Airline Customer Services Agreement - SkyMall Inc.
AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN [AIRLINE NAME] [ADDRESS] AND SKYMALL, INC. 1520 EAST PIMA STREET PHOENIX, ARIZONA 85034 DATED ____________________, 1995 <PAGE> 2 TABLE OF CONTENTS 1. Recitals.............................................................. 1 1.1 Airline Business............................................. 1 1.2 SkyMall Business............................................. 1 1.3 Offer of SkyMall Program..................................... 1 2. The SkyMall(R) Program and Guarantees................................. 1 2.1 The Catalog.................................................. 1 2.2 Concierge Service............................................ 1 3. SkyMall Program Agreement............................................. 1 3.1 Exclusive Rights............................................. 1 3.2 Reserved Services............................................ 1 4. Term of Agreement..................................................... 2 4.1 Initial and Renewal Terms.................................... 2 4.2 Termination.................................................. 2 5. The Catalog........................................................... 2 5.1 Catalog Production........................................... 2 5.2 Shipment and Distribution of Catalogs........................ 3 6. Customer Orders, Customer Services and Promotion...................... 3 6.1 Order Processing and Delivery................................ 3 6.2 Resolution of Customer Problems.............................. 4 6.3 Promotion of Catalog......................................... 4 6.4 Aircraft Seat Phones......................................... 4 6.5 Complimentary Air Travel..................................... 4 7. SkyMall(R) Program Costs and Expenses.................................. 4 7.1 SkyMall Expenses.............................................. 4 7.2 Airline Expenses.............................................. 5 8. Airline Sales Commissions............................................. 5 8.1 Sales Commission............................................. 5 8.2 Payment Due Date............................................. 5 9. Reports, Records and Audit............................................ 5 9.1 SkyMall Reports and Records.................................. 5 9.2 Airline Reports and Records.................................. 5 9.3 Audit of Records............................................. 5 10. Use and Approval of Names............................................. 5 10.1 Limited License to Use Airline's Names........................ 5 10.2 Mutual Approval of Advertising and Promotional Material....... 6 i <PAGE> 3 11. Rights to the Catalog, Services and Purchase Information........ 6 12. Confidential Information........................................ 6 12.1 Confidential and Proprietary Information............... 6 12.2 Use and Protection of Confidential Information......... 6 12.3 Enforcement............................................ 7 13. No-Competition.................................................. 7 14. Default and Remedies............................................ 7 14.1 Default................................................ 7 14.2 Remedies............................................... 8 14.3 Consequential Damages.................................. 8 14.4 Force Majeure Excusing Performance..................... 8 15. Indemnification................................................. 8 15.1 Claims................................................. 8 15.2 SkyMall's Indemnification of Airline................... 8 15.3 Airline's Indemnification of SkyMall................... 9 15.4 Notification, Defense of Claims and Settlement......... 9 16. Insurance....................................................... 10 16.1 Insurance Amounts and Certificates..................... 10 16.2 Endorsements........................................... 10 17. Miscellaneous................................................... 10 17.1 Entire Agreement....................................... 10 17.2 Amendments and Waivers................................. 10 17.3 Assignments and Successors............................. 10 17.4 No Joint Venture or Partnership........................ 10 17.5 Severability........................................... 10 17.6 Survival............................................... 11 17.7 Further Actions and Assurances......................... 11 17.8 Governing Law.......................................... 11 17.9 Attorneys' Fees........................................ 11 17.10 Notices................................................ 11 17.11 Counterparts........................................... 11 17.12 Exhibits............................................... 11 17.13 Time................................................... 11 17.14 Effective Date......................................... 12 ii <PAGE> 4 AIRLINE CUSTOMER SERVICES AGREEMENT This Airline Customer Services Agreement (the "Agreement"), is between [Airline Name], a ________________ corporation ("Airline"), and SkyMall, Inc., an Arizona corporation ("SkyMall"). Airline and SkyMall agree as follows: 1. RECITALS. 1.1 Airline Business. Airline operates aircraft to domestic (U.S.) and international destinations. The "Airline Fleet" includes Airline's aircraft flying domestic trips. 1.2 SkyMall Business. SkyMall provides in-flight and in-transit sales and rapid delivery of merchandise and services for travelers. 1.3 Offer of SkyMall Program. This agreement grants SkyMall the exclusive right to offer the SkyMall(R) Program (as defined below) to Airline's domestic air passengers. 2. THE SKYMALL(R) PROGRAM AND GUARANTEES. The "SkyMall(R) Program" includes: 2.1 The Catalog. The SkyMall(R) Catalog offers merchandise and services which may be ordered by Airline's passengers (the "Catalog"). SkyMall provides a total customer satisfaction guarantee on merchandise offered in the Catalog, except as expressly provided in Section 5.1 below. 2.2 Concierge Service. The SkyMall(R) Concierge Service offers concierge services (the "Concierge Service") for a fee to customers (the "Concierge Service Fee") plus the price of the product or service. SkyMall provides a limited customer satisfaction guarantee on the Concierge Service, depending on the services requested. 3. SKYMALL PROGRAM AGREEMENT. 3.1 Exclusive Rights. Airline grants SkyMall the exclusive right to provide the SkyMall(R) Program to Airline for Airline's Fleet. Airline will not itself provide, nor obtain from any other source, a similar program. Airline also grants to SkyMall a first right of refusal to provide the SkyMall(R) Program on inter-active video for Airline's Fleet. 3.2 Reserved Services. Airline reserves the right to provide to its passengers: (a) through its in-flight magazine (1) merchandise marked with Airline's trademarks ("Airline's Trademarked Merchandise") and Airline's airfare and vacation packages and air transportation services ("Airline's Services") or any other proprietary items or services of Airline, and (2) merchandise and services offered by other advertisers; and (b) a catalog for the sale of duty free merchandise. 1 <PAGE> 5 4. TERM OF AGREEMENT. The Term of this Agreement includes: 4.1 Initial and Renewal Terms. The Initial Term from _________________, until _________________. After the Initial Term this Agreement will renew annually (an "Annual Renewal Term"), unless terminated earlier by either Party pursuant to this Agreement. 4.2 Termination. (a) Termination for Convenience. After the Initial Term, either Party may terminate this Agreement for any reason without cause by 90 days written notice to the other Party. (b) Termination For Cause. Either Party may immediately terminate this Agreement for cause by giving written notice to the other Party. (c) Cooperation Upon Termination. Upon notice of termination (1) the Parties will cooperate until termination to continue distributing Catalogs and to secure customer orders, (2) each party will use its best efforts to minimize the costs and damages of the termination, and (3) Airline is solely responsible for recycling or disposing of Catalogs in its possession at the time of termination. (d) Termination Rights and Obligations. Termination will not affect rights or obligations of the Parties which are of a continuing nature or which accrued prior to the effective date of termination. 5. THE CATALOG. 5.1 Catalog Production. SkyMall will produce, at its expense, three or more editions of the Catalog each year, each up to _____ pages but not weighing more than _____________. SkyMall (a) will select and price all merchandise and services and (b) will consider reasonable requests of Airline for additional merchants, products, or services (but is not obligated to secure particular merchants, products, or services). NOTE THAT (b) AND (c) SHOULD BE INCLUDED ONLY FOR APPROPRIATE (LARGER) AIRLINES. (a) Airline Approval of the Catalog. Airline will approve each edition of the Catalog prior to production. Airline is deemed to approve a Catalog edition if Airline's written disapproval is not delivered to SkyMall within three business days after Airline receives the prototype Catalog. Airline may disapprove any merchant, product, or service on any reasonable grounds except price, but will not unreasonably disapprove a merchant, product, or service. (b) Airline Pages. If Airline requests, up to ____ pages in each Catalog (the "Airline Pages") may be devoted to merchandise marked with Airline's 2 <PAGE> 6 trademarks and Airline's airfare, vacation, and transportation services ("Airline's Goods and Services"). SkyMall does not guarantee Airline's Goods and Services and Airline (a) assumes responsibility for the merchandise and services and (b) indemnifies SkyMall for all product liability and other costs and expenses arising in connection with Airline's Goods and Services, including costs of legal or other proceedings, judgments, fines, and penalties, costs of defense, and reasonable attorneys' fees. (c) Cover and Name. The cover of each catalog will be customized to identify Airline and will not be identical to SkyMall's general catalog. At Airline's option, the catalog will bear SkyMall's name or another name selected by Airline. SkyMall does not own, and acknowledges Airline's ownership of, any custom name selected by Airline for the Catalog and any associated goodwill. (d) Suppliers. SkyMall will contract with each supplier of merchandise or services (a "Supplier") for the SkyMall(R) Program. SkyMall is solely responsible for each Supplier's merchandise and services. 5.2 Shipment and Distribution of Catalogs. (a) Delivery to Hubs. SkyMall will deliver the Catalogs to Airline's facilities at up to _______ Airline hub locations (the "Airline Hubs"). Airline may change the hub locations. SkyMall will deliver the Catalogs in proportions as directed by Airline at least five days before the scheduled distribution of the Catalogs to the Airline Fleet. (b) Distribution to Airline Fleet. Airline will use reasonable efforts (at least the same efforts used in connection with Airline's in-flight magazine) to distribute Catalogs to the seatbacks of all aircraft in Airline's Fleet, so that each Airline passenger has access to a reasonably unsoiled and presentable copy of the Catalog. Airline will carry 20 additional copies of the Catalog on each aircraft to replace Catalogs taken daily by passengers. Until a Catalog expires Airline will not remove a Catalog from an aircraft (except for soiled and unpresentable Catalogs). 3 <PAGE> 7 6. CUSTOMER ORDERS, CUSTOMER SERVICES AND PROMOTION 6.1 Order Processing and Delivery. SkyMall, at its sole expense, will deliver merchandise and services offered through the Catalog. SkyMall will give prompt attention to any complaint or requested change with respect to SkyMall's order processing or delivery services. (a) Order Processing. SkyMall will offer customer order inquiry and processing 24 hours per day, 365 days per year (but may use voice messaging and other equipment during early morning hours, Sundays, holidays, and at other appropriate times). SkyMall will maintain an "800" customer order telephone number, including an in-flight equivalent of an "800" telephone number for Airline's in-flight telephone equipped aircraft. (b) Merchandise Deliveries. SkyMall or its vendors will offer delivery within the United States, Puerto Rico and the Virgin Islands. SkyMall may, in its sole discretion, offer delivery to international destinations. (c) Payment for Merchandise and Services. SkyMall may require payment for merchandise by cash (U.S. Dollars), cash equivalents, and major credit cards. SkyMall is solely responsible for establishing appropriate contractual arrangements with companies issuing credit cards honored by SkyMall. (d) No Airline Liability. Airline assumes no liability for, and is not responsible for the credit worthiness of, any Airline passengers or customers. (e) SkyMall Employees. SkyMall's order processing and delivery personnel are SkyMall's employees or independent contractors. SkyMall's employees and independent contractors will comply with reasonable security measures imposed by Airline. (f) Airline Employee Discounts. Subject to proper identification, SkyMall will allow Airline employees a ____% discount on merchandise and services to the extent permitted by SkyMall's vendors. 6.2 Resolution of Customer Problems. SkyMall is solely responsible for handling, to the reasonable satisfaction of its customer and Airline, all correspondence, claims, and complaints generated by the SkyMall(R) Program. Airline may, at its option, respond directly to any customer request or complaint. 6.3 Promotion of Catalog. Airline will use reasonable efforts to promote use of the Catalog (at least the same efforts used for Airline's in-flight magazine), including in flight, boarding area, and flight club area announcements, information booths, and video introductions. 6.4 Aircraft Seat Phones. Airline (a) will equip its aircraft with seat phones or other in-flight telephone equipment as business conditions warrant and (b) will keep 4 <PAGE> 8 SkyMall informed about the installation or change out of in-flight telephone equipment on its aircraft. 6.5 Complimentary Air Travel. Airline will provide, at its discretion, complimentary round-trip passes to SkyMall to be used for business travel related to performance of this Agreement (the "Complimentary Air Travel"). The Complimentary Air Travel must be booked at least one week in advance and is available on a positive space basis. 7. SKYMALL(R) PROGRAM COSTS AND EXPENSES. The costs and expenses associated with the SkyMall(R) Program will be paid as follows: 7.1 SkyMall Expenses. SkyMall will pay for all costs and expenses associated with the SkyMall(R) Program except for those assumed by Airline. 7.2 Airline Expenses. Airline will provide and pay for: (a) the cost of distribution of the Catalog from the Airline Hubs to Airline's Fleet and of carrying the Catalog on Airline's Fleet; (b) the promotional costs incurred by Airline to the extent mutually agreed upon prior to instituting a promotion; (c) the Complimentary Air Travel costs; and (d) the costs of any optional service as mutually agreed by SkyMall and Airline. 8. AIRLINE SALES COMMISSIONS. 8.1 Sales Commission. SkyMall will pay a monthly sales commission (the "Sales Commission") to Airline equal to the greater of (a) $__________ per month or (b) _____% of Net Sales (as defined in EXHIBIT A). 8.2 Payment Due Date. SkyMall will pay the Sales Commission to Airline on the first day of the second month after the month when the sales occurred. SkyMall will deliver, with the payment, a supporting statement showing (a) the number of orders filled for the month, (b) the net dollar amount of sales related to the orders, and (c) the calculation of the Sales Commission. 9. REPORTS, RECORDS AND AUDIT. 9.1 SkyMall Reports and Records. SkyMall will provide Airline monthly reports of SkyMall's performance under this Agreement and of Airline's Sales Commissions (collectively, the "SkyMall Reports"). The SkyMall Reports will be in a form agreed by the Parties, but need not include information about activities with anyone other than Airline. SkyMall will maintain the SkyMall Reports during the Term and for one year after termination (the "Record Maintenance Period"). 9.2 Airline Reports and Records. Airline will provide SkyMall information reasonably requested by SkyMall, including data about actual and projected passenger enplanements and actual and planned aircraft schedules (collectively, the "Airline Reports"). The Airline Reports will be in a form agreed by the Parties, but need not include information about activities with anyone other 5 <PAGE> 9 than SkyMall. Airline will maintain the Airline Reports for the Record Maintenance Period. 9.3 Audit of Records. During the Record Maintenance Period each Party (or auditors it selects) may, at a mutually convenient time and at its sole cost and expense, examine and make copies of the other's Reports at the other's offices. 10. USE AND APPROVAL OF NAMES 10.1 Limited License to Use Airline's Names. Airline grants SkyMall a non-exclusive license to use Airline's corporate name and Airline's tradenames, trademarks, and service marks (the "Airline Names") (a) solely as directed and approved in writing by Airline and (b) solely in connection with the production and promotion of the Catalog for Airline. SkyMall will not otherwise use, publish or reproduce (including, without limitation, in any form of advertising) any Airline Names. This license creates no third party rights and will immediately terminate upon termination of this Agreement. 10.2 Mutual Approval of Advertising and Promotional Material. Airline must give written approval before any distribution of material which refers to Airline. SkyMall must give written approval before any distribution of material which refers to SkyMall. 11. RIGHTS TO THE CATALOG, SERVICES AND PURCHASE INFORMATION. SkyMall owns (a) the Catalog and the Concierge Service, their contents, their name or names, the designs and other information created or developed by SkyMall (or jointly by SkyMall and Airline) in connection with the Catalog and the SkyMall(R) Program, and the associated goodwill and (b) the names, addresses and other direct marketing information about persons who order from the Catalog (the "SkyMall Buyer File"). SkyMall may use the SkyMall Buyer File, or make it available to third parties, so long as the file information is not selectable by airline and does not indicate that an individual is a passenger of Airline or a member of Airline's frequent flyer program. 12. CONFIDENTIAL INFORMATION. 12.1 Confidential and Proprietary Information. The Parties may furnish to each other confidential or proprietary information (the "Confidential Information"). Confidential Information must be marked in a manner that indicates it is proprietary and includes information about marketing philosophies and objectives, plans, designs, orders, forecasts, competitive advantages and disadvantages, types of services provided, trade secrets, ideas, creations, materials, intellectual property (including, without limitation, patents, copyrights, trademarks, service marks, designs, logos, and slogans), data processing programs or procedures, source code, object code, business methods and procedures, employees, suppliers, and customers. Confidential Information excludes: (a) information approved for release to the public without qualification as to the recipient; (b) information which a Party obtained, had, or possessed independently of the other Party (unless such information is confidential 6 <PAGE> 10 pursuant to another agreement or understanding); (c) information in the public domain; and (d) the SkyMall Buyer File. 12.2 Use and Protection of Confidential Information. Each Party has exclusive ownership and use of its own Confidential Information. The Parties and their officers and employees will: (a) preserve the confidentiality of the other's Confidential Information; (b) not disclose, directly or indirectly, any of the other's Confidential Information to any third party for any purpose; (c) not use the other's Confidential Information except as expressly permitted by this Agreement; (d) immediately notify the other of any loss or disclosure of the other's Confidential Information; (e) comply with reasonable security procedures for protection of Confidential Information; and (f) employ at least the same degree of care in protecting the other's Confidential Information as it employs in protecting its own Confidential Information. A Party served with a subpoena or other legal process requiring the production or disclosure of the other's Confidential Information, will promptly notify the other and will in good faith attempt to permit the other (at the other's expense) to intervene and contest such disclosure or production. 12.3 Enforcement. If a Party breaches or threatens to breach its confidentiality obligations, the other's remedies at law would be inadequate. Each Party is entitled to a temporary restraining order or injunction (without any bond or other security) to prevent disclosure or use of the Confidential Information. This remedy does not preclude any other action or remedy for any breach or threatened breach of this Agreement, including the recovery of damages, reasonable attorneys' fees, costs and other expenses in connection with the actions. 13. NO-COMPETITION. During the Term, the Parties will not compete with each other in any way, including use of information or knowledge about the other in competition with the other, and will not provide any information or knowledge about the other to any competitor of the other. 14. DEFAULT AND REMEDIES. 14.1 Default. The following are defaults under this Agreement: (a) Non-Payment. Failure to make a required payment, or to perform a monetary obligation, within 30 days after written notice; (b) Performance or Condition. Failure to perform, or breach of, any non- monetary obligation under this Agreement which continues for 45 days after written notice; (c) Bankruptcy or Insolvency. Either Party: (1) becomes insolvent; (2) does not pay its bills when due without just cause; (3) takes any material steps leading to its cessation as a going concern; (4) ceases or suspends operations; (5) makes a general assignment for the benefit of creditors or files a 7 <PAGE> 11 voluntary application for appointment of a custodian or receiver; or (6) has an action commenced against it under any law relating to bankruptcy, insolvency, reorganization or relief of debtors (except that if any of the foregoing actions are filed involuntarily, a Party has 60 days to secure dismissal before the filing is deemed a default). If bankruptcy proceedings are commenced and this Agreement is not otherwise terminated, the non-defaulting Party may suspend all further performance, other than making payments when due, until the defaulting Party assumes or rejects this Agreement pursuant to Section 365 of the United States Bankruptcy Code or any similar or successor provision. A suspension of performance pending the defaulting Party's assumption or rejection is not a breach of this Agreement and does not affect the non-defaulting Party's right to pursue or enforce its rights under this Agreement or otherwise. 14.2 Remedies. Upon a default the non-defaulting Party may, consistent with applicable laws and at its option, do one or more of the following: (a) Temporary Restraining Order or Injunction. Proceed immediately, when Confidential Information or non-competition requirements are involved, to obtain a temporary restraining order or injunction; (b) Damages for Breach. Institute proceedings to recover damages, including reasonable attorneys' fees, costs and other expenses; (c) Other Remedies. Exercise any other right, privilege or remedy available under this Agreement, or in law or equity; and (d) Terminate the Agreement. By written notice to the defaulting Party immediately terminate this Agreement. 14.3 Consequential Damages. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE FOR, AND EACH PARTY WAIVES AND RELEASES ANY CLAIMS AGAINST THE OTHER PARTY FOR, ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST REVENUES, LOST PROFIT OR LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE) RESULTING FROM PERFORMANCE OR FAILURE TO PERFORM, OR ACTS OR OMISSIONS UNDER, THIS AGREEMENT. 14.4 Force Majeure Excusing Performance. No Party is liable to the other if a failure or delay in performance arises out of any cause beyond the reasonable control of the Parties (including loss of facilities, breach by suppliers of supply agreements, fires, floods, strikes, labor unrest, embargoes, civil commotion, rationing or other governmental orders or requirements, acts of civil or military authorities, war, acts of God, unavoidable accidents, acts or omissions of sovereign states, or serious adverse weather conditions). All requirements of notice and other performance are extended to accommodate the period when performance is impeded, except that the Party claiming to be excused must deliver written 8 <PAGE> 12 notice to the other Party within 30 days stating the cause, the reasonable efforts taken to overcome the cause, and the period of time the cause is expected to continue. 15. INDEMNIFICATION. 15.1 Claims. "Claims" means any and all claims, liabilities, damages, demands, suits, causes of action, proceedings, recoveries, judgments, expenses, taxes, fines, penalties or executions (including but not limited to litigation costs and expenses and reasonable attorneys' fees). 15.2 SkyMall's Indemnification of Airline. SkyMall indemnifies and holds harmless Airline, its directors, officers, employees, and agents against all Claims for: (a) SkyMall's negligent acts or omissions; (b) SkyMall's offering, providing, or failing to provide any Catalog merchandise or services; (c) SkyMall's advertising, promotions, or activities; (d) Airline's use of patents, copyrights, trademarks, tradenames, logos, slogans, imprints, or any copy supplied by SkyMall and used as directed by SkyMall; and (e) any claim that merchandise sold in the Catalog infringes upon the valid patent or other rights of a third party. This indemnification does not apply to Claims arising from (a) merchandise, services, advertising, or promotions offered or provided by Airline or (b) negligent acts or omissions of Airline, its directors, officers, employees, contractors, or agents. 15.3 Airline's Indemnification of SkyMall. Airline indemnifies and holds harmless SkyMall, its directors, officers, employees, and agents against all Claims for: (a) Airline's negligent acts or omissions; (b) Airline's offering, providing, or failing to provide any merchandise or services which are to be provided by Airline; (c) Airline's advertising, promotions, or activities; (d) SkyMall's use of patents, copyrights, trademarks, tradenames, logos, slogans, imprints, or any copy supplied by Airline and used as directed by Airline; and (e) any claim that merchandise provided by Airline infringes upon the valid patent or other rights of a third party. This indemnification does not apply to Claims arising from (a) merchandise, services, advertising, or promotions offered or provided by SkyMall or (b) negligent acts or omissions of SkyMall, its directors, officers, employees, contractors, or agents. 15.4 Notification, Defense of Claims and Settlement. A Party seeking indemnification (the "Indemnitee")is subject to the following procedures: (a) Notice. Indemnitee must notify the other Party (the "Indemnitor") promptly after learning of a Claim. Failure to notify Indemnitor of a Claim relieves Indemnitor from the obligation to indemnify to the extent the delay materially prejudices defense of the Claim. (b) Defense. Indemnitor is entitled to assume the defense of the Claim, with counsel reasonably acceptable to Indemnitee. Indemnitor is not liable for legal or other expenses incurred by Indemnitee after notice of Indemnitor's election to assume the defense of the Claim, other than the reasonable costs 9 <PAGE> 13 of investigating the matter and cooperating with counsel. Indemnitee may employ its own counsel, but the fees and expenses are at the Indemnitee's expense unless (1) Indemnitor authorizes employment of counsel by Indemnitee, (2) Indemnitee reasonably concludes based on the opinion of counsel that there is a conflict of interest between Indemnitor and Indemnitee in the conduct of the defense, or (3) Indemnitor fails to employ counsel to assume the defense. (d) Settlements. Indemnitor is not obligated for any settlement unless it agrees to the settlement in writing. If Indemnitor agrees to a settlement, but Indemnitee unreasonably fails to enter into the settlement, then Indemnitor's indemnification obligation for the Claim will not exceed the amount of the settlement (plus expenses incurred up to the time the settlement could have been effected). 16. INSURANCE. 16.1 Insurance Amounts and Certificates. Each Party must keep in force insurance, and furnish to the other certificates evidencing insurance, as follows: (a) comprehensive general liability insurance, $4,000,000 combined single limit coverage; (b) products liability insurance, $4,000,000 combined single limit coverage; (c) advertisers liability insurance, $4,000,000; and (d) automobile liability insurance, $1,000,000. Each party must also keep in force policies of workers compensation insurance in amounts required by law. 16.2 Endorsements. Each Party will endorse all required policies to: (a) provide that the insurance is primary insurance and acknowledge that insurance procured by the other Party is secondary or excess insurance; (b) name the other Party, its directors, officers, agents, and employees as additional insureds; (c) contain a waiver of subrogation clause in favor of the additional insureds; and (d) require 30 days written notice to the other Party of any cancellations or adverse material change in such insurance. 17. MISCELLANEOUS. 17.1 Entire Agreement. This Agreement is the entire agreement of the Parties regarding its subject matter and supersedes all prior oral or written agreements. 17.2 Amendments and Waivers. This Agreement may not be amended except in a writing signed by each Party. No waiver is effective unless in writing and signed by the Party granting the waiver. Any single waiver does not operate as a continuing waiver or waive any other provision or breach of this Agreement, whether in the past or in the future. 17.3 Assignments and Successors. Neither Party may assign this Agreement without the prior written consent of the other Party, which shall not be unreasonably withheld. This Agreement is binding on, and inures to the benefit of, the Parties and their respective successors and assigns. Nothing in this Agreement confers 10 <PAGE> 14 on any person, other than the Parties or their respective successors and assigns, any rights, obligations, remedies or liabilities. 17.4 No Joint Venture or Partnership. Nothing in this Agreement constitutes, creates, or establishes any agency, joint venture or partnership relationship between the Parties. No Party has any power or right to represent, act on behalf of, or contractually bind the other Party as its agent, partner or otherwise. 17.5 Severability. The unenforceability, illegality, or invalidity of any provision of this Agreement will not alter the remaining provisions of this Agreement. Each provision of this Agreement is severable from all other provisions of this Agreement. 17.6 Survival. All agreements, obligations, covenants, terms, conditions, representations, and warranties made in this Agreement will survive the execution and delivery of this Agreement until all obligations of the parties are fully performed. All rights and obligations of the Parties with regard to Confidential Information, Non-Competition, Indemnification, and Insurance shall survive termination of this Agreement. 17.7 Further Actions and Assurances. Each Party will cooperate in good faith to take actions, and to execute and deliver documents, as reasonably requested by the other Party. 17.8 Governing Law. This Agreement is governed by and interpreted in accordance with the laws of Arizona. 17.9 Attorneys' Fees. In any proceeding arising out of or related to this Agreement, the prevailing Party is entitled to receive, in addition to any other remedy or award, reasonable attorneys' fees, costs and other expenses incurred in connection with such proceeding. 17.10 Notices. Notices must be in writing and are effective (a) on the date of delivery or (b) 72 hours after mailing by United States first class mail, registered or certified, return receipt requested, postage prepaid and properly addressed. Notices must be sent to the address stated on the signature page (or to any other address designated by a Party). 17.11 Counterparts. This Agreement may be executed in counterparts, each of which is an original. All counterparts constitute one and the same Agreement. 17.12 Exhibits. The Exhibits to this Agreement are incorporated in and made a part of this Agreement. 17.13 Time. Time is of the essence of this Agreement. 11 <PAGE> 15 17.14 Effective Date. This Agreement is executed ______________, 19____, to be effective on ___________________________, 19____. [AIRLINE NAME] By: ________________________________________ Name: ______________________________________ Title: _____________________________________ [Airline Name] [address] ____________ (Voice) ____________ (Fax) SKYMALL, INC. By: ______________________________ Name: Robert M. Worsley Title: President SkyMall, Inc. 1520 East Pima Street Phoenix, Arizona 85034 Attention: Robert M. Worsley, President (602) 254-9777 (Voice) (602) 254-6075 (Fax) With a copy to: Lewis and Roca 40 North Central Avenue Phoenix, Arizona 85004-4429 Attention: Kevin L. Olson, Esq. 12 <PAGE> 16 EXHIBIT A NET SALES CALCULATION PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN AIRLINE AND SKYMALL "Net Sales" are determined as follows: A. Definitions: (a) "Gross Merchandise Sales" is defined as all gross merchandise sales from the Catalog but not sales to Airline's employees. (b) "Concierge Service Fees" is defined as the charge SkyMall collects from Airline customers for each concierge service request and is exclusive of the price of goods or services required to fulfill such request. (c) "Returned Merchandise Revenue" is defined as the sale amounts on all returned merchandise or refunds from Airline customers and applicable restocking charges. (d) "Cancelled Concierge Service Fees" is defined as any Concierge Service Fees charged by SkyMall for services rendered and thereafter cancelled by Airline customers, and the cost to cancel or return the applicable service or product. (e) "Sales Taxes, Excise Taxes and Duties" is defined as all applicable sales and excise taxes and duties on Catalog merchandise and services paid by SkyMall for Airline customers. (f) "Shipping and Handling Charges" is defined as all shipping, handling and insurance costs for all Catalog merchandise and services sold to Airline customers. (g) "Giftwrapping and Monogramming Charges" is defined as all extra and special services requested and paid by Airline customers. (h) "Advertising Revenues" is defined as the depiction fees and advertising charges paid by Suppliers for having their products or services featured in the Catalog. (i) "Bad Debts" is defined as all bad debts incurred by SkyMall in administering the SkyMall(R) Program for Airline. <PAGE> 17 B. Calculation: Net Sales = (a) Gross Merchandise Sales + (b) Concierge Service Fees + (c) Sales Taxes, Excise Taxes and Duties + (d) Shipping and Handling Charges + (e) Giftwrapping and Monogramming Charges (Less): - (a) Returned Merchandise Revenue - (b) Cancelled Concierge Service Fees - (c) Sales Taxes, Excises Taxes and Duties - (d) Shipping and Handling Charges - (e) Giftwrapping and Monogramming Charges - (f) Bad Debts Net Sales excludes Advertising Revenues C. Example: Merchandise Sales $3,100,000 Concierge Fees 100,000 Taxes 192,000 Shipping & Handling 320,000 Giftwrapping 30,000 ---------- Subtotal $3,742,000 (Less): Merchandise Returns $ 160,000 Cancelled Fees 5,000 Taxes 192,000 Shipping & Handling 320,000 Giftwrapping 30,000 Bad Debts 32,000 ---------- Subtotal $ 739,000 ---------- TOTAL NET SALES $3,003,000 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.6 <SEQUENCE>9 <DESCRIPTION>1994 STOCK OPTION PLAN AS AMENDED <TEXT> <PAGE> 1 EXHIBIT 10.6 SKYMALL, INC. 1994 STOCK OPTION PLAN (AS AMENDED SEPTEMBER 30, 1996) 1. Purpose. The SkyMall, Inc. 1994 Stock Option Plan is intended to assist in attracting and retaining certain key employees to whom options may be granted under the Plan. 2. Definitions. The following terms have the following meanings: 2.1. "Act" means the Federal Securities Act of 1933, as amended, and applicable state securities laws. 2.2. "Board" means the Board of Directors of SkyMall, Inc. 2.3. "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder. 2.4. "Committee" means the Compensation Committee of the Board of Directors of Skymall, Inc. 2.5. "Company" means SkyMall, Inc. and any of its subsidiaries. 2.6. "Grant Date" means the date on which an Option is granted. 2.7. "Incentive Option" means an Option eligible for tax treatment as an incentive option under Section 422 of the Code. 2.8. "Non-Qualified Option" means an Option that is not eligible for tax treatment under Section 422 of the Code 2.9. "Option" means an option to purchase Stock that is granted under the Plan. 2.10. "Optionee" means an employee to whom an Option has been granted under the Plan. 2.11. "Plan" means the SkyMall, Inc. 1994 Stock Option Plan, as amended, the terms and conditions of which are in this instrument. 2.12. "Stock" means the common stock of SkyMall, Inc. 2.13. "Stock Option Agreement" means the written agreement entered into between the Company and the Optionee that provides for the price and terms of an option granted under the Plan. <PAGE> 2 2.14 "Subsidiary" means any corporation, the majority of the outstanding capital stock of which is owned, directly or indirectly, by the Company. 2.15. "Tax Date" means the date an Optionee is required to pay the Company an amount to cover tax withholding on the exercise of a Non-Qualified option. 2.16. "Ten Percent Shareholder" means an employee who owns more than 10% of the total combined voting power of all classes of stock of the Company. 3. Administration. 3.1. The Plan shall be administered by the Board. Without limiting the powers of the Board, the Board shall have the power to determine the times during which any option shall be exercisable, the events upon which any Option shall be terminated, the amounts, if any, payable to beneficiaries of an Optionee upon the death of such Optionee, the exercisability of any Option upon the sale of all or substantially all of the assets of the Company, or a merger pursuant to which the Company is not the surviving corporation, (other than a merger that is only a change in form), and other terms of exercise. No member of the Board shall be eligible to vote with respect to Options to be granted to him or her. 3.2. The Committee, subject to the provisions of the Plan, shall make recommendations to the Board regarding: (a) the employees who shall receive Options, the times when such Options shall be granted and the time limits within which Options may be exercised, the number of shares to be subject to each Option, and the terms and provisions of Stock Option Agreements (which need not be identical): (b) Matters of interpretation of plan provisions; (c) rules and regulations relating to the Plan; (d) Stock Option Agreements under the Plan; and (e) other determinations advisable for the proper administration of the Plan. All decisions and determinations of the Board in the administration of the Plan shall be final. 4. Tax Characteristics of Options. Options granted pursuant to the Plan may be designated, but need not be designated, as Incentive Options. The Stock Option Agreement shall provide whether an option is an Incentive Option or a Non-Qualified Option. In the case of options that are Incentive Options the aggregate fair market value (determined at the time the incentive stock option is granted) of the Stock with respect to which options are exercisable for the first time by an employee during any calendar year (under all stock option plans of the Company) shall not exceed $100,000. 2 <PAGE> 3 5. Stock Subject to the Plan. 5.1 Subject to adjustments pursuant to Section 11 of this Plan, the aggregate number of shares that may be issued upon the exercise of Options shall not exceed 650,000 shares of Stock, which may be authorized but unissued shares or treasury shares, as the Board may determine. 5.2 If an Option for any reason expires or is terminated, those shares of Stock allocated for issuance upon the unexercised or terminated portion of such Option may again be subject to an Option under the Plan. 6. Eligibility. All directors and officers of the Company who are employees of the Company and other key employees of the Company and any Subsidiary (whether existing now or a new subsidiary) as selected by the Board shall be eligible to receive Options under the Plan. 7. Option Exercise Price and Payment of Withholding Taxes. The price at which shares of Stock may be purchased upon the exercise of any Option shall be such price as determined by the Board, which shall not be less than 110% of the fair market value of the Stock on the date of the granting of the Option, but if the Company desires to grant an Incentive Option to a Ten Percent Shareholder, the price at which shares may be purchased shall not be less than 110% of the fair market value of the Stock at the date of grant. Also, if an Employee desires to exercise a Non-Incentive Option, the Employee shall pay to the Company the federal and state income and withholding taxes the Company determines are payable on the spread between the fair market value of the stock at the date of exercise and Option Price. 8. Term of Options. The term of each Option shall be determined by the Board, but unless otherwise determined the term of each option shall be five years from the date of grant. In no case shall the term of any option exceed ten years from the date of grant, or five years in the case of a grant of an Incentive Option to a person who owns 10% or more of the value of the Employer's outstanding Stock. 9. Payment on Exercise of Options. The price of an exercised Option and any taxes attributable to the delivery of the Stock to the employee upon exercise of such Option shall be paid: (a) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) at the discretion of the Board, through the delivery of Stock with a fair market value equal to the exercise price and withholding taxes, if any; or 3 <PAGE> 4 (c) at the discretion of the Board, through a combination of (a) and (b). 10. Non-Transferability of Options. Options shall not be transferable by the Optionee, except that if an employee dies, his or her personal representative may exercise the option within 90 days of the date of the employee's death. 11. Adjustments. If the Company: (a) declares a dividend or makes a distribution on its Stock payable in Stock or securities convertible into Stock; (b) recapitalizes through a split-up of the outstanding shares of Stock into a greater number or a combination of the outstanding Stock into a lesser number: or (c) issues, by reclassification of its Stock, any shares of Stock, the Board shall make appropriate and equitable adjustments in the number and kind of shares subject to outstanding Options under the Plan. Any other adjustments to the Options shall be within the sole discretion of the Board. If the adjustment would produce fractional shares with respect to any unexercised Option, the Board may adjust appropriately the number of shares covered by the Option to eliminate the fractional shares. The price of any shares subject to an outstanding Option shall be adjusted so there will be no change in the aggregate purchase price payable upon the exercise of such Option. 12. Additional Restrictions. Notwithstanding any other provisions of the Plan, any Option granted under the Plan may contain such additional or more restrictive provisions as the Board deems advisable and consistent with the Plan. 13. Registration. The Plan, the Stock to be issued pursuant to the exercise of Options or the Options granted under the Act, may in the discretion of the Board, be registered under the Act. 14. Effective Date of Plan. The Plan shall become effective as of January 1, 1994 and shall remain in effect for ten years from its effective date, unless it is sooner terminated by the Board. No Incentive Options may be issued under the Plan unless the Plan is approved by the stockholders of the Company within one year from the date the Plan is adopted by the Company. 4 <PAGE> 5 15. Amendment Termination. The Board, in its discretion and at any time, may modify, amend or terminate the Plan. Neither the termination of the Plan nor any modification or amendment thereof, shall adversely affect any rights under an Option previously granted under the Plan without the consent of the Optionee. Notwithstanding the foregoing, the Board may amend the Plan to the extent necessary to cause Options granted under the Plan to meet the requirements of the Code and regulations thereunder and the Act. 16. Miscellaneous. 16.1. The Grant Date of any Option under this Plan shall be the date specified by the Board in the Stock Option Agreement. The grant of any Option shall be subject to the execution by an Optionee of a Stock Option Agreement in the form and containing the terms specified by the Board. 16.2. Nothing in the Plan or any Option granted hereunder shall confer upon any employee any right to continue in the service of the Company or a Subsidiary. 16.3 The grant of Options under the Plan, the issuance and delivery of shares upon the exercise of Options, and any other matters relating thereto shall be subject to all laws, rules and regulations as may from time to time be applicable thereto, including but not limited to, any and all rules and regulations of any stock exchange or exchanges upon which the shares of the Company may be listed and all applicable federal and state securities laws, and shall be further subject to the approval of counsel for the Company with respect to compliance with such laws, rules and regulations. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. In the case of an Incentive Option, any Optionee who disposes of shares of Stock acquired on the exercise of an Option by sale or exchange (a) either within two (2) years after the date of the grant of the Option under which the Stock was acquired or (b) within one (1) year after the acquisition of such shares of Stock shall notify the Company of such disposition and of the amount realized upon such disposition. 16.4 No person shall acquire any rights as an Optionee under this Plan unless and until a Stock Option Agreement shall have been duly executed on behalf of the Company by such officer or officers as the Board shall designate for such purpose, delivered to the person named therein, and executed by such person. No person shall have any rights as a shareholder with respect to any shares covered by an Option granted pursuant to the Plan until the date of the issuance of a share certificate to the Optionee for such shares. 5 <PAGE> 6 16.5 The President of the Company has been authorized to execute this Plan, as amended, and has executed the Plan, as amended, on the date indicated below. ---------------------------------------- President Date: September 30, 1996 6 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-10.7 <SEQUENCE>10 <DESCRIPTION>NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN <TEXT> <PAGE> 1 EXHIBIT 10.7 SKYMALL, INC. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN 1. Purposes Of The Plan. The purposes of this Plan are to enable the Company to attract and retain the best available individuals to serve as non-employee members of the Board, to reward such directors for their contributions to the Company, and to maximize the identity of interest between such directors and the Company's stockholders generally. 2. Definitions. As used herein, the following definitions shall apply: (a) "Board" shall mean the Board of Directors of the Company. (b) "Company" shall mean SkyMall, Inc., a Nevada corporation. (c) "Exercise Price" shall mean, with respect to each Share granted, the Fair Market Value on the date of grant. (d) "Fair Market Value" shall mean, with respect to the date a given Option is granted or exercised, the value determined by the Board in good faith using a generally accepted valuation method; provided, however, that where there is a public market for the Stock, the Fair Market Value per Share shall be the mean of the final bid and asked prices of the Stock on the date of grant or exercise, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the Nasdaq Stock Market's National Market or Nasdaq) or, in the event the Stock is listed on a stock exchange, the Fair Market Value per Share shall be the closing price of the Stock on such exchange on the date of grant or exercise of the Option, as reported in The Wall Street Journal. (e) "Option" shall mean a right to purchase Stock, granted pursuant to the Plan. (f) "Optioned Stock" shall mean the Stock subject to an Option. (g) "Optionee" shall mean a non-employee director of the Company who has been granted an Option. (h) "Plan" shall mean this SkyMall, Inc. Non-Employee Director Stock Option Plan. (i) "Share" shall mean a share of the Stock. (j) "Stock" shall mean the common stock of the Company described in the Company's Articles of Incorporation, as amended or restated from time to time. <PAGE> 2 (k) "Trading Day" shall mean a day on which the Fair Market Value of the Stock can be determined. 3. Stock Subject To The Plan. (a) Subject to increases and adjustments pursuant to Section 9 hereof, the initial number of Shares reserved and available for distribution under the Plan shall be 100,000. (b) If an Option should terminate, or be canceled, rescinded or surrendered, the Optioned Stock subject to such Option shall not be available for future grants under the Plan. 4. Option Grants. (a) An Option to purchase 5,000 Shares shall be granted to each non-employee director of the Board on appointment to the Board. (b) In addition, an Option to purchase 3,000 Shares shall be granted annually to each non-employee director of the Board on the date determined pursuant to Section 10 hereof; provided, however, that such Option shall not be granted to any non-employee director of the Company who during the fiscal year immediately preceding such grant date (or the period that he served as a director of the Company, if less than the full fiscal year) attended fewer than 75 percent of the aggregate of (i) the total number of the regularly scheduled and special meetings of the Board and (ii) the total number of meetings held by all committees of the Board on which he served; provided, further, that no such Options shall be granted to any of the non-employee directors of the Company in the event that, on such grant date, the number of Shares remaining available for distribution under the Plan is less than the product of the number of then current non-employee directors of the Company multiplied by 3,000. 5. Board Approval And Effective Dates. This Plan shall become effective as of October 15, 1996, the date as of which the Board and the stockholders of the Company adopted the Plan. The Plan and all outstanding Options shall remain in effect until such Options shall have been exercised, shall have expired or shall otherwise be terminated. 6. Term; Exercise; Rights As A Stockholder. (a) The term of each Option shall be ten years from the date of grant thereof. An Option shall be exercisable upon grant and may be exercised in whole or in part at any time or times during its term; provided, however, that an Option may not be exercised for a fraction of a Share. 2 <PAGE> 3 (b) An Option shall be deemed to be exercised upon receipt by the Company from the Optionee of written notice of such exercise. Such notice shall be accompanied by full payment for the Shares subject to such exercise. (c) No person shall have any right or privilege as a stockholder of the Company, whether to vote or to receive dividends or otherwise, by reason of the grant of an Option, but shall obtain such right only when Shares are actually issued to such person upon exercise thereof. 7. Payment. The Exercise Price shall be paid: (a) In United States dollars in cash or by check payable to the order of the Company; or (b) At the election of the Optionee by delivery of Shares with an aggregate Fair Market Value equal to the Exercise Price; or (c) By any combination of (a) and (b) above. The Board shall determine acceptable methods for tendering Stock as payment upon exercise of an Option and may impose such limitations and prohibitions on the use of Stock to exercise an Option as it deems appropriate. 8. Transferability Of Options. The Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee or by his guardian or legal representative. In the event of the Optionee's death, his Option shall be exercisable, prior to the expiration of the Option, by the person or entity to whom his accrued and vested rights pass by will or by the laws of descent and distribution. 9. Adjustments Upon Changes In Capitalization Or Merger. If the outstanding Stock of the Company shall at any time be changed or exchanged by declaration of a stock dividend, split-up, combination of shares, recapitalization, merger, consolidation, or other corporate reorganization in which the Company is the surviving corporation, the number and kind of Shares subject to the Plan or subject to any Options theretofore granted, and the Options' prices, shall be appropriately and equitably adjusted. In the event of a liquidation or dissolution of the Company, sale of all or substantially all of its assets, or a merger, consolidation or other corporate reorganization in which the Company is not the surviving corporation, or any merger or other reorganization in which the 3 <PAGE> 4 Company is the surviving corporation but the holders of its Stock receive securities of another corporation, any outstanding Options hereunder shall be appropriately and equitably adjusted. 10. Time Of Granting Options. The Option grant date shall be the third Trading Day after the Company publicly announces its year-end financial results for the immediately preceding fiscal year. 11. Amendment And Termination Of The Plan. The Board may from time to time amend the Plan in whole or part in such respects as the Board may deem advisable or may terminate the Plan, provided, however, that amendments to the Plan relating to the amount, price, or timing of the option grants shall not be made more than once in any six month period. Any amendment or termination of the Plan shall not affect Options already granted and such Options shall remain in full force and effect as if the Plan had not been amended or terminated. Any amendment to the Plan shall be submitted as a proposal for approval of the Company's stockholders if such approval of the amendment is necessary for the Plan to comply or to continue to comply with the applicable exemption, if any, under Section 16(b) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 12. Conditions Upon Issuance Of Shares. The Plan, the grant, the exercise of Options and the obligations of the Company shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company shall not be required to issue or deliver any certificate or certificates for Shares of Stock prior to (i) the admission of such Shares to listing on any stock exchange on which the Stock may then be listed, and (ii) the completion of any registration or other qualification of such Shares under any state or federal law (including, without limitation, the Securities Act of 1933, as amended), or rulings or regulations of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. As a condition to the exercise of an Option, the Company may require the Optionee to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is necessary or advisable. 13. Miscellaneous Provisions. (a) Plan Expense. Any expenses of administering this Plan shall be borne by the Company. (b) Taxes. The Company shall be entitled if necessary or desirable to pay or withhold the amount of any tax attributable to the delivery of Stock under the Plan after giving the person entitled to receive such Stock notice as far in advance as practical, and the Company may defer making delivery of such Stock if any such tax may be pending unless and until indemnified to its satisfaction. 4 <PAGE> 5 (c) Construction Of Plan. The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined by the Board in accordance with the laws of the State of Nevada, and such determinations shall be final and conclusive. (d) Gender. For purposes of this Plan, words used in the masculine gender shall include the feminine and neuter, and the singular shall include the plural and vice versa, as appropriate. As approved by the Board of Directors as of October 15, 1996. ---------------------- ROBERT M. WORSLEY President ATTEST: ------------------------------ DAVID A. WIRTHLIN Secretary 5