Employment Agreement - SkyMall Inc. and Curtis D. Brown
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 14th day of January, 1999, by and between SkyMall,
Inc., a Nevada corporation ("Employer"), and Curtis D. Brown ("Employee"):
RECITALS
A. Employer wishes to retain the services of Employee in order to utilize
Employee's skills, talents and abilities;
B. Employee wishes to be employed by Employer as Chief Technology Officer
of SkyMall.com, a wholly-owned subsidiary of Employer;
C. Employer does not wish to receive or utilize in any manner any trade
secrets or other confidential or proprietary information of another company that
Employee may have had access to by virtue of his prior employment;
D. Employee understands that he must not provide Employer with any trade
secrets or other confidential or proprietary information of another company that
Employee may have had access to by virtue of his prior employment; and
E. Employer and Employee wish to memorialize the terms of their
agreement.
AGREEMENT
In consideration of Employer's employment of Employee, the compensation to
be paid to Employee, and the mutual covenants and promises contained herein, the
parties agree as follows:
1. EMPLOYMENT. Employer shall employ Employee as Chief Technology Officer
of SkyMall.com, and Employee shall accept such employment and agrees to perform
his duties and responsibilities in accordance with the terms and conditions
herein.
2. TERM. The term of the employment of Employee by Employer shall be for
a period of three years, commencing on February 16, 1999, and ending on February
16, 2002, unless sooner terminated in accordance with paragraph 14 of this
Agreement. The employment of Employee may be renewed by a written agreement
signed by Employee and Employer specifically renewing Employee's employment and
specifying a renewal term. Neither the Employee nor Employer will have any
obligation to renew the employment.
3. EMPLOYEE'S OBLIGATIONS AND DUTIES. During the term of his employment,
and except during vacation periods and reasonable periods of absence due to
sickness, personal injury or other approved leave of absence, Employee shall
devote his full time and efforts during normal business hours to the business
<PAGE>
affairs of Employer. Employee shall perform and discharge in a diligent and
professional manner such duties and responsibilities as may be prescribed from
time to time by Employer. Notwithstanding the foregoing, Employee shall report
only to the Chief Information Officer of Employer or, in the event the position
of President of SkyMall.com is created, to the person appointed to such
position. Employee agrees to adhere to all of Employer's rules, policies, and
procedures as may be in effect from time to time, including but not limited to
Employer's policy requiring pre-employment and routine random drug screening,
and any policies contained in Employer's employee guidebooks. Employer may
amend, revise, or discontinue any of its rules, policies, and procedures as
Employer deems necessary or desirable. The terms of Employer's rules, policies,
procedures and employee guidebooks do not create any contractual rights in favor
of Employee. Employer has provided to Employee copies of the Employer's employee
guidebooks that are in effect as of the date hereof.
4. ANNUAL BASE SALARY. During the term of Employee's employment under
this Agreement, Employer shall pay Employee an annual base salary of a minimum
of $250,000.00 (said amount, together with any increases thereto as shall be
determined at least annually within one week of the performance reviews
contemplated by paragraph 13 hereof, being hereinafter referred to as "Salary").
Any Salary paid pursuant to this paragraph shall accrue and be payable in
accordance with the payroll practices of Employer as may be in effect from time
to time.
5. SIGNING BONUS. In consideration for his employment, Employee shall be
paid a one-time signing bonus in the amount of $100,000.00 (absent applicable
taxes and withholding), which shall be distributed to Employee as follows:
one-quarter of said signing bonus ($25,000.00, absent applicable taxes and
withholding) shall be paid to Employee on February 16, 1999; one-half of said
signing bonus ($50,000.00, absent applicable taxes and withholding) shall be
paid to Employee on July 1, 1999; and one-quarter of said signing bonus
($25,000.00, absent applicable taxes and withholding) shall be paid to Employee
on October 1, 1999. In the event Employee is not still employed by Employer
through and until July 1, 1999, Employee is obligated and agrees to repay to
Employer the one-quarter of the signing bonus ($25,000.00, absent applicable
taxes and withholding), that Employee received on February 16, 1999.
6. INCENTIVE BONUS. During the term of Employee's employment under this
Agreement, Employee will be eligible to participate in Employer's incentive
compensation plan (a current copy of which has been provided to Employee) that
will allow Employee to receive, subject to Board approval, (i) a cash bonus of
up to seventy-five percent (75%) of his Salary (the "Cash Bonus") based on the
financial performance of Employer and other criteria as may be in good faith
agreed to and determined by the Board of Directors of Employer and Employee from
time to time; and (ii) additional awards of stock options based on the formula
provided in the above- referenced incentive compensation plan.
7. STOCK OPTIONS. Subject to approval by the Board of Directors of
Employer (which approval Employer expects to receive), Employee shall be
eligible to receive, pursuant to Employer's 1994 Stock Option Plan, as amended
on April 20, 1998 (a copy of which has been provided to Employee), options to
purchase 75,000 shares of common stock par value $.001 per share ("Common
Stock") at the market price of such Common Stock on the date of execution of
this Agreement. One-third of such options shall be immediately vested, and the
2
<PAGE>
remaining two-thirds shall vest as follows: one-third on the first anniversary
of this agreement and one-third on the second anniversary of this Agreement. The
options, shall be covered by a separate written option agreement between
Employer and Employee, containing customary terms and provisions, including
without limitation, full vesting upon a sale or change of control of Employer or
SkyMall.com, which option agreement shall be authorized by the Board of
Directors and delivered to Employee for execution by no later than ten days
after the date of this Agreement.
8. PERSONAL PAID TIME OFF. Employee shall be entitled to 15 personal paid
time off days per year (accrued at the rate of 4.615 hours per pay period). Any
unused days shall be forfeited, and no payment shall be made in lieu of taking
time off. Employer offers paid holidays to employees on a schedule adopted each
year.
9. 401(K). After 90 days of employment, Employee shall be eligible to
participate in Employer's 401(k) Plan that is currently offered through Fidelity
Investments. Employer shall match fifty percent (50%) of Employee's contribution
to the 401(k) Plan (up to 6% of Employee's Salary) in accordance with the terms
of the 401(k) Plan documents.
10. EMPLOYEE BENEFITS. During the term of Employee's employment under this
Agreement, Employee shall be eligible for medical and dental insurance
(beginning on the first day of the month after one full month of employment). In
the interim period during which Employee shall not be eligible for such medical
and dental insurance, the Employer will compensate Employee for actual COBRA
expenses up through the effective date of enrollment under the Employer's
programs. Employer shall also provide to Employee short and long-term disability
insurance and life insurance, all in accordance with the standard benefits
policies and procedures applicable to employees of Employer during the term of
this Agreement.
11. EXPENSES. During the term of Employee's employment under this
Agreement, Employer shall reimburse Employee for all reasonable travel and other
expenses incurred by Employee in connection with the performance by Employee of
his duties and responsibilities hereunder, subject to Employee's submission of
receipts for the expenses, and in accordance with Employer's standard policies
as may be in effect from time to time.
12. WITHHOLDING OF TAXES. Employer may withhold from any compensation or
benefits payable to Employee under this Agreement all federal, state and local
taxes as may be required to be withheld by law, regulation or ruling.
13. PERFORMANCE REVIEWS. Employer shall provide Employee with annual
performance reviews in a manner deemed reasonable by Employer in its sole
discretion.
14. TERMINATION. Subject to the express requirements of clauses (a) and
(b) below, Employee's employment is at will and may be terminated at any time,
by either party, with or without cause, by providing written notice to the
other.
A. BY EMPLOYEE. If Employee's employment is terminated by Employee
for any reason, or for no reason, Employer shall have no further obligation or
liability other than: (i) to provide Employee his pro-rated Salary through the
3
<PAGE>
last date Employee performs work for Employer; and (ii) to provide Employee
continuing benefits as required under COBRA or other applicable law.
B. BY EMPLOYER. If Employee's employment is terminated by Employer
for any reason other than Good Cause (as defined below), then Employer shall
continue to pay to Employee the Salary each year through February 16, 2002. If
Employee's employment is terminated by Employer for Good Cause, then Employer
shall have no further obligation or liability other than: (a) to provide
Employee his pro-rated Salary through the last date Employee performs work for
Employer; and (b) to provide Employee continuing benefits as required under
COBRA or other applicable law. Anything in the preceding sentences to the
contrary notwithstanding, (i) Employer must first give Employee reasonable
notice and an opportunity to meet with the President of Employer to discuss such
termination if Employee is to be terminated for any reason other than Good
Cause; and (ii) Employer must first give Employee written notice that Employee
is being terminated for Good Cause, specifying in writing in reasonable detail
the basis for such termination and such basis in fact constituting Good Cause.
"GoodCause" shall mean the occurrence of any of the following
circumstances: (i) Employee becomes unable to perform the duties and essential
functions of his job due to mental or physical disability for a period of more
than 13 weeks; (ii) Employee refuses or neglects to perform duties reasonably
assigned to him, provided that Employer first gives Employee written notice and
such refusal or neglect by Employee continues for a period of five days after
such notice; (iii) Employee fails to devote his full working time to Employer,
provided that Employee is first given an opportunity to cure; (iv) Employee
commits any act of dishonesty or disloyalty that is detrimental in a material
respect to the Employer; (v) Employee dies; or (vi) Employee breaches any of the
terms of this Agreement, including but not limited to paragraphs 3, 15, 16 and
17 hereof, and such breach has or is reasonably likely to have a material
adverse effect on Employer.
15. CONFIDENTIALITY.
A. CONFIDENTIAL MATERIAL. In the course of Employee's employment by
Employer, Employee will be given access to and become acquainted with trade
secrets and various other proprietary or confidential technical and commercial
information, including, but not limited to, the following: (i) business
strategies, pricing, marketing and cost data; (ii) technical information
regarding Employer's products and services; (iii) confidential customer
information; (iv) customer and supplier lists; (v) contents of contracts and
agreements with partners, merchants, customers and suppliers; (vi) customer
requirements and specifications; and (vii) e-commerce designs, plans,
development techniques and other products or processes, whether or not
copyrighted by Employer. All items described in the foregoing sentence are
defined herein as "Confidential Material," provided that the term Confidential
Material shall not include any information (x) that is or becomes generally
publicly available (other than as a result of violation of this Agreement by the
Employee), (y) that the Employee receives on a non-confidential basis from a
source (other than the Employer) that is not known by the Employee to be bound
by an obligation of secrecy or confidentiality to the Employer, or (z) that was
in the possession of the Employee prior to disclosure by the Employer. Employee
4
<PAGE>
further acknowledges that the Confidential Material has been developed or
acquired by the Employer through expenditure of substantial time, effort and
money, and that the Confidential Material provides Employer with an advantage
over competitors.
B. NON-DISCLOSURE AGREEMENT. In consideration for access to
Confidential Material, Employee agrees that during his employment and continuing
for two years thereafter, he shall not directly or indirectly disclose or use
for any reason whatsoever any Confidential Material obtained by him by reason of
his employment with Employer, except as required to conduct the business of
Employer or as authorized by express written permission of the Board of
Directors of Employer or as otherwise required by law.
C. OWNERSHIP OF DATA. Employee confirms that all Confidential
Material and all documents reflecting such information remain the exclusive
property of Employer. All business records, papers, documents or other data, in
whatever form, kept or made by Employee relating to the business of Employer,
shall be and shall remain the property of Employer during the term of Employee's
employment and at all times thereafter. Employee will grant and hereby grants to
Employer the sole and exclusive ownership of (including the sole and exclusive
right to reproduce, use or disclose for any purpose) any and all reports,
drawings, data, programs, plans, writings or other information made or prepared
by Employee alone or with others during the term of his employment that relate
to his employment or Employer's business.
D. REMEDIES. Employee hereby agrees that damages and any other
remedy available at law would be inadequate to redress or remedy any loss or
damage suffered by Employer upon any breach of the terms of this paragraph 15 by
Employee, and Employee therefore agrees that Employer, in addition to recovering
on any claim for damages or obtaining any other remedy available at law, also
may enforce the terms of this paragraph 15 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
Employee further acknowledges and agrees that Employer shall be entitled to
recover attorneys' fees and costs associated with enforcement of this paragraph
15.
16. NON-COMPETE AGREEMENT.
A. HIGHLY-COMPETITIVE MARKET. Employee acknowledges and agrees that
Employer's products and services are sold and performed in a highly-competitive
market. Employee acknowledges that the services he may render to Employer, the
information exchanged between all parties in connection with rendering those
services, and Employer's relationships with customers, airlines, transportation
companies, catalog retailers, vendors, banks, accountants, and any other
Employer program participants, business partners or similar parties, are each of
a unique and valuable character. Employee acknowledges that the market for
Employer's products and services is national and international in scope.
B. LIMITATION OF ACTIVITIES.
(i) Employee agrees that during his Employment with Employer and
for a period of two years after the later of either (x) the termination of
Employee's employment with Employer, or (y) February 16, 2002, Employee shall
not solicit, directly or indirectly, any vendors or customers of Employer for
any Competitor, as that term is defined below. In addition, Employee agrees that
5
<PAGE>
he will not, for that same period of time, recruit, hire or induce, directly or
indirectly, any employee or business partner of Employer to provide services to
any other person or entity other than Employer, unless the departure of that
employee or business partner from Employer would not reasonably be expected by
Employer to have a material impact on the operations of the employee's or
business partner's office, or otherwise have a detrimental effect on Employer as
a whole.
(ii) Employee agrees that during his Employment with Employer and
for a period of six months after the termination of Employee's employment with
Employer, Employee shall not engage in, plan for, organize, work for, or assist,
directly or indirectly, any Competitor in a manner that would be competitive to
Employer, nor use Employee's knowledge of Employer or its business in any manner
that competes with Employer. During this six month period, Employer will pay to
Employee the sum of $20,833.00 per month, to be paid in accordance with the
payroll practices of Employer at that time, except that Employer is not
obligated to pay Employee under this paragraph during any time that Employee is
receiving payments under paragraph 14(b) hereof. The foregoing restrictions
shall be understood to prohibit Employee from participating in the following
non-exclusive list of activities:
(a) Providing services as an employee, director,
consultant, agent, or representative to a Competitor;
(b) Owning, either directly or indirectly or through or in
conjunction with one or more members of his family or his spouse's family or
through any trust or other contractual arrangement, a greater than five percent
(5%) interest in, or otherwise controlling, either directly or indirectly, any
partnership, corporation, or other entity which has products and services that
are competitive to any products and services being developed or otherwise
offered by Employer or being actively developed by Employer with a bona fide
intent to market same.
(iii)In the event Employee breaches this provision of the
Agreement, he agrees to repay Employer within 10 days any payments he received
under paragraph 16(b)(ii) above, which repayment shall not release Employee from
any legal claims that Employer may have against Employee for his breach.
(iv) Notwithstanding the foregoing provisions, upon written
request by Employee explaining Employee's opportunities that would otherwise be
prohibited under paragraph 16(b)(ii) hereof or on Employer's own initiative,
Employer may waive the foregoing restrictions. In the event Employer does so
waive its rights to enforce the provisions of paragraph 16(b)(ii) hereof,
Employer will be relieved of its obligation to pay Employee in accordance with
that provision, which relief shall be effective immediately upon delivery to
Employee of Employer's written release of Employee under paragraph 16(b)(ii)
hereof.
(v) As used in this paragraph 16, the term Employer includes
SkyMall, Inc. and any of its affiliates or subsidiaries, or any entity in which
SkyMall, Inc. has a direct or indirect equity interest. A Competitor is
understood and agreed by Employer and Employee to mean any person or entity that
is engaged in, or has plans to engage in within the subsequent 6 months, any
6
<PAGE>
business activity or operations that Employer is also engaged in, or for which
Employer had written business plans to engage in (created in the usual course of
business), at the time of the Employee's departure from Employer; it being
agreed by Employer that, where necessary to enable Employee to avoid breaching
the provisions of this paragraph 16 and subject to Employee's compliance with
the provisions set forth in paragraph 15, Employee shall be given full access to
such plans
C. REMEDIES. Employee hereby agrees that damages and any other
remedy available at law would be inadequate to redress or remedy any loss or
damage suffered by Employer upon any breach of the terms of this paragraph 16 by
Employee, and Employee therefore agrees that Employer, in addition to recovering
on any claim for damages or obtaining any other remedy available at law, also
may enforce the terms of this paragraph 16 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
Employee further acknowledges and agrees that Employer shall be entitled to
recover attorneys' fees and costs associated with enforcement of this paragraph
16.
If any provision of this paragraph 16 is deemed, as a matter of
law, to be unreasonable as to time, area, or scope by any court, then such court
shall have authority to modify this paragraph as to time, area or scope, but
only to the limited extent necessary to make this paragraph reasonable and
enforceable.
17. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES. As a material inducement to
Employer to enter this Agreement, Employee makes the following representations
and warranties:
A. BOARD OF DIRECTORS. Employee represents and warrants that he is
not currently a member of the board of directors of any other company or
business entity. Employee shall not accept any appointments to serve on any
other boards without prior written approval of Employer.
B. NO BREACH OF PRIOR AGREEMENT. Employee represents and warrants
that his employment with Employer and his recruitment of other employees on
behalf of Employer will not result in his violating any agreements that he may
have with any third party.
C. NO SHARING OF CONFIDENTIAL INFORMATION. Employee represents and
warrants that he shall not disclose to Employer any trade secrets or other
confidential or proprietary information of another company that Employee may
have had access to by virtue of his prior employment.
18. RETURN OF MATERIALS. Employee shall return to Employer promptly at its
request all materials furnished to Employee by Employer and all materials
prepared by Employee that contain Confidential Material together with all copies
thereof.
19. NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficient if given in writing and delivered personally or
mailed by registered or certified mail, return receipt requested, postage
7
<PAGE>
prepaid and addressed to the parties at the addresses listed below. Either party
may designate a different address by notice so given.
Employer: Christine Aguilera, Esq.
General Counsel
SkyMall, Inc.
1520 East Pima Street
Phoenix, Arizona 85034
Employee: Mr. Curtis D. Brown
200 Diplomat Drive
Mt. Kisco, New York 10549
With a
copy to: Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attn: Kristopher D. Brown, Esq.
20. ARBITRATION. To the extent permitted by applicable law, all disputes
arising from or in connection with this Agreement will be finally settled by
arbitration. The arbitration will be held in Maricopa County, Arizona, in
accordance with arbitration rules of the American Arbitration Association, by an
arbitrator mutually agreed upon by the parties. The parties agree that judgment
upon the award return by the arbitrator may be entered in any court having
jurisdiction thereof.
21. GOVERNING LAW AND CHOICE OF FORUM. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Arizona without regard to its conflicts of law principles. The
parties agree that any legal suit, action or proceeding arising out of or
related to this Agreement shall be instituted in a state or federal court of
competent jurisdiction located in Maricopa County, Arizona. The parties accept
the exclusive jurisdiction of the aforesaid courts, and irrevocably agree to be
bound by any judgment rendered by said courts in connection with this Agreement.
All costs incurred in connection with any such suit, action or proceeding shall
be borne by the non-prevailing party.
22. INDEMNIFICATION OF EMPLOYEE. Employer and Employee will enter into
Employer's standard form Indemnification Agreement, a copy of which is attached
hereto as Exhibit A.
23. SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
24. AMENDMENT. This Agreement shall not be modified, amended or rescinded
except by written instrument duly executed by Employee and Employer.
8
<PAGE>
25. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
26. CAPTIONS AND HEADINGS. The captions and headings of this Agreement are
for convenience of reference only and shall not be considered to be a part of
this Agreement, affect the meaning or interpretation of this Agreement, or be
used in determining the intent of the parties.
27. SURVIVAL. The provisions of paragraphs 15 and 16 of this Agreement
shall remain in full force and effect following the termination of Employee's
employment or the termination of this Agreement, for the periods set forth
therein.
28. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be enforceable by Employer's successors and assigns, and is fully assignable
by Employer to any of Employer's current or future affiliates and subsidiaries.
29. ENTIRE AGREEMENT. Except as stated herein, this Agreement sets forth
the entire understanding of the parties hereto with respect to the subject
matter hereof.
SKYMALL, INC.,
A NEVADA CORPORATION
By: /s/ Robert M. Worsley Date: 1/15/99
--------------------------------- ----------------------
Robert M. Worsley
Its: President and CEO
/s/ Curtis D. Brown Date: 1/14/99
------------------------------------- ----------------------
Curtis D. Brown
9
<PAGE>
Exhibit A
INDEMNITY AGREEMENT
By this Indemnity Agreement (this "Agreement"), SkyMall, Inc., a Nevada
corporation , and its wholly-owned subsidiary, SkyMall.com (collectively, the
"Company"), and the undersigned officer ("Officer") of the Company, warrant,
covenant and agree as follows:
WHEREAS, Officer is a senior executive of the Company and in such capacity
is performing a valuable service for the Company; and
WHEREAS, in order to induce Officer to serve as an officer of the Company,
the Company desires to enter into this contact with Officer.
NOW, THEREFORE, in consideration of Officer's continued service as an
officer after the date hereof, the parties hereto agree as follows:
1. INDEMNIFICATION OF OFFICER. Subject to Section 2 below, the Company shall
hold harmless and indemnify Officer against any and all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by Officer in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, to which Officer is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Officer is, was or at
any time becomes a director, officer, employee or agent of the Company, or is or
was serving or at any time serves at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise to the extent currently set forth in the Company's
Bylaws, a copy of which is attached as Exhibit "A." No amendment or termination
of the Company's Articles of Incorporation or the Bylaws shall affect or
terminate the contracted rights granted to the Officer hereunder.
2. LIMITATIONS ON INDEMNIFICATION. No indemnity pursuant to Section 1 hereof
shall be paid by the Company:
(a) Except to the extent the aggregate of losses to be indemnified
hereunder exceeds the amount of the losses for which the Officer is indemnified
pursuant to any policy of insurance purchased and maintained by the Company;
(b) In respect to remuneration paid to Officer if it shall be determined
by a final judgment or other final adjudication that such remuneration was in
violation of law;
(c) On account of any suit in which final judgment is rendered against
Officer or an accounting of profits made from the purchase or sale by Officer of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any law; or
<PAGE>
(d) If a final adjudication by a Court having jurisdiction in the matter
establishes that Officer's acts or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was material to the cause of action.
3. CONTINUATION OF INDEMNIFICATION. All obligations of the Company hereunder
shall continue during the period Officer is a director, officer, employee or
agent of the Company (or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter so long as
Officer shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that Officer was a director of the Company or serving in
any other capacity referred to herein.
4. NOTIFICATION AND DEFENSE OF CLAIM. Officer shall promptly notify the
Company of any matter which is or may be the subject of any indemnification
claim hereunder. Promptly after receipt by Officer of notice of the commencement
of any action, suit or proceeding, Officer will notify the Company thereof. With
respect to any such action, suit or proceeding:
(a) The Company will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may wish,
the Company, jointly with any other indemnifying party may assume the defense
thereof, with counsel reasonably satisfactory to Officer. After notice from the
Company to Officer of its election so to assume the defense thereof, the Company
will not be liable to Officer for any legal or other expenses subsequently
incurred by Officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ counsel in such action, suit or proceeding, but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Officer unless (i)
the employment of counsel by Officer has been authorized by the Company, (ii)
Officer shall have reasonably concluded that there may be a material conflict of
interest between the Company and Officer in the conduct of the defense of such
action or (iii) the Company shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
counsel shall be borne by the Company. The Company shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on behalf of
the Company or as to which Officer shall have made the determination provided
for in (ii) above.
(c) The Company shall not be liable to indemnify Officer under the
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. The Company shall not settle any action or claim in
any manner which would impose any material penalty or limitation on Officer
without Officer's consent. Neither the Company nor Officer will unreasonably
withhold its or his consent to any settlement proposed by the other of any
matter for which indemnity is provided hereunder, including any settlement
including a penalty or limitation on the Officer.
5. PREPAID EXPENSES. The expenses (including attorneys' fees) incurred by
Officer in investigating, defending, or appealing any threatened, pending or
completed action, suit or proceeding covered hereunder, whether civil criminal,
2
<PAGE>
administrative or investigative, including without limitation any action by or
in the right of the Company (other than expenses to be paid directly by the
Company in assuming the defense of any matter covered hereby under Section 4(b)
hereof), shall be paid in advance by the Company.
6. REPAYMENT OF EXPENSES. Officer shall reimburse the Company for all expenses
paid by the Company in defending any civil or criminal action, suit or
proceeding against Officer in the event and only to the extent that is shall be
finally determined that Officer is not entitled to be indemnified by the Company
for such expenses under the Agreement or otherwise.
7. OTHER RIGHTS AND REMEDIES. The rights provided by any provision of this
Agreement shall not be deemed exclusive or any other rights to which Officer may
be entitled under any provision of law, any Articles, any Bylaw, this or other
agreement, vote of Stockholders or otherwise, both as to action in his official
capacity and as to action in another capacity while occupying any of the
positions or having any of the relationships referred to in Section 1 of this
Agreement, and shall continue after Officer has ceased to occupy such position
or have such relationship.
8. ENFORCEMENT. In the event Officer is required to bring any action to
enforce rights or to collect monies due under this Agreement and is successful
in such action, Company shall reimburse Officer for all of Officer's reasonable
fees and expenses in bringing and pursuing such action.
9. SEPARABILITY. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
10. MISCELLANEOUS. This Agreement shall be interpreted and enforced in
accordance with the laws of Nevada. This Agreement shall be binding upon Officer
and upon Company, its successors and assigns, and shall inure to the benefit of
Officer, his heirs, personal representatives and assigns and to the benefit of
the Company, its successors and assigns. No amendment, modification, termination
or cancellation of this Agreement, other than pursuant to Section 9, shall be
effective unless in writing signed by both parties hereto.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
January 14, 1999.
SKYMALL, INC.
By: /s/ Robert M. Worsley
---------------------------------
Name: Robert M. Worsley
Title: CEO
OFFICER
/s/ Curtis D. Brown
-------------------------------------
Name: Curtis D. Brown
4