Employment Agreement - SkyMall Inc. and Robert M. Worsley
EMPLOYMENT AGREEMENT
BY THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as
of this 30th day of September, 1996, SkyMall, Inc., a Nevada corporation
("Employer"; references herein to "Employer" shall include SkyMall, Inc. and any
subsidiary of SkyMall, Inc. existing during the term or extended term of this
Agreement) and Robert M. Worsley ("Employee"), state, confirm and agree as
follows:
I. RECITALS
1.1 Employer is engaged in the business of marketing and selling
consumer merchandise and services through its in-flight catalog and engaging in
other marketing related activities ("Employer's Business"). Employer's Business
is conducted primarily in the United States of America (the "Market Area").
1.2 Employee is a key employee of Employer, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, customer lists, marketing
strategies and other confidential matters of critical significance to the
conduct of Employer's Business and its future prospects (the "Trade Secrets").
The loss of Employee during the term of this Agreement, or the aid or assistance
to any competitor of Employer by Employee or direct competition of Employee
respecting Employer's Business within the Market Area would materially and
irreparably injure Employer.
1.3 Employer desires to hire Employee, and Employee desires to accept
such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment from Employer, on the terms and conditions set forth in
this Agreement.
2.2 Term. Subject to the provisions for termination and extension as
hereinafter provided, the term of this Agreement shall commence on the date
first above written, and shall continue until the third anniversary thereof.
2.3 Renewal and Review. The term of this Agreement shall be extended
for successive two (2) year periods ("Renewal Period") without any action of
Employer or Employee unless Employee or Employer provides written notice to the
other party hereto of its intent not to extend this Agreement no less than 30
days prior to the expiration of the initial term of this Agreement or of any
successive Renewal Period.
2.4 Duties and Positions with Employer. During the term of this
Agreement, Employee shall serve as President and Chief Executive Officer of
Employer, and in such other additional positions as the Board of Directors of
Employer (the "Board") may from time to time determine. Employee will faithfully
and diligently perform all duties commensurate with such positions, including
those duties directed by the Board, as well as those set forth in the Bylaws
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of Employer that relate to such positions. Employee shall devote all of his
professional time, attention, skill, and energies to Employer's Business and
shall serve it faithfully, diligently, and to the best of his ability.
2.5 Service as Director. If Employee is elected or appointed as a
Director of Employer during all or any portion of the term of this Agreement,
Employee shall serve in such capacity without additional compensation.
2.6 Compensation. Employee will receive the following compensation for
his services during his term of employment:
(a) A base salary of $190,000 per year (reviewable no less
than once per year by, and subject at any time to increase but not
decrease at the discretion of, the Board or the Compensation Committee
thereof), which, after withholding and other required deductions, shall
be paid in equal installments in accordance with such salary payment
policies as may be established by Employer from time to time;
(b) The Company shall pay all premiums, up to a maximum of
$10,000 (exclusive of premiums on key-man life insurance of which the
Company is the beneficiary), on behalf of Employee for life insurance
and disability insurance, which have coverage that is no less than the
coverage in effect on the date hereof;
(c) Participate in any incentive compensation plan, pension or
profit-sharing plan, stock purchase plan, group benefit plan, medical
plan, bonus plan and/or other benefit plans, either currently in effect
or as may be established from time to time by the Board or the
Compensation Committee thereof for which Employee, as an officer of
Employer, may be eligible to participate; and
(d) Receive such other compensation as may from time to time
be granted to Employee by the Board or the Compensation Committee
thereof including any bonuses.
2.7 Expenses. Employer shall pay or reimburse Employee for all
reasonable expenses incurred or paid by Employee in furtherance of the business
of Employer. Employee shall present such receipts, invoices, or other evidence
of the nature and amount of all expenditures paid or reimbursed by Employer as
Employer may from time to time require.
2.8 Termination.
(a) Death. In the event of Employee's death during the term of
this Agreement, this Agreement shall thereupon terminate and Employer
shall pay to Employee's beneficiary or estate, as that term is
hereinafter defined, the portion of Employee's salary, which was earned
but unpaid, on the date of Employee's death. As used herein, the term
"beneficiary or estate" means the person or
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persons designated by Employee in the last written notice delivered to
Employer during his lifetime, or in the absence of such written notice,
such person or persons designated by Employee in his last will and
testament specifically to receive Employee's benefits under the terms
of this Agreement, or, in the absence of both written notice and such a
designation, Employee's estate. In the event that Employee should
during his lifetime designate a person or persons other than his wife
as beneficiary or beneficiaries in such written notice, such notice to
be valid must contain the signed consent of Employee's spouse.
(b) Permanent Disability. In the event Employee should become
permanently disabled, as that term is hereinafter defined, during the
term of this Agreement, then this Agreement shall terminate and
Employer's only obligation to Employee shall be to pay Employee his
salary and any other benefits to which he is entitled hereunder,
including without limitation disability insurance as provided in
Section 2.6(b), for a twelve-month period following the date Employee
became permanently disabled less any benefits to which Employee is
entitled under any then existing disability insurance or similar plans,
if any, during such period. For the purposes hereof, "permanent
disability" shall mean that disability resulting from injury, disease
or other cause, whether mental or physical, which incapacitates
Employee from performing his normal duties as an employee, which
appears to be permanent in nature and contemplates the continuous,
necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If Employee should become partially
disabled, as that term is hereinafter defined, Employee shall be
entitled to his salary and any other benefits to which he is entitled,
including without limitation disability insurance as provided in
Section 2.6(b), for six-months following the commencement of such
partial disability. At the end of such six-month period, if Employee
remains partially disabled, his salary shall be reduced according to
the amount of time Employee is able to devote to Employer's business.
For the purposes hereof, "partial disability" shall mean that
disability resulting from injury, disease or other cause, whether
mental or physical, which incapacitates Employee from performing a
significant portion of his normal duties as an employee, which appears
to be permanent in nature and contemplates the continuous and necessary
loss of a significant portion of his professional activities.
(d) Temporary Disability. In the event Employee should become
disabled, and such disability is not partial, as defined above, such
disabled Employee shall be entitled to his salary for a period of
ninety (90) days. If such temporary disability continues longer than
such ninety (90) day period, then Employee shall be deemed to have
become permanently disabled for the purposes of this Agreement at the
end of said ninety (90) day period.
(e) Dismissal. Employer may terminate Employee's employment
under this Agreement at any time with or without Cause by giving at
least thirty
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(30) days written notice to Employee at his address as listed on
Employer's records specifying the effective date of termination. As
used herein, "Cause" shall mean that (a) in the course of Employee's
duties under this Agreement, Employee engages in willful misconduct,
dishonesty or reckless disregard of Employee's responsibilities or (b)
Employee is convicted of a felony. Upon any termination under this
Paragraph (e), Employee or Employee's estate, as the case may be, will
be entitled to receive only that compensation due Employee through the
date of termination. In the event that Employee is terminated other
than for Cause, Employee will receive his then current salary, net of
withholding and other deductions required by law, through the last day
of the Non-Compete Period (as defined below), payable at Employee's
election either in a lump sum or at the times such salary would have
been payable were Employee to remain employed by Employer.
2.9 Covenant Not to Compete. During the term of this Agreement and for
a period of two (2) years thereafter, Employee shall not use or disclose the
Trade Secrets for any purpose whatsoever or to any person or entity, including
any competitor or potential competitor of Employer. Employee shall not during
the term or extended term of this Agreement, and for a period of two (2) years
thereafter (the "Non-Compete Period"), (a) induce or encourage any other
employee of Employer to become employed by or to provide any Trade Secrets to
any competitor or potential competitor of Employer or its subsidiaries, or (b)
own, directly or indirectly, manage, operate, serve as an officer, director or
partner of, or otherwise (whether actively or by passive investment) become
associated with any person or entity engaged in a business in competition with
Employer's business in the Market Area and in areas in which Employer is
planning to engage in business at the time of the termination or expiration of
this Agreement. The foregoing covenants by Employee shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against Employer whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Employer of said covenants. If any of the covenants of Employee
set forth in this paragraph shall be deemed too broad to be enforceable by
judicial process, then such covenants shall be reduced to such levels as shall
be so enforceable and shall be enforced as reduced. Employee acknowledges and
agrees that, because of the intended scope of Employer's business operations and
his knowledge gained as a result of this employment relationship, the temporal
and geographic scope of this covenant not to compete are reasonable.
2.10 Representations and Warranties. Employee hereby represents and
warrants that the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between
Employee and any other party or parties.
2.11 Attorneys' Fees. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
the court and not by the jury.
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2.12 Notices. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to Employer: SkyMall, Inc.
1520 East Pima Street
Phoenix, Arizona 85034
Attn: Chief Financial Officer
with a copy to: Christopher Johnson, Esq.
Squire, Sanders & Dempsey, L.L.P.
40 North Central Avenue
Suite 2700
Phoenix, AZ 85004
If to Employee: Robert M. Worsley
601 East Houston
Gilbert, Arizona 85234
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person, or, if
mailed, at midnight on the third business day after the date of mailing.
2.13 Modifications and Amendments. This Agreement shall not be altered
or amended except by a written agreement signed by the parties hereto.
2.14 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or written.
2.15 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of
Employer and its successors and assigns, including any corporation, person or
other entity that acquires all or substantially all of the assets of Employer or
any other corporation with or into which Employer is consolidated or merged, and
Employee and his heirs, executors, administrators and legal representatives;
provided, however, that the obligations of Employee hereunder may not be
delegated or assigned.
2.16 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona.
2.17 Headings; Interpretation. The paragraph headings used herein are
for convenience and reference only and are not intended to define, limit or
describe the scope or intent of any provision of this Agreement. When used in
this Agreement, the term "including" shall mean without limitation by reason of
enumeration.
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2.18 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.19 Severability. In the event that any portion of this Agreement is
held to be invalid or unenforceable for any reason whatsoever, it is agreed that
said invalidity or unenforceability shall not affect the other portions of this
Agreement and that the remaining covenants, terms and conditions, or portions
thereof, shall remain in full force and effect, and any court of competent
jurisdiction may so modify the objectionable provisions as to make them valid,
reasonable and enforceable.
2.20 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first written above.
SKYMALL, INC.,
a Nevada corporation
By: /s/ David Wirthlin
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Name: David Wirthlin
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Title: Secretary
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EMPLOYER
/s/ Robert M. Worsley
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ROBERT M. WORSLEY
EMPLOYEE
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