments or postponements thereof, to consider and approve the Agreement and
Plan of Merger,  dated January 19, 2001,  under which  Travelzoo  will be merged
into a newly-formed Delaware corporation, Travelzoo Inc. ("Travelzoo Delaware"),
as follows:
               [ ]FOR                [ ]AGAINST                 [ ]ABSTAIN

     I understand that, if I don't check any of the boxes above, this proxy will
be voted for the merger.  The Board of Directors of  Travelzoo  has  unanimously
recommended a vote for the merger.

     Unless I check the NO box below, I confirm that:

     I consent to receiving by electronic  transmission  any notices to be given
by Travelzoo Delaware to its stockholders, in accordance with Section 323 of the
Delaware General Corporation Law.                     [ ]  Yes           [ ]  No

     I  consent  to  receiving  by  electronic   transmission  (including  email
transmission and postings on Travelzoo  Delaware's website) Travelzoo Delaware's
proxy  statements,  annual reports and other information to be provided to me in
accordance with the requirements of the U.S. Securities and Exchange Commission.
                                                      [ ]  Yes           [ ]  No

     This Proxy is solicited on behalf of the Board of Directors.

Name(s):                                ----------------------------------------

Registered email address (as  you
  previously provided to Travelzoo*)    ----------------------------------------

Proxy Card PIN (which Travelzoo 
  previously provided to you by email)  ----------------------------------------

Mailing address:                        ----------------------------------------
                                        ----------------------------------------
                                        ----------------------------------------

Signature(s)                            ----------------------------------------
                                        ----------------------------------------
                                Please sign exactly as your name appears above.
                                Joint owners should each sign. When signing as 
                                attorney, executor, trustee or guardian, please
                                give full title in that capacity.

Date:                                        , 2001

* Travelzoo        has       provided       an       online       form,       at
  http://www.corporate.travelzoo.com/shareholders,  for shareholders who wish to
  change their original registered email addresses,  which includes  information
  to allow  Travelzoo  to verify the  identity of the  shareholder.  Changes are
  effective  only if  properly  made  through  the online  form;  email or other
  informal notice is not effective.

Note  that  stockholders  may vote on the  Internet  at  http://www.[_________].
Travelzoo  encourages  stockholders  to use  Internet  voting,  which  will help
minimize the cost of the voting process for Travelzoo and its  stockholders.  If
you wish to use a paper proxy,  please print this page,  mark, sign and date it,
complete the information required and return it to Travelzoo by mail to 800 West
El Camino Real, Suite 180, Mountain View, CA 94040.

<PAGE>
                                                                         Annex E

               BAHAMAS INTERNATIONAL BUSINESS COMPANIES ACT, 1989

                               (as amended, 1998)

Rights of dissenters.

81.(1) A member of a company  incorporated  under this Act shall be  entitled to
payment of the fair value of his shares upon dissenting from -

          (a)  a merger,  if the company is a  constituent  company,  unless the
               company is the surviving company and the member continues to hold
               the same or similar shares;

          (b)  a consolidation, if the company is a constituent company;

          (c)  any sale, transfer,  lease, exchange or other disposition of more
               than 50 per cent of the assets or business of the company, if not
               made in the usual or regular course of the business carried on by
               the company, but not including -

               (i)  a  disposition  pursuant  to an order of the  court,  having
                    jurisdiction in the matter,

               (ii) a   disposition   for  money  on  terms   requiring  all  or
                    substantially  all net  proceeds  to be  distributed  to the
                    members in accordance with their respective interests within
                    one year after the date of disposition, or

               (iii) a transfer pursuant to the power described in section 9(2);

          (d)  a redemption of his shares by the company pursuant to section 79;
               and

          (e)  an arrangement, if permitted by the court.

(2) A member who desires to exercise his entitlement  under subsection (1) shall
give to the  company,  before  the  meeting  of  members  at which the action is
submitted to a vote, or at the meeting but before the vote, written objection to
the action;  but an objection is not required  from a member to whom the company
did not give  notice of the  meeting  in  accordance  with this Act or where the
proposed action is authorized by written consent of members without a meeting.

(3) An objection under  subsection (2) shall include a statement that the member
proposes to demand payment for his shares if the action is taken.

(4) Within 20 days  immediately  following the date on which the vote of members
authorizing the action is taken, or the date on which written consent of members
without a meeting is  obtained,  the company  shall give  written  notice of the
authorization or consent to each member who gave written  objection or from whom
written  objection  was not  required,  except  those  members who voted for, or
consented to in writing, the proposed action.

(5) A member to whom the  company  was  required  to give  notice  who elects to
dissent shall, within 20 days immediately following the date on which the notice
referred to in subsection (4) is given,  give to the company a written notice of
his decision to elect to dissent, stating -

          (a)  his name and address;

          (b)  the number and classes or series of shares in respect of which he
               dissents; and

          (c)  a demand for payment of the fair value of his shares;

and a member who elects to dissent from a merger under  section 74 shall give to
the company a written  notice of his decision to elect to dissent within 20 days
immediately  following  the date on which  the copy of the plan of  merger or an
outline thereof is given to him in accordance with section 74.

(6) A member who dissents  shall do so in respect of all shares that he holds in
the company.

(7) Upon the giving of a notice of election  to dissent,  the member to whom the
notice  relates ceases to have any of the rights of a member except the right to
be paid the fair value of his shares.

(8) Within 7 days immediately following the date of the expiration of the period
within which members may give their notices of election to dissent,  or within 7
days  immediately  following  the date on which the proposed  action is put into
effect,  whichever  is  later,  the  company  or,  in the  case of a  merger  or
consolidation,  the surviving company or the consolidated company,  shall make a
written  offer to each  dissenting  member to purchase his shares at a specified
price that the company determines to be their fair value; and if, within 30 days
immediately  following the date on which the offer is made,  the company  making
the  offer and the  dissenting  member  agree  upon the price to be paid for his
                                       

<PAGE>

shares,  the  company  shall pay to the  member  the  amount  in money  upon the
surrender of the certificates representing his shares.

(9) If the  company  and a  dissenting  member fail within the period of 30 days
referred  to in  subsection  (8) to agree on the price to be paid for the shares
owned by the member,  within 20 days immediately following the date on which the
period of 30 days expires, the following shall apply -

          (a)  the company and the  dissenting  member  shall each  designate an
               appraiser;

          (b)  the 2  designated  appraisers  together  shall  designate a third
               appraiser;

          (c)  the 3 appraisers  shall fix the fair value of the shares owned by
               the  dissenting  member  as of the close of  business  on the day
               prior to the date on which the vote of  members  authorizing  the
               action was taken or the date on which written  consent of members
               without a meeting was  obtained,  excluding any  appreciation  or
               depreciation  directly or indirectly induced by the action or its
               proposal,  and  that  value is  binding  on the  company  and the
               dissenting member for all purposes; and

          (d)  the company  shall pay to the member the amount in money upon the
               surrender by him of the certificates representing his shares.

(10) Shares  acquired by the company  pursuant to subsection (8) or (9) shall be
canceled  but if the  shares are shares of a  surviving  company,  they shall be
available for re-issue.

(11) The enforcement by a member of his entitlement  under this section excludes
the enforcement by the member of a right to which he might otherwise be entitled
by virtue of his holding  shares,  except that this section does not exclude the
right of the member to institute proceedings to obtain relief on the ground that
the action is illegal.

                                      E-2

<PAGE>

 
                                   PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.  Indemnification of Directors and officers.

     The  Delaware  General  Corporation  Law permits the  indemnification  by a
Delaware  corporation  of its  directors,  officers,  employees and other agents
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in  settlement in  connection  with  specified  actions,  suits or  proceedings,
whether civil, criminal,  administrative or investigative (other than derivative
actions which are by or in the right of the  corporation)  if they acted in good
faith and in a manner  they  reasonably  believed to be in or not opposed to the
best interests of the  corporation,  and, with respect to any criminal action or
proceeding,  had no reasonable  cause to believe  their conduct was unlawful.  A
similar standard of care is applicable in the case of derivative actions, except
that  indemnification  only  extends to  expenses  (including  attorneys'  fees)
incurred in connection with defense or settlement of such an action and requires
court approval before there can be any indemnification  where the person seeking
indemnification has been found liable to the corporation.

     As permitted by Delaware law, the Registrant's certificate of incorporation
provides that no director of the  Registrant  will be  personally  liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (a) for any breach of duty of loyalty to the
Registrant or to its  stockholders,  (b) for acts or omissions not in good faith
or that involve intentional  misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General  Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit.

     The Registrant's  Restated  certificate of  incorporation  further provides
that the Registrant must indemnify its directors and executive  officers and may
indemnify  its other  officers and  employees  and agents to the fullest  extent
permitted by Delaware law. The Registrant  believes that  indemnification  under
its certificate of incorporation  covers  negligence and gross negligence on the
part of indemnified parties.

     The Registrant has entered into indemnification agreements with each of its
directors  and  officers.  These  agreements,  among other  things,  require the
Registrant  to  indemnify  such  directors  and  officers  for certain  expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred by
any such person in any action or  proceeding,  including any action by or in the
right of the Registrant,  arising out of such person's services as a director or
officer of the Registrant, any subsidiary of the Registrant or any other company
or  enterprise  to which the  person  provides  services  at the  request of the
Registrant.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be  permitted  to  directors,  officers or persons  controlling  the
Registrant pursuant to such provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange  Commission such  indemnification  is
against public policy as expressed in such Act and is therefore unenforceable.

Item 21.  Exhibits and Financial Statements.



                                       II-1

<PAGE>

     See Exhibit Index and Financial Statements schedule.

Item 22.  Undertakings.

     The undersigned Registrant hereby undertakes that:

     The  undersigned  Registrant  hereby  undertakes to respond to requests for
information  that is  incorporated  by reference  into the proxy  statement  and
prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business
day of receipt of such request, and to send the incorporated  documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the  registration  statement
through the date of responding to the request.

     The  undersigned  Registrant  hereby  undertakes  to  supply  by means of a
post-effective  amendment  all  information  concerning a  transaction,  and the
company  being  acquired  involved  therein,  that  was not the  subject  of and
included in the registration statement when it became effective.


                                      II-2

<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the Registrant
has duly caused this  Registration  Statement  to be signed on its behalf by the
undersigned,  thereunto duly authorized,  in the City of Mountain View, State of
California, on February 2, 2001.

                                Travelzoo Inc.

                                By:             /s/ RALPH BARTEL
                                   ---------------------------------------------
                                                   Ralph Bartel
                                      Chairman of the Board and Chief
                                                Executive Officer

                                POWER OF ATTORNEY

     Each person whose signature  appears below hereby  constitutes and appoints
Ralph Bartel as his or her true and lawful attorney in fact and agent for him or
her and on his or her behalf and in his or her name, place and stead, in any and
all  capacities  to  sign  any  and  all  amendments  (including  post-effective
amendments) to this Registration Statement,  and to file the same, with exhibits
and any and all other documents filed with respect thereto,  with the Securities
and Exchange  Commission (or any other  governmental  or regulatory  authority),
granting  unto said  attorney full power and authority to do and to perform each
and every  act and thing  requisite  and  necessary  to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes as
he or she  might  or  could  do if  personally  present,  hereby  ratifying  and
confirming  all that said attorney in fact and agent may lawfully do or cause to
be done by virtue hereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.


<TABLE>
<CAPTION>

         Signature                                Title                              Date
         ---------                                -----                              ----
<S>                                 <C>                                         <C>
        /S/ RALPH BARTEL            Chairman of the Board and Chief
   ------------------------           Executive Officer                         February 2, 2001
         Ralph Bartel

          /S/ LISA SU
   ------------------------         Controller (Chief Accounting Officer)       February 1, 2001
           Lisa Su

     /S/ SUZANNE L. DURFEE
   ------------------------         Director                                    February 1, 2001
      Suzanne L. Durfee

     /S/ DAVID J. EHRLICH
   ------------------------         Director                                    February 2, 2001
       David J. Ehrlich

       /S/ SUZANNA MAK
   ------------------------         Director                                    February 2, 2001
         Suzanna Mak

    /S/ DONOVAN NEALE-MAY
   ------------------------         Director                                    February 1, 2001
      Donovan Neale-May

      /S/ CAROL J. S. ROTH
   ------------------------         Director                                    February 1, 2001
       Carol J. S. Roth

     /S/ KELLY M. URSO
   ------------------------         Director                                    February 1, 2001
        Kelly M. Urso
</TABLE>


                                      II-3

<PAGE>


                         EXHIBIT INDEX

  Exhibit
  Number                 Description

    2.1        Merger Agreement, dated January  19, 2001, between  Travelzoo.com
               Corporation  and  Travelzoo Inc.  (Incorporated  by  reference to
               Annex A to the  Proxy Statement and  Prospectus included in  this
               Registration Statement)

    3.1        Certificate of Incorporation of  Travelzoo Inc.  (Incorporated by
               reference   to  Annex B  to  the  Proxy Statement  and Prospectus
               included in this Registration Statement)

    3.2        By-laws of Travelzoo Inc. (Incorporated by  reference to  Annex C
               to   the  Proxy  Statement  and   Prospectus   included  in  this
               Registration Statement)

    5.1        Opinion of Bryan Cave LLP, counsel to Travelzoo Inc.*

    10.1       Employment   Agreement,   dated  as  of  April  1, 2000,  between
               Travelzoo Bahamas and Ralph Bartel

    10.2       Stock Option Agreement  dated  January  22, 2001,  between  Ralph
               Bartel and Travelzoo Inc.

    21.1       List of Subsidiaries of Travelzoo.com Corporation

    21.2       List of Subsidiaries of Travelzoo Inc.

    23.1       Consent of KPMG LLP

    23.2       Consent of Bryan Cave LLP (included in Exhibit 5.1)*

    24.1       Power of Attorney (included on signature page)

 -------------
  * To be filed by amendment.

                                      II-4





                              EMPLOYMENT AGREEMENT


         This  Employment  Agreement  is  entered  into as of April 1, 2000 (the
"Effective  Date"),  by and between  Travelzoo.com  Sales,  Inc.,  a  California
corporation  (the  "Company"),  with  principal  corporate  offices at 800 W. El
Camino Real, Suite 180, Mountain View, CA 94040, and Ralph Bartel,  Ph.D., whose
address is currently  800 High School Way,  Apt.  307,  Mountain  View, CA 94041
("Employee").  The Company and Employee are  collectively  referred to herein as
"the Parties."

         WHEREAS,  the Company  desires to retain  Employee  as Chief  Executive
Officer,  and Employee  desires to perform such service for the Company,  on the
terms and conditions as set forth herein;

         NOW,  THEREFORE,  in consideration of the promises and mutual covenants
herein  contained,  and other good and valuable  consideration,  the receipt and
sufficiency  of which is  hereby  acknowledged,  it is  mutually  agreed  by the
parties as follows:

         1.  Duties and Scope of Employment.

                  (a) Position.  Employee  shall be employed as Chief  Executive
         Officer.

                  (b) Duties.  During the term of Employee's employment with the
         Company,  Employee  shall devote her full time,  skill and attention to
         her  duties  and   responsibilities,   which   Employee  shall  perform
         faithfully, diligently and competently,
 and Employee shall use her best
         efforts to further the business of the Company.  During the term of the
         Agreement,  Employee  agrees  not  to  actively  engage  in  any  other
         employment,  occupation  or  consulting  activity  for  any  direct  or
         indirect  remuneration  without the prior approval of the Board, except
         that this provision shall not be interpreted to prohibit  Employee from
         involvement in any charitable or community  activity/organization  that
         he is currently involved in and that does not materially interfere with
         her ability to perform her duties under this Agreement.  Employee shall
         be  permitted,  to the extent such  activities  do not  materially  and
         adversely  affect the ability of  Employee to fully  perform her duties
         and  responsibilities  hereunder,  to (i) manage  Employee's  personal,
         financial and legal affairs,  (ii) serve on civic or charitable  boards
         or  committees,  and (iii) with the  consent of the Board of  Directors
         (which consent shall not be unreasonably  withheld),  serve as a member
         of the board of directors of any noncompeting business.

         2.  Nature of Employment.  Employee  agrees not to leave or discontinue
her  employment  with the  Company  during  the first  three  (3)  months of her
employment.  Similarly,  the Company agrees not to terminate Employee during the
first  three (3)  months of  employment  with the  Company,  except for cause as
defined in paragraph 2(b). After the three month period has ended, Employee will
become an "at-will" employee which means that the employment relationship may be
terminated  at any time,  with or  without  cause,  at the  option of either the
Company or Employee, upon two weeks written notice to the other party.

                  (a)  Termination  by Company  without  Cause.  If  Employee is
terminated by the Company without Cause (as defined in paragraph 2(b)) after the
initial  three  months of  employment,  Employee  shall  receive  her salary and
benefits earned through the date of termination.

                  (b)  Termination  for Cause.  If  Employee is  terminated  for
"Cause" as defined herein at any time, Employee will receive only payment of her
salary and  benefits  through  the date of  termination.  For  purposes  of this
Agreement,  "Cause" is  defined  as (i) gross  misconduct  by  Employee  that is
materially injurious to the Company's business;  (ii) the commission by Employee
of a felony;  or (3) the willful  failure or refusal of the Employee,  following
receipt of an explicit  directive from the Company,  to comply with the material
terms of this Agreement.

         3.   Compensation and Fringe Benefits

                  (a) Base  Salary.  Employee  will receive a base salary at the
annualized  rate  of  $192,000.00  (the  "Base  Salary"),  which  shall  be paid
periodically in accordance with normal Company payroll  practices and subject to
the usual and applicable required  withholding.  Employee understands and agrees
that neither her job performance nor promotions,  commendations,  bonuses or the
like  from  the  Company  give  rise to or in any way  serve  as the  basis  for
modification,  amendment,  or extension,  by implication  or otherwise,  of this
Agreement.

                  (b) Productivity  Bonus Plan. In  addition to the Base Salary,
Employee shall participate in the company's  Productivity  Bonus Plan. A copy of
the bonus plan is attached.

                                       

<PAGE>

                  (c) Vacation and Holiday Pay. Employee shall receive two weeks
of paid  vacation  per year,  which  accrues  over the  course  of the year.  In
addition, the Company provides eight (8) paid holidays each year, along with two
(2) "floating holidays" which can be used by Employee at any time.

                  (d) Health  Insurance.  The Company  shall pay  Employee up to
$600.00  per month  (upon  submission  of receipts or other proof of payment) as
reimbursement for the costs of Employee's health insurance.

                  (e) Other  Benefits.  Employee will be entitled to participate
in or receive such  benefits  under the  Company's  employee  benefit  plans and
policies and such other  benefits  which may be made available as in effect from
time to time and as are provided to similarly situated employees of the Company,
subject in each case to the  generally  applicable  terms and  conditions of the
plans and policies in question.

         4. Expenses.  The Company will pay or reimburse Employee for reasonable
travel,  entertainment or other expenses incurred by Employee in the furtherance
of or in  connection  with the  performance  of Employee's  duties  hereunder in
accordance with the Company's established policies.

         5. Certain Covenants.

                  (a) Intellectual Property Rights.

                      (i)  Employee  agrees  that the  Company  will be the sole
                  owner of any and all of  Employee's  "Discoveries"  and  "Work
                  Product,"  hereinafter  defined,  made  during the term of her
                  employment  with  the  Company,   whether   pursuant  to  this
                  Agreement  or  otherwise.  For  purposes  of  this  Agreement,
                  "Discoveries" means all inventions, discoveries, improvements,
                  and copyrightable works (including,  without  limitation,  any
                  information  relating  to  the  Company's  software  products,
                  source  code,  know-how,   processes,   designs,   algorithms,
                  computer   programs  and   routines,   formulae,   techniques,
                  developments  or  experimental  work,   work-in-progress,   or
                  business  trade  secrets)  made or  conceived  or  reduced  to
                  practice by Employee  during the term of her employment by the
                  Company,    whether   or   not   potentially   patentable   or
                  copyrightable in the United States or elsewhere.  For purposes
                  of this  Agreement,  "Work  Product"  means  any and all  work
                  product relating to Discoveries.

                      (ii) Employee shall  promptly  disclose to the Company all
                  Discoveries  and  Work  Product.  All  such  disclosures  must
                  include  complete  and  accurate  copies of all  source  code,
                  object code or machine-readable  copies,  documentation,  work
                  notes, flow-charts, diagrams, test data, reports, samples, and
                  other tangible  evidence or results  (collectively,  "Tangible
                  Embodiments")  of  such  Discoveries  or  Work  Product.   All
                  Tangible  Embodiments of any  Discoveries or Work Project will
                  be deemed to have been  assigned to the Company as a result of
                  the act of expressing any Discovery or Work Product therein.

                      (iii) Employee  hereby assigns and agrees to assign to the
                  Company  all of her  interest  in any  country  in any and all
                  Discoveries  and Work Product,  whether such  interest  arises
                  under   patent   law,   copyright   law,   trade-secret   law,
                  semiconductor  chip  protection  law,  or  otherwise.  Without
                  limiting the  generality of the preceding  sentence,  Employee
                  hereby  authorizes the Company to make any desired  changes to
                  any part of any Discovery or Work Product,  to combine it with
                  other  materials  in  any  manner  desired,  and  to  withhold
                  Employee's identity in connection with any distribution or use
                  thereof alone or in  combination  with other  materials.  This
                  assignment   and   assignment   obligation   applies   to  all
                  Discoveries  and  Work  Product   arising  during   Employee's
                  employment  with the  Company (or its  predecessors),  whether
                  pursuant to this Agreement or otherwise.  Employee's agreement
                  to assign  to the  Company  any of her  rights as set forth in
                  this Section  5(a)(iii)  shall not apply to any invention that
                  qualifies fully under the provisions of California  Labor Code
                  Section 2870, where no equipment,  supplies, facility or trade
                  secret  information  of the  Company  was  used  and  that was
                  developed entirely upon Employee's own time, and (i) that does
                  not relate to Company  business or to the Company's  actual or
                  anticipated  research  or  development,  or (ii) that does not
                  result from any work performed by Employee for the Company.

                                        2

<PAGE>

                      (iv)  At  the  request  of  the  Company,  Employee  shall
                  promptly and without additional  compensation  execute any and
                  all patent applications,  copyright registration applications,
                  waivers of moral  rights,  assignments,  or other  instruments
                  that the Company deems  necessary or  appropriate to apply for
                  or  obtain  Letters Patent of the United States or any foreign
                  country,  copyright  registrations or otherwise to protect the
                  Company's  interest in such  Discovery and Work  Product,  the
                  expenses  for  which  will be borne by the  Company.  Employee
                  hereby irrevocably designates and appoints the Company and its
                  duly  authorized   officers  and  agents  as  her  agents  and
                  attorneys-in-fact  to, if the Company is unable for any reason
                  to secure  Employee's  signature  to any lawful and  necessary
                  document  required or  appropriate to apply for or execute any
                  patent application, copyright registration application, waiver
                  of moral rights, or other similar document with respect to any
                  Discovery  and Work Product  (including,  without  limitation,
                  renewals,    extensions,    continuations,    divisions,    or
                  continuations  in part),  (i) act for and in her behalf,  (ii)
                  execute  and file any such  document,  and  (iii) do all other
                  lawfully permitted acts to further the prosecution of the same
                  legal force and effect as if executed by him; this designation
                  and appointment  constitutes an irrevocable  power of attorney
                  coupled with an interest.

                      (v) To the  extent  that  any  Discovery  or Work  Product
                  constitutes  copyrightable  or similar  subject matter that is
                  eligible  to be treated as a "work made for hire" or as having
                  similar  status in the United States or elsewhere,  it will be
                  so deemed.  This provision does not alter or limit  Employee's
                  other obligations to assign intellectual property rights under
                  this Agreement.

                      (vi) The obligations of Employee set forth in this Section
                  5 (including,  without limitation, the assignment obligations)
                  will continue beyond the termination of Employee's  employment
                  with respect to Discoveries and Work Product conceived or made
                  by Employee alone or in concert with others during  Employee's
                  employment  with  the  Company,   whether   pursuant  to  this
                  Agreement or otherwise. Those obligations will be binding upon
                  Employee,   her  assignees  permitted  under  this  Agreement,
                  executors, administrators, and other representatives.

                  (b) Exposure to Proprietary Information.

                      (i) As used in this Agreement,  "Proprietary  Information"
                  means all  information of a business or technical  nature that
                  relates to the  Company  including,  without  limitation,  all
                  information about software products whether currently released
                  or in development, all inventions, discoveries,  improvements,
                  copyrightable work, source code, know-how, processes, designs,
                  algorithms,  computer  programs  and  routines,  formulae  and
                  techniques,  and any information regarding the business of any
                  customer or  supplier of the Company or any other  information
                  that  the   Company   is   required   to  keep   confidential.
                  Notwithstanding the preceding sentence,  the term "Proprietary
                  Information"  does not include  information that is or becomes
                  publicly   available   through  no  fault  of   Employee,   or
                  information that Employee learned prior to the Effective Date.

                      (ii)  In   recognition   of  the  special  nature  of  her
                  employment under this Agreement, including  her special access
                  to the Proprietary  Information,  and in  consideration of her
                  employment pursuant to this Agreement,  Employee agrees to the
                  covenants  and  restrictions  set  forth in  Section 5 of this
                  Agreement.

                  (c) Use of Proprietary Information; Restrictive Covenants.

                      (i) Employee acknowledges that the Proprietary Information
                  constitutes  a protectible  business  interest of the Company,
                  and   covenants  and  agrees  that  during  the  term  of  her
                  employment,  whether under this  Agreement or  otherwise,  and
                  after  the  termination  of  such  employment,  he  will  not,
                  directly or indirectly,  disclose,  furnish, make available or
                  utilize any of the Proprietary Information,  other than in the
                  proper performance of her duties for the Company.

                                       3

<PAGE>

                      (ii) Employee will not,  during the term of this Agreement
                  or,   solely  with   respect  to  clauses  2  and  3  of  this
                  subparagraph  (ii), for a period of one year  thereafter  (the
                  "Restricted  Period"),  anywhere within the United States (the
                  "Restricted Territory"), directly or indirectly (whether as an
                  owner,  partner,   shareholder,   agent,  officer,   director,
                  employee, independent contractor, consultant, or otherwise):

                           1. perform  services  for, or engage in, any business
                      that  develops or sells  products  or  services  which are
                      competitive   with  any  products  or  services   sold  or
                      developed  by the Company for which  Employee has provided
                      any  assistance  in  planning,   development,   marketing,
                      training,  support,  or  maintenance  during the period of
                      Employee's employment with the Company (the "Products");

                           2.  except  on  behalf of the  Company,  solicit  any
                      person or entity  who is,  or was at any time  during  the
                      twelve-month  period  immediately prior to the termination
                      of Employee's  employment with the Company,  a customer of
                      the Company for the sale of the Products or any product or
                      service  of a type  then  sold by the  Company  for  which
                      Employee provided any assistance in planning, development,
                      marketing, training, support, or maintenance; or

                           3. solicit for  employment  any person who is, or was
                      at any time  during the  twelve-month  period  immediately
                      prior to the termination of Employee's employment with the
                      Company, an employee of the Company.

                  (d) Scope/Severability.  The  Parties  acknowledge   that  the
business of the Company is and will be national and  international  in scope and
thus the covenants in this Section 5 would be  particularly  ineffective  if the
covenants  were to be  limited  to a  particular  geographic  area of the United
States. If any court of competent  jurisdiction at any time deems the Restricted
Period unreasonably lengthy, or the Restricted Territory unreasonably extensive,
or any of the covenants set forth in this Section 5 not fully  enforceable,  the
other  provisions  of this  Section  5,  and this  Agreement  in  general,  will
nevertheless  stand and to the full extent  consistent with law continue in full
force and effect,  and it is the  intention  and desire of the parties  that the
court treat any provisions of this Agreement which are not fully  enforceable as
having been modified to the extent deemed  necessary by the court to render them
reasonable and  enforceable  and that the court enforce them to such extent (for
example,  that  the  Restricted  Period  be  deemed  to be  the  longest  period
permissible  by law,  but not in excess of the  length  provided  for in Section
5(c), and the Restricted  Territory be deemed to comprise the largest  territory
permissible by law under the circumstances).

                  (e) Return of Company  Materials  upon  Termination.  Employee
acknowledges that all records, documents, and Tangible Embodiments containing or
of Proprietary Information prepared by Employee or coming into her possession by
virtue of her  employment by the Company are and will remain the property of the
Company.  Upon  termination of her employment  with the Company,  Employee shall
immediately  return to the  Company  all such  items in her  possession  and all
copies of such items.

         6. Equitable Remedies.

            (a)  Employee  acknowledges  and  agrees  that  the  agreements  and
covenants set forth in Sections  5(a),  (b), (c), (d) and (e) are reasonable and
necessary  for  the  protection  of  the  Company's  business  interests,   that
irreparable  injury will result to the Company if Employee  breaches  any of the
terms  of said  covenants,  and  that  in the  event  of  Employee's  actual  or
threatened  breach of any such  covenants,  the  Company  will have no  adequate
remedy at law. Employee  accordingly  agrees that, in the event of any actual or
threatened breach by him of any of said covenants,  the Company will be entitled
to immediate injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages.  Nothing in this Section 6 will be
construed as prohibiting the Company from pursuing any other remedies  available
to it for such  breach or  threatened  breach,  including  the  recovery  of any
damages that it is able to prove.

                                       4

<PAGE>

            (b) Each of the  covenants in Sections  5(a),  (b), (c), (d) and (e)
will be construed as independent of any other  covenants or other  provisions of
this Agreement.

            (c) In the  event  of any  judicial  determination  that  any of the
covenants in Sections 5(a), (b), (c), (d), and (e) are not fully enforceable, it
is the intention  and desire of the parties that the court treat said  covenants
as having been  modified to the extent  deemed  necessary by the court to render
them reasonable and enforceable, and that the court enforce them to such extent.


         7. Assignment.  This  Agreement  shall be binding upon and inure to the
benefit of (a) the heirs,  executors and legal  representatives of Employee upon
Employee's death and (b) any successor of the Company. Any such successor of the
Company  shall be deemed  substituted  for the  Company  under the terms of this
Agreement  for all  purposes.  As used  herein,  "successor"  shall  include any
person, firm, corporation or other business entity which at any time, whether by
purchase,  merger  or  otherwise,  directly  or  indirectly,   acquires  all  or
substantially  all of the assets or business of the Company.  None of the rights
of  Employee  to  receive  any form of  compensation  payable  pursuant  to this
Agreement  shall be assignable or  transferable  except  through a  testamentary
disposition  or by the laws of  descent.  Any  attempted  assignment,  transfer,
conveyance or other disposition (other than as aforesaid) of any interest in the
rights of Employee to receive any form of  compensation  hereunder shall be null
and void.

            8. Notices. All notices,  requests, demands and other communications
called for hereunder  shall be in writing and shall be deemed given if delivered
personally, one (1) day after mailing via Federal Express overnight or a similar
overnight  delivery service,  or three (3) days after being mailed by registered
or  certified  mail,  return  receipt  requested,  prepaid and  addressed to the
parties or their  successors  in interest at the addresses  listed above,  or at
such other  addresses  as the parties  may  designate  by written  notice in the
manner aforesaid.

            9.  Severability.  In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void,  this  Agreement  shall  continue  in full force and effect  without  said
provision.

            10.  Entire  Agreement.   This  Agreement,   and  the  Stock  Option
Agreement,  represent the entire agreement and understanding between the Company
and Employee concerning Employee's employment relationship with the Company, and
supersede in their  entirety  any and all prior  agreements  and  understandings
concerning Employee's employment relationship with the Company.

            11. Resolution of Disputes Regarding Employment.

                (a) The  Parties  agree  to  submit any  dispute or  controversy
arising  out of,  relating  to, or in  connection  with this  Agreement,  or the
interpretation,  validity,  construction,  performance,  breach,  or termination
thereof, to mediation.  The Parties shall mutually select the mediator and shall
equally pay for the costs of the mediator.

                (a) If  and  only  if  a  mediation  is  unsuccessful,  and  the
dispute or controversy is not resolved within 30 days after a mediation,  either
party may submit the matter to binding  arbitration,  to the extent permitted by
law, to be held in or near San Jose,  California in accordance with the National
Rules for the  Resolution of Employment  Disputes then in effect of the American
Arbitration  Association (the "Rules").  The arbitrator may grant injunctions or
other relief in such  dispute or  controversy.  The  decision of the  arbitrator
shall be final,  conclusive  and  binding  on the  parties  to the  arbitration.
Judgment  may be  entered  on the  arbitrator's  decision  in any  court  having
jurisdiction.  The  arbitrator  may  award  the  prevailing  party  in any  such
attorneys' fees and costs incurred in connection therewith.

                  (b) The arbitrator shall apply California law to the merits of
any dispute or claim,  without  reference to rules of conflict of law.  Employee
hereby expressly consents to the personal  jurisdiction of the state and federal
courts  located in Santa Clara County,  California  or the Northern  District of
California  for any  action  or  proceeding  arising  from or  relating  to this
Agreement   and/or  relating  to  any  arbitration  in  which  the  Parties  are
participants.

                  (c) Employee understands that nothing in this Section modifies
Employee's  at-will  status.  Either the Company or Employee can  terminate  the
employment  relationship at any time, with or without cause, subject only to the
restrictions set forth in Section 2 above.

                  (d) Employee  has  read  and  understands  Section  11,  which
discusses  arbitration.  employee  understands  that by signing this  agreement,
employee  agrees to submit any future claims arising out of,  relating to, or in

                                       5

<PAGE>

connection with this agreement, or the interpretation,  validity,  construction,
performance, breach, or termination thereof to binding arbitration to the extent
permitted  by law,  and that this  arbitration  clause  constitutes  a waiver of
employee's  right to a jury trial and relates to the  resolution of all disputes
relating to all aspects of the employer/employee relationship, including but not
limited to, the following claims:

                           (i) Any and all  claims  for  wrongful  discharge  of
employment; breach of contract, both express and implied; breach of the covenant
of good  faith  and  fair  dealing,  both  express  and  implied;  negligent  or
intentional   infliction  of  emotional   distress;   negligent  or  intentional
misrepresentation;  negligent  or  intentional  interference  with  contract  or
prospective economic advantage; and defamation;

                           (ii) Any and all claims for  violation of any federal
state or municipal  statute,  including,  but not limited to the California Fair
Employment and Housing Act, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, the Americans with  Disabilities Act of 1990, and the
Fair Labor Standards Act;

                           (iii)  Any and all  claims  arising  out of any other
laws and regulations relating to employment or employment discrimination.

                  (e)  The  Parties   may  apply  to  any  court  of   competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary, without breach of this arbitration
agreement and without abridgment of the powers of the arbitrator.

         12. No Oral Modification, Cancellation or Discharge. This Agreement may
only be amended,  canceled or discharged  in writing  signed by Employee and the
Company.

         13.  Governing  Law. This  Agreement  shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

         14.   Acknowledgment.   Employee  acknowledges  that  he  has  had  the
opportunity  to discuss  this  matter  with and obtain  advice  from her private
attorney,  has  had  sufficient  time  to,  and has  carefully  read  and  fully
understands  all  the  provisions  of  this  Agreement,  and  is  knowingly  and
voluntarily entering into this Agreement,

         IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below.

                                       COMPANY:

                                       TRAVELZOO.COM SALES, INC.


                                       By:  /s/ R. Bartel
                                          --------------------------------------

                                       Title:  President

                                       Date:   March 31, 2000




                                       EMPLOYEE:


                                        /s/ R. Bartel
                                       -----------------------------------------
                                       Ralph Bartel

                                       Date:   3/31/2000
                                             -----------------------------------







                                        6


<PAGE>


                               TRAVELZOO.COM SALES

                             PRODUCTIVITY BONUS PLAN

                                 MARCH 31, 2000


HOW THE PLAN WORKS

We are pleased to present you with this information  covering the details of how
Travelzoo.com  Sales, Inc. (including its successors,  the "Company") will share
increased productivity with its employees through a Productivity Bonus Plan (the
"Plan") that will become effective as of March 31, 2000. Accordingly,  the first
Productivity  Bonuses will be paid with respect to the period commencing January
1, 2000 and ending March 31, 2000.

The Productivity Bonus will consist of a quarterly bonus, which will be based on
the "net profit"  before  taxes of the  Company.  The bonus amount will be 5% of
such net profit  before taxes and will be  distributed  equally to all full-time
employees  at the end of the  second  month  following  a fiscal  quarter of the
Company.

For  purposes  of this Plan,  "net  profit" is defined as  revenues  from banner
advertising,  display advertising,  classifieds advertising and commissions from
advertisers  for the  quarter  less (i) sales and  marketing  expenses  for such
period, (ii) research and development expenses for such period and (iii) general
and  administrative  expenses for such period,  all as  determined in conformity
with generally accepted accounting principles consistently applied.

Because the Productivity Bonus will be paid in cash, it is taxable. Accordingly,
appropriate  withholdings  will be made from each  payment  of the  Productivity
Bonus to Company employees. All bonus payments supplement and are in addition to
an  employee's  salary  and  any  contributions  under  a  tax  deferred  401(k)
retirement or other similar plan.


WHO IS ELIGIBLE

All full time  employees of the Company are eligible to  participate in the Plan
and to receive a Productivity Bonus. Because the bonus is based on the Company's
productivity  through  the end of each  quarter,  an  employee  must be actively
employed on each day of the quarter  comprising the bonus computation  period in
order to be eligible to participate in the bonus.  There will be no proration of
the  bonus  distribution  for  employees  who  terminate  before  the end of the
applicable bonus period.

ADMINISTRATION AND DEFINITIONS

The Company will  administer the Plan.  The  calculation of the bonus amount and
all other calculations  relating to the Plan shall be performed by the Company's
accounting  department.   All  matters  pertaining  to  the  administration  and


<PAGE>

interpretation  of the  Plan  shall be  determined  by the  Company  in its sole
discretion,  and the Company's determinations shall be final and binding for all
purposes.

CHANGES OR TERMINATION OF THE PLAN

The Company reserves the right to modify, add to or discontinue the Productivity
Bonus or the Plan, or its interpretation of any provision of the Plan, from time
to time and at any time in its sole discretion;  provided,  however, that in the
event the Plan is  terminated,  employees  shall be  promptly  advised and shall
receive all bonus  amounts  earned  prior to said  termination  in due course in
accordance with the terms of the Plan previously in effect.

NO GUARANTEE OF EMPLOYMENT

The Plan is not a contract of employment and does not guarantee  continuation of
employment for any specified  period of time.  Employment with the Company is at
the mutual consent of the employee and the Company and is subject to termination
without cause or notice at the option of either party.






                                                                    Exhibit 10.2

                             STOCK OPTION AGREEMENT

     This Stock Option Agreement (the "Agreement") is entered into effective
as of January 22, 2001 (the "Date of Grant"),  by and between  Ralph Bartel (the
"Optionee") and Travelzoo Inc, a Delaware corporation (the "Company").

                                    RECITALS

     WHEREAS,  the Optionee  and the Company  have  entered into a  contribution
agreement of even date herewith  (the  "Contribution  Agreement"),  according to
which the  Optionee  has agreed to  contribute  1,000  shares of common stock of
Silicon  Channels  Corporation,  a  California  corporation,  to the  Company in
exchange for shares of the Company's  common stock,  par value $.01 (the "Common
Stock")  plus a stock  option  to  purchase  shares  of the  Common  Stock  (the
"Option"); and

     WHEREAS,  on January 19, 2001, an  independent  committee of  disinterested
directors of the Company unanimously approved the Contribution Agreement and the
grant of the Option to the Optionee; and

     WHEREAS,  the Company has reserved  such number of shares of the  Company's
Common Stock as may from time to time be issuable upon exercise of the Option.

                                    AGREEMENT

     NOW THEREFORE,  in consideration of the foregoing recitals and the promises
and covenants  contained herein, and for other good and valuable  consideration,
the
  receipt  and  adequacy  of  which  are  hereby  acknowledged,  the  parties
represent, covenant and agree as follows:

     1.  Grant of Option. The Company  hereby  grants to the  Optionee,  and the
Optionee hereby accepts,  an Option, as modified by the Stock Split, to purchase
from the Company  2,158,349  shares of the  Company's  Common Stock (the "Option
Shares") at an exercise price of $1.00 per share (the "Exercise Price"), subject
to the terms and conditions set forth in this Agreement.

     This Option is not  intended to be and shall not be treated as an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended.

     2.  Vesting  Schedule. This Option shall vest and shall be exercisable,  in
whole or in part, immediately upon execution of this Agreement.

     3.  Term of Option. This Option may be  exercised at any time from the Date
of Grant in  accordance  with the terms of this  Agreement.  This  Option  shall
terminate ten (10) years from the Date of Grant subject to the  restrictions and
limitations of Section 6 below.

     4.  Method of Exercise.

         (a)  This Option shall be exercisable by delivery of a written exercise
notice which shall state the  Optionee's  election to exercise  the Option,  the
number of Option Shares with respect to which the Option is being exercised, and
such other  warranties,  representations  and  agreements  regarding  Optionee's
investment intent with respect to such shares of Common Stock as may be required
by the  Company  to  comply  with  applicable  securities  laws  (the  "Exercise
Notice").  The  Exercise  Notice  shall be signed by the  Optionee  and shall be
delivered in person or by certified mail to any one of the Company's  Directors.
The Exercise  Notice shall be accompanied  by payment of the aggregate  Exercise
Price as to all  exercised  shares.  This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed  Exercise Notice  accompanied
by the aggregate Exercise Price.

         (b)  Payment of the  aggregate  Exercise  Price for Option Shares being
purchased  may be made (i) in cash or by check,  or (ii) by any  other  means of
exercise authorized from time to time by the Company's Board of Directors.

         (c)  No shares of Common Stock shall be issued pursuant to the exercise
of the Option  unless such  issuance  and such  exercise  shall  comply with all
relevant provisions of law and the requirements of any stock exchange upon which
the Common Stock may then be listed.  Assuming such  compliance,  for income tax


<PAGE>

purposes  the shares of Common  Stock  shall be  considered  transferred  to the
Optionee  on the date on which the  Option is  exercised  with  respect  to such
shares.

     5.  Investment Representation.  The Optionee hereby represents and warrants
to the Company that the Optionee,  by reason of the Optionee's  relationship  to
the  Company  and  Optionee's  access to all  financial  and  other  information
regarding the Company or  Optionee's  business or financial  experience  (or the
business or financial experience of the Optionee's professional advisors who are
unaffiliated with and who are not compensated by the Company or any affiliate or
selling  agent of the  Company,  directly or  indirectly),  has the  capacity to
protect  the  Optionee's  own  interests  in  connection  with the  transactions
contemplated under this Agreement.

     6.  Death of Optionee. In the event of  Optionee's  death while this Option
remains  exercisable,  the Optionee's legal representative or representatives or
the persons  entitled to do so under the  Optionee's  last will and testament or
under applicable  intestate laws shall have the right to exercise this Option at
any time within a period of one (1) year after  death,  but not after such death
if such death occurs after ten (10) years from the Date of Grant.

     7.  Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization,  stock dividend,  stock split or similar change  affecting the
Common Stock, a substitution or  proportionate  adjustment  shall be made in the
kind,  number  and  exercise  price of  shares of Common  Stock  subject  to the
unexercised  portion of the Option. The terms of such substitution or adjustment
shall be as reasonably determined by the Company's Board of Directors.

     8.  Non-Transferability  of Option.  Without the express written consent of
the Board of Directors of the Company, this Option may not be transferred in any
manner  otherwise than by will or by the laws of descent or distribution and may
be exercised  during  Optionee's  lifetime  only by Optionee.  The terms of this
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.

     9.  Securities Laws  Requirements.  This Option shall not be exercisable to
any extent, and the Company shall not be obligated to transfer any Option Shares
to Optionee upon exercise of such Option,  if such  exercise,  in the opinion of
counsel for the Company,  would violate the  Securities  Act of 1933 (the "Act")
(or any other federal or state statutes having similar requirements as may be in
effect at that  time).  Further,  the  Company  may  require as a  condition  of
transfer  of any Option  Shares  pursuant  to any  exercise  of the Option  that
Optionee furnish a written representation that he is purchasing or acquiring the
Option Shares for  investment and not with a view to resale or  distribution  to
the public. The Optionee hereby represents and warrants that he understands that
the Option Shares are "restricted  securities," as defined in Rule 144 under the
Act,  and that any resale of the Option  Shares must be in  compliance  with the
registration  requirements of the Act, or an exemption  therefrom,  and with the
requirements  of any applicable  "Blue Sky" law. Each  certificate  representing
Option  Shares shall bear the legends set forth below and any other legends that
may be required by the Company or by any federal or state securities laws:

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE RESTRICTED  SECURITIES
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES THEREUNDER,
         AND MAY NOT BE SOLD,  OFFERED FOR SALE OR OTHERWISE  TRANSFERRED IN THE
         ABSENCE OF  REGISTRATION  OR AN  EXEMPTION  THEREFROM.  THE  SECURITIES
         EVIDENCED BY THIS  CERTIFICATE  ARE SUBJECT TO CERTAIN  RESTRICTIONS ON
         TRANSFER.  SUCH TRANSFER  RESTRICTIONS  ARE BINDING ON  TRANSFEREES  OF
         THESE SHARES.

     Further, if the Company decides,  in its sole discretion,  that the listing
or  qualification  of the Option Shares under any securities or other applicable
law is necessary or desirable, the Option shall not be exercisable,  in whole or
in part,  unless  and until  such  listing  or  qualification,  or a consent  or
approval with respect thereto,  shall have been effected or obtained free of any
conditions not acceptable to the Company.

     10. No Obligation to Register Option Shares.  The Company shall be under no
obligation  to  register  the  Option  Shares  pursuant  to the Act or any other
federal or state securities laws.

     11. Market Stand-Off.  In connection with any underwritten  public offering
by the Company of its equity  securities  pursuant to an effective  registration
statement  filed  under  the  Act,  for  such  period  as  the  Company  or  its
underwriters  may request (such period not to exceed 180 days following the date
of the applicable  offering),  the Optionee  shall not,  directly or indirectly,
sell,  make any short sale of,  loan,  hypothecate,  pledge,  offer or grant any
option or other  contract  for the  purchase  of,  purchase  any option or other
contract  for the sale of, or  otherwise  dispose  of or  transfer,  or agree to

                                       2

<PAGE>

engage in any of the foregoing  transactions  with respect to, any Option Shares
acquired under this Agreement  without the prior written  consent of the Company
or its underwriters.

     12. Protections  Against   Violations  of  Agreement.  No  purported  sale,
assignment,  mortgage,  hypothecation,   transfer,  pledge,  encumbrance,  gift,
transfer in trust  (voting or other) or other  disposition  of, or creation of a
security  interest  in or lien on, any of the Option  Shares by the  Optionee in
violation  of  the   provisions  of  this   Agreement  or  the   Certificate  of
Incorporation  of the Company,  will be valid, and the Company will not transfer
any of said  Option  Shares on its books nor will any of said  Option  Shares be
entitled to vote, nor will any dividends be paid thereon, unless and until there
has been  full  compliance  with  said  provisions  to the  satisfaction  of the
Company.  The foregoing  restrictions  are in addition to and not in lieu of any
other remedies, legal or equitable, available to enforce said provisions.

     13. Withholding   Requirements.   The   Company's  obligations  under  this
Agreement  shall  be  subject  to  all  applicable  tax  and  other  withholding
requirements,  and the Company shall,  to the extent  permitted by law, have the
right to deduct any withholding amounts from any payment or transfer of any kind
otherwise due to Optionee.

     14. Taxation  Upon  Exercise of Option.  Optionee  understands  that,  upon
exercising the Option,  he may recognize  income for tax purposes,  both federal
and state, in an amount equal to the excess of the then fair market value of the
Option  Shares  over the  Exercise  Price.  However,  the timing of this  income
recognition  may be  deferred  for up to six  months if  Optionee  is subject to
Section 16 of the Securities Exchange Act of 1934, as amended. If Optionee is an
employee, the Company will be required to withhold from Optionee's compensation,
or collect from Optionee and pay to the applicable taxing  authorities an amount
equal to a percentage of this  compensation  income.  The Optionee shall satisfy
his tax withholding  obligation  arising upon the exercise of this Option out of
Optionee's compensation or by payment to the Company.

     15. Entire   Agreement  and  Waiver.  This  Agreement  contains  the entire
agreement  between the parties  hereto  related to the subject matter hereof and
supersedes all prior and contemporaneous agreements, arrangements,  negotiations
and  understandings  between the parties hereto relating  thereto.  There are no
other agreements,  understandings,  statements, promises or inducements, oral or
otherwise,  contrary  to  the  terms  of  this  Agreement.  No  representations,
warranties,  covenants or conditions,  express or implied, whether by statute or
otherwise,  other than as set forth herein,  have been made by any party hereto.
No waiver of any term,  provision  or condition  of this  Agreement,  whether by
conduct or  otherwise,  in any one or more  instances,  shall be deemed to be or
shall constitute a waiver of any other provision hereof, whether or not similar,
nor shall such waiver  constitute  a continuing  waiver,  and no waiver shall be
binding unless executed in writing by the party making the waiver.

     16. Governing  Law. This Agreement  shall be construed in accordance  with,
and governed in all respects  by, the laws of the State of  California,  without
giving effect to the principles of conflicts of laws thereof.

     17. Counterparts.  This Agreement may be executed in several  counterparts,
and all counterparts so executed shall constitute one Agreement,  binding on all
of the parties hereto, notwithstanding that all of the parties are not signatory
to the original or the same counterpart.

     18. Amendment.  This  Agreement  may  be  altered  or  amended  only  by an
instrument in writing signed by each of the parties hereto,  and such alteration
or  amendment  shall be  binding  upon the  parties,  and all other  persons  or
entities.

     19. Severability.  The  invalidity or  unenforceability  of  any particular
provision of this Agreement shall not affect the other  provisions  hereof,  and
this  Agreement  shall  be  construed  in all  respects  as if such  invalid  or
unenforceable provisions were omitted herefrom.

     20. Notices.  All notices  and other  communications  under this  Agreement
("Notices")  shall be in writing and shall be deemed to have been duly given (i)
on the date of service if served personally on the party to whom notice is to be
given,  or (ii)  when  dispatched,  during  the  normal  business  hours  of the
addressee,  by customary means of  telefacsimile,  on the date dispatched or, if
dispatched  after the  recipient's  normal  business  hours,  at the  opening of
business  on the next  business  day, or (iii) on the third  business  day after
mailing  if mailed to the party to whom  notice is to be given,  by first  class
mail registered or certified,  postage prepaid; provided,  however, that Notices
to the Company  concerning  the  exercise of the Option  shall be deemed to have
been duly given only on the date  actually  received by the Company.  Notices to
(i) the Company shall be addressed to any one of the Company's  Directors at the
Company's  corporate  headquarters,  and (ii) the Optionee at his address in the
Company's records.

                                       3

<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  have  executed and  delivered  this
Agreement as of the date first above written.

OPTIONEE:                                   TRAVELZOO INC.,
                                            a Delaware corporation

   /s/ Ralph Bartel                           /s/ Ralph Bartel
-----------------------------------         ------------------------------------
         Ralph Bartel                                    Ralph Bartel
                                                         President









                                       4




                                                                    Exhibit 21.1
                   SUBSIDIARIES OF TRAVELZOO.COM CORPORATION

Travelzoo Inc., a Delaware corporation






                                                                    Exhibit 21.2
                         SUBSIDIARIES OF TRAVELZOO INC.

Silicon Channels Corporation, a California corporation

Travelzoo.com Canada Inc., a corporation formed under the Business  Corporations
Act of Canada (1)


-------------------
(1)  Travelzoo.com Canada, Inc. is a wholly-owned subsidiary of Silicon Channels
     Corporation.







                                                                    Exhibit 23.1


                         Consent of Independent Auditors


The Board of Directors
Travelzoo.com Corporation:

We consent to the use of our report dated  August 6, 2000,  except as to notes 9
and 10, which are as of January 22,  2001,  on the  combined  balance  sheets of
Travelzoo.com  Corporation  and affiliate as of December 31, 1998 and 1999,  and
the related  combined  statements of operations,  stockholders'  equity and cash
flows for the period from May 21, 1998  (inception) to December 31, 1998 and for
the year ended  December 31, 1999 in the  registration  statement on Form S-4 of
Travelzoo  Inc.  filed on or about  February 2, 2001 and to the reference to our
firm under the headings  "Selected  Combined  Historical and Pro Forma Financial
Data" and "Experts" in the prospectus.


                                  /s/ KPMG LLP


Mountain View, California
February 2, 2001