Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 5th day of January, 1999, by and between
SkyMall, Inc., a Nevada corporation ("Employer"), and Xxxxxx Xxxxxxx
("Employee"):
RECITALS
A. Employer wishes to retain the services of Employee;
B. Employee wishes to be employed by Employer as Chief Marketing Officer
for Employer's subsidiary, Xxxxxxx.xxx, Inc.; and
C. 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 Marketing Officer
for Xxxxxxx.xxx, inc., and reporting directly to the CEO of the parent company
SkyMall Inc. 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 January 5, 1999, and ending on January 5,
2002, unless sooner terminated in accordance with paragraph 17 of this
Agreement. The employment of Employee may be renewed by a written agreement
signed by the 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,
Employee shall devote his full time and efforts to the business affairs of
Employer provided, however, the foregoing shall not prevent the employee from
pursuing other activities outside his employment with employer so long as such
activities do not interfere with his performance with his duties and the
employee keeps the CEO informed of his activities. 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. 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.
4. BOARD OF DIRECTORS. Employer shall cause Employee to be immediately
appointed to the Board of Directors of Xxxxxxx.xxx, Inc.
5. 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. From time to time, or in connection with performance evaluations,
Employer may increase the amount of this base salary. All compensation 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. Employer's
current payroll practices provide for bi-weekly payment of wages.
6. SIGNING BONUS. On the first regularly occurring pay day after Employee
commences his employment, Employer shall pay Employee a one-time signing bonus
in the amount of $100,000.00.
7. INCENTIVE BONUS. During the term of Employee's employment under this
Agreement, Employee will be eligible to participate in Employee's incentive
compensation plan that will allow Employee to earn a cash bonus of up to
seventy-five percent (75%) of his annual base salary, with a guaranteed minimum
bonus of $150,000.00 annually.
8. STOCK OPTIONS. Employee shall be eligible to receive options to purchase
75,000 shares of stock of SkyMall, Inc. at the market price on the date of
acceptance of this agreement. One-third of such options shall be immediately
vested, and the remaining two-thirds shall vest as follows: one-third on the
first anniversary of the date of this agreement and one-third on the second
anniversary of this agreement. On the ninetieth day following the acceptance of
your employment and to the extent that the stock price of SkyMall's common stock
is less than the exercise price of the option granted to you on your start date,
the Board will consider granting additional options to you to give the
equivalent economic benefit of the options granted to you on your start date.
Employee shall be eligible for additional option grants in accordance with
Employer's policies as may be in effect during the term of this Agreement.
Employee shall be entitled to retain any options granted pursuant to this
Agreement, vesting will be accelerated to 100% upon change in control in
accordance with the terms of any applicable option agreement, even if
Xxxxxxx.xxx, Inc. is no longer owned by Employer. All options granted under this
agreement shall become fully vested upon a change in control of SkyMall Inc.
9. COMPENSATION BY RIPTIDE. During the term of Employee's employment under
this Agreement, Employer acknowledges that Riptide has agreed to pay Employee an
additional $200,000.00 each year for three years, to be pro-rated and paid
concurrently with the pay periods of Employer. If Riptide fails to make such
payments to Employee for any reason whatsoever, Employer shall guarantee such
payments and make such payments itself.
10. PERSONAL PAID TIME OFF. Employee shall be entitled to 24 personal paid
time off days per year (accrued at the rate of 7.38 hours per pay period). Any
unused days shall be forfeited, and no payment shall be made in lieu of taking
time off.
11. 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
2
Investments. Employer shall match fifty percent (50%) of Employee's contribution
to the 401(k) Plan (up to 6% of Employee's annual base salary) in accordance
with the terms of the Plan documents.
12. 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),
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.
13. EXPENSES. During the term of Employee's employment under this
Agreement, Employer shall reimburse Employee for all reasonable travel (it is
expressly understood that it shall be reasonable to purchase First Class tickets
for air 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.
14. RELOCATION REIMBURSEMENT. Employee shall be entitled to reimbursement
for reasonable travel expenses associated with up to three visits during which
he and his spouse locate a home in Arizona, and reasonable moving expenses
associated with Employee's relocation from California to Arizona. The
reimbursement shall be grossed up for tax purposes and shall include the
following items that are actually paid for by Employee and documented with
applicable receipts: closing costs on the sale of Employee's home in California
and purchase of a home in Arizona; packing, loading and transportation of
household goods and four cars; air fare for spouse, two children and nanny or
mileage (at 32 cents per mile) if cars are driven from California to Arizona by
Employee or his spouse; the cost of up to two rental cars while Employee's cars
are being moved; and other reasonable, incidental interim moving or living
expenses not to exceed ninety days from the date of employment. Employer shall
not purchase Employee's current home.
15. 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.
16. PERFORMANCE REVIEWS. Employer shall provide Employee with annual
performance reviews in a manner deemed reasonable by Employer in its sole
discretion.
17. TERMINATION. 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 annual base salary
through the last date Employee performs work for Employer; and (ii) to provide
Employee continuing benefits as required under COBRA or other applicable law.
3
b. BY EMPLOYER. If Employee's employment is terminated by Employer
for any reason, then Employer shall, through January 5, 2002: (i) continue to
guarantee and pay to Employee the annual base salary of $250,000.00; (ii)
continue to guarantee the annual compensation of $200,000.00 promised by
Riptide; and (iii) continue to pay to Employee the guaranteed minimum bonus of
$150,000.00 annually through January 2002. Additionally, the stock options to be
awarded hereunder shall continue to vest, and Employee shall be eligible to
purchase additional options that would normally be made available to executives
at his level.
18. 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." Employee 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 five 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 18 by
Employee, and Employee therefore agrees that Employer, in addition to recovering
4
on any claim for damages or obtaining any other remedy available at law, also
may enforce the terms of this paragraph 18 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
18.
19. 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. Employee agrees that, for a period of
two (2) years after the termination of this agreement or the date employer last
makes a payment to employee under this Agreement, he shall not engage in, plan
for, organize, work for, or assist, directly or indirectly, any business that is
competitive, directly or indirectly, with Employer's business, nor solicit
participants in or customers of the Employer's program, nor use Employee's
knowledge of Employer or its business in any manner that competes with Employer.
As used in this paragraph 19, the term Employer includes SkyMall, Inc. and any
of its affiliates or subsidiaries. The foregoing restrictions shall be
understood to prohibit Employee from participating in the following
non-exclusive list of activities:
(i) Provide services as an employee, director, consultant,
agent, or representative to any company or other entity that is competitive,
directly or indirectly, with Employer's plans and initiatives for the Internet
or interactive shopping.
(ii) Provide services as an employee, director, consultant,
agent, or representative to any catalog company or other entity that is
competitive, directly or indirectly, with Employer or its products and services
or entities in which SkyMall has an equity interest.
(iii) Directly or indirectly solicit Employer's vendors,
customers, employees, business partners or similar third parties for any
activity that is directly or indirectly competitive with Employer.
(iv) Participate in, be employed in any capacity by, serve as
director, consultant, agent or representative for, or have any interest,
directly or indirectly, in any entity or enterprise which is engaged in a
business directly or indirectly competitive to Employer, or which is competitive
to any products and services being actively developed by Employer with the bona
fide intent to market same. Without limiting the generality of the foregoing,
5
Employee agrees that it shall be a violation of this Agreement for Employee to
participate in, be employed in any capacity by, serve as director, consultant,
agent or representative for, or have any interest, directly or indirectly, in
the following companies or any of their affiliates: Genesis Direct, Cornerstone
Group, CUC International, Inc., Hanover and Cinmar Group.
(v) Own, 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 control 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.
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 19 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 19 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
19.
If any provision of this paragraph 19 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.
20. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES. Employee represents and
warrants that he is currently a member of the Boards of Directors of the
following entities, and no others: Riptide, Gravity, City Meals. Employee
represents and warrants that this Agreement does not violate the terms,
conditions or provisions of any employment relationship with any prior employer.
Employee shall not accept any appointments to serve on any other Boards without
prior written approval of Employer.
21. 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.
22. 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
prepaid and addressed to the parties at the addresses listed below. Either party
may designate a different address by notice so given.
6
Employer: Xxxxxxxxx Xxxxxxxx
General Counsel
SkyMall, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Employee: Xxx Xxxxxxx
00 Xxxxxxx Xxxxx
Xxxx Xxxx Xxx, XX 00000
23. 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.
24. 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.
25. AMENDMENT. This Agreement shall not be modified, amended or rescinded
except by written instrument duly executed by Employee and Employer.
26. 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.
27. 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.
28. SURVIVAL. The provisions of paragraphs 18 and 19 of this Agreement
shall remain in full force and effect following the termination of Employee's
employment or the termination of this Agreement.
29. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be unforceable by Employer's successors and assigns, and is fully assignable
by Employer to any of Employer's current or future affiliates and subsidiaries.
7
30. 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/ Xxxxxx X. Xxxxxxx Date: 1/5/99
-------------------------------- -----------------------
Xxxxxx X. Xxxxxxx
Its: President and CEO
/s/ Xxxxxx X. Xxxxxxx Date: 1/5/99
------------------------------------ -----------------------
Xxxxxx X. Xxxxxxx
8
