1
* Confidential portion has been omitted and
filed separately with the Commission.
EXHIBIT 10.2(b)
[LETTERHEAD OF CONTINENTAL AIRLINES, INC.]
February 5, 1995
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and CEO
SkyMall In-Flight Shopping Service
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: AMENDMENT TO THE JANUARY 1, 1992 AIRLINE CUSTOMER SERVICES
AGREEMENT BETWEEN CONTINENTAL AIRLINES AND SKYMALL, INC.
Dear Bob:
This letter, when accepted on behalf of Continental Airlines,
Inc. ("Continental") and SkyMall, Inc. ("SkyMall"), will constitute an amendment
to the Airline Customer Services Agreement dated January 1, 1992 between
Continental and SkyMall (the "Agreement"). Whereas Continental has previously
delivered to SkyMall a letter terminating the Agreement and Continental has
agreed to revoke the letter terminating the Agreement if ▇▇▇▇▇▇▇ agrees to the
amendment to the Agreement as set forth herein. The amendment is set forth as
follows:
Agreement 7.1 Minimum Fee Payment is amended to increase the
monthly Minimum Fee Payment to $*, thereby increasing the annual Minimum Fee
Payment to $*. ▇▇▇▇▇▇▇ agrees that payment of Continental's Minimum Fee Payment
will be retroactive to October 1, 1994.
Agreement 4.5 Termination of the Agreement is amended to allow
Continental to terminate the Agreement at any time for any reason upon not less
than thirty (30) days prior written notice to SkyMall.
The terms of these amendments shall be effective as of October
1, 1994.
Except as specifically set forth herein, the terms and
conditions set forth in the Agreement shall remain in full force and effect.
Please indicate your acceptance of this amendment by signing
in the space provided below and returning one fully executed copy of this letter
to my attention.
Sincerely,
/s/ ▇. ▇. ▇▇▇▇▇
----------------------------
▇. ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Vice President SkyMall, Inc.
Marketing and Sales 3-1-95
----------------------------------
Date
2
AIRLINE CUSTOMER SERVICES AGREEMENT
BETWEEN
CONTINENTAL AIRLINES
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
AND
SKYMALL, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
DATED
JANUARY 1, 1992
3
AIRLINE CUSTOMER SERVICES AGREEMENT
CONTINENTAL AIRLINES
TABLE OF CONTENTS
RECITALS............................................................................................... 1
AGREEMENTS............................................................................................. 1
1.0 Continental................................................................................... 1
2.0 SkyMall....................................................................................... 1
2.1 SkyMall(R)Services Catalog........................................................... 2
2.2 SkyMall(R)Concierge Service.......................................................... 2
2.3 SkyMall(R)Guarantees................................................................. 2
3.0 Continental's Basic Agreement With SkyMall.................................................... 2
4.0 Term of Agreement............................................................................. 3
4.1 Term of Agreement.................................................................... 3
4.2 Initial Term......................................................................... 3
4.3 New SkyMall Distribution Center Renewal Term......................................... 3
4.5 Termination of the Agreement......................................................... 3
5.0 SkyMall(R)Program and SkyMall(R)Services Catalog.............................................. 3
5.1 ▇▇▇▇▇▇▇(R)Program.................................................................... 3
5.2 SkyMall(R)Services Catalog Merchandise, Services, Design and Production.............. 3
5.2.1 Continental Approval of SkyMall(R)Services Catalog.......................... 4
5.2.2 Continental Pages........................................................... 5
5.2.3 Suppliers Including GTE Airfone(R).......................................... 5
5.2.4 Continental Approval of Advertising and Promotional Material................ 5
5.2.5 Continental Employee Discounts.............................................. 5
5.2.6 Rights to the Catalog Name, Services and Purchase Information............... 5
5.2.7 Minimum Catalog Production Formula.......................................... 6
5.3 SkyMall Shipment and Continental Distribution of Catalogs............................ 6
5.4 Continental Promotion of Catalog Services............................................ 7
5.5 Continental Aircraft Seat Phones..................................................... 7
6.0 SkyMall(R)Customer Ordering and Services...................................................... 7
6.1 SkyMall(R)Order Processing and Deliver............................................... 7
6.1.1 SkyMall(R)Order Processing.................................................. 7
6.1.2 SkyMall(R)Product Services.................................................. 7
6.1.3 SkyMall(R)National Merchandise Deliveries................................... 8
6.1.4 SkyMall(R)International Orders and Deliveries............................... 8
6.1.5 Credit Card Companies....................................................... 8
6.1.6 Payment for Merchandise and Services........................................ 8
6.1.7 SkyMall Employees........................................................... 8
6.2 Resolution of Customer Problems...................................................... 9
4
6.3 SkyMall Support of Continental Personnel............................................. 9
6.3.1 On-Going Support............................................................ 9
6.4 Complimentary Air Travel............................................................. 9
6.5 Optional Other Services.............................................................. 9
6.5.1 Frequent Flyer Mileage Credit Service....................................... 9
6.5.2 Counter-to-Counter Deliver Service.......................................... 10
6.5.3 On-Board Sales and Deliveries Service.......................................... 10
6.6 Optional SkyMall Independent Mailing Services........................................ 10
6.6.1 Continental Frequent Flyer Customers........................................ 10
6.6.2 All Continental Customer Participants....................................... 10
6.7 Additional Services to Promote Continental........................................... 10
6.7.1 Continental Free-Standing Inserts........................................... 10
6.7.2 Continental Scripts for SkyMall Customer Service Representatives............ 10
6.7.3 Continental Future Promotional Programs..................................... 10
6.8 SkyMall(R)Program Costs and Expenses................................................. 10
6.8.1 SkyMall..................................................................... 11
6.8.2 Continental................................................................... 11
7.0 Continental Sales Commissions and Fees........................................................ 12
7.1 Minimum Fee Payment.................................................................. 12
7.2 Net Sales............................................................................ 12
7.3 SkyMall Payment of Continental Sales Commissions..................................... 12
8.0 Annual Adjustments............................................................................ 13
8.1. Formulas............................................................................. 13
8.2. Adjustment of Total Payments............................................................ 13
9.0 Reports, Records and Audit.................................................................... 14
9.1 SkyMall Reports and Records.......................................................... 14
9.2 Continental Audit of Records......................................................... 14
9.3 Continental Reports and Records...................................................... 14
9.3.1 Continental Scheduled Flight Information.................................... 15
9.4 SkyMall Audit of Records............................................................. 15
10.0 Limited License of Use of Continental's Names................................................. 15
11.0 Confidential Information...................................................................... 15
11.1 Confidential and Proprietary Information............................................. 15
11.2 Exceptions........................................................................... 16
11.3 Continental and SkyMall Actions...................................................... 16
11.4 Enforcement.......................................................................... 16
11.5 Survival............................................................................. 17
12.0 No-Competition................................................................................ 17
13.0 Indemnifications.............................................................................. 17
13.1 Claims............................................................................... 17
13.2 SkyMall's Indemnification of Continental............................................. 17
13.3 Continental's Indemnification of SkyMall............................................. 17
13.4 Notification, Defense of Claims and Settlement....................................... 18
5
13.5 Survival............................................................................. 19
14.0 Insurance..................................................................................... 19
14.1 SkyMall Insurance.................................................................... 19
14.2 Continental Insurance................................................................ 20
14.3 Survival............................................................................. 20
15.0 Miscellaneous................................................................................. 21
15.1 Agreement............................................................................ 21
15.2 Agreement - Amendments and Waivers................................................... 21
15.3 Agreement - Failure of Enforcement................................................... 21
15.4 Approval or Consent.................................................................. 21
15.5 Assignments and Successions.......................................................... 21
15.6 Attorneys' Fees...................................................................... 22
15.7 Benefits of Parties, Successors and Assigns.......................................... 22
15.8 Breach or Default.................................................................... 22
15.9 Breach and Default Remedies.......................................................... 24
15.10 Consequential Damages................................................................ 24
15.11 Counterparts......................................................................... 24
15.12 Days................................................................................. 25
15.13 Dealings with Third Parties.......................................................... 25
15.14 Exhibits............................................................................. 25
15.15 Force Major Excusing Performance..................................................... 25
15.16 Further Actions and Assurances....................................................... 25
15.17 Governing Law........................................................................ 25
15.18 Headings and Interpretation.......................................................... 26
15.19 Joint Venture or Partnership......................................................... 26
15.20 Notices.............................................................................. 26
15.21 Severability......................................................................... 27
15.22 Survival............................................................................. 27
15.23 Termination.......................................................................... 27
15.24 Time................................................................................. 29
EXHIBIT A - MINIMUM CATALOG PRODUCTION FORMULA ............... A-1
EXHIBIT B - CONTINENTAL PAGES REIMBURSEMENT FORMULA .......... B-1
EXHIBIT C - NET SALES FORMULA ................................ C-1
EXHIBIT D - CONTINENTAL PAGES AGREEMENT ...................... D-1
EXHIBIT E - FREQUENT FLYER MILEAGE CREDIT AGREEMENT .......... E-1
EXHIBIT F - COUNTER-TO-COUNTER DELIVERY SERVICES AGREEMENT ... F-1
EXHIBIT G - ON-BOARD SALES AND DELIVERIES AGREEMENT .......... G-1
6
AIRLINE CUSTOMER SERVICES AGREEMENT
CONTINENTAL AIRLINES
This copyrighted and confidential Airline Customer Services Agreement
(the "Agreement") is made January 1, 1992, by and between Continental Airlines,
a Delaware corporation ("Continental"), and SkyMall, Inc., an Arizona
corporation ("SkyMall", or "SM").
RECITALS
WHEREAS, Continental operates passenger aircraft in domestic and
international service;
WHEREAS, SkyMall provides in-flight and in-transit shopping of quality
merchandise, rapid delivery of such merchandise, and a variety of concierge
services for travelers (the "SkyMall(R) Program");
WHEREAS, SkyMall is the owner of United States Service Mark
Registration numbers 1,643,136, 1,661,267, 1,661,973, 1,661,974, and 1,662,025
for SkyMall(R) and its designs, and SkyMall has applications pending for other
service marks including JETCETERASSM, CONCIERGE SERVICE - IT'S MAGICSM, and
accompanying designs, and various other marks and designs; and
WHEREAS, Continental desires to grant to SkyMall, and SkyMall desires
to receive from Continental, the exclusive right as provided in this Agreement
to offer the SkyMall(R) Program to the domestic and international air travelers
of Continental.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, promises, and covenants made in this Agreement, and for other
valuable consideration, the receipt and sufficiency of which is acknowledged, it
is agreed by and between Continental and SkyMall (individually, a "Party", and
collectively, the "Parties") as follows:
AGREEMENTS
1.0 CONTINENTAL
Continental operates fleets of aircraft in domestic and international
scheduled flights, with many equipped with aircraft telephones (Airfones(R)).
For purposes of this Agreement, Continental aircraft fleets are defined as those
Continental aircraft fleets which generally fly domestic and international trips
(the "Continental Fleets"). Continental Fleets serve millions of air travelers
annually with the highest quality of airline services.
2.0 SKYMALL
SkyMall will provide to Continental for Continental Fleets the
SkyMall(R) Program which is defined as the: (A) SkyMall(R) In-flight Merchandise
and Services Catalog offering high quality
1
7
merchandise (the "SkyMall(R) Services Catalog", or "Catalog"); and (B) SkyMall
Concierge(R) Service - Its Magic(SM) offering high quality concierge services
(the "SkyMall(R) Concierge Service").
2.1 SkyMall(R) Services Catalog. Travelers may order SkyMall(R)
Merchandise from the SkyMall(R) Services Catalog by air phone, ground phone,
telefax, or mail and, correspondingly, the merchandise may be delivered either
immediately on arrival at designated airports, by express two (2) business day
air delivery to domestic addresses, by mail, or by commercially available means
to selected international addresses. SkyMall provides full satisfaction
guarantees on its merchandise. Likewise, SkyMall provides a complete line of
concierge services to travellers with limited to full satisfaction guarantees,
depending on the services requested.
2.2 SkyMall(R) Concierge Service. SkyMall will provide SkyMall(R)
Concierge Service - It's Magic(SM) to Continental passengers which services will
be available through the SkyMall(R) Services Catalog for a concierge fee plus
the price of the product or service (the "SkyMall(R) Concierge Service").
SkyMall(R) Concierge Service presently include, but are not limited to, the
making of reservations for dinner, lodging, other accommodations, auto rental,
airline, transportation and sporting event tickets, floral deliveries, other
services, and locating hard-to-find items. Continental acknowledges that
Continental's passengers may make travel reservations for other than
Continental's flights using SkyMall(R) Concierge Service. Continental will
cooperate in good faith in the implementation and development of the SkyMall(R)
Concierge Service Program.
2.3 SkyMall(R) Guarantees. SkyMall will provide a total customer
satisfaction guarantee on all merchandise offered in the SkyMall(R) Services
Catalog. Merchandise may be returned by the customer to SkyMall within thirty
(30) days of the customer's receipt of the merchandise for full exchange or
refund of the purchase price, at the customer's choice, except for personalized
merchandise (unless there is an imprinting error by ▇▇▇▇▇▇▇'s Supplier in which
event the customer shall have the foregoing election). SkyMall also will provide
limited to total customer satisfaction guarantees on SkyMall(R) Concierge
Service, depending on the services requested. The SkyMall(R) Concierge Service
fees shall also be fully exchanged or refunded, at the customer's choice, for
any SkyMall(R) Concierge Service which are unsatisfactory to the customer.
SkyMall will not guarantee Continental's Trademarked Merchandise unless such a
guarantee is part of a separate Continental Pages Agreement. SkyMall will not
under any circumstances, however, guarantee any services offered by Continental
in the Continental Pages.
3.0 CONTINENTAL'S BASIC AGREEMENT WITH SKYMALL
By this Agreement and during the Term of this Agreement, Continental
contracts with and grants to SkyMall the exclusive right to provide the
SkyMall(R) Program, consisting of the SkyMall(R) Services Catalog and SkyMall(R)
Concierge Service specified in this Agreement, to Continental for the
Continental Fleets, and Continental will not itself provide such program, nor
contract with any other source for or otherwise obtain from any other source
such program or a similar program. Continental also grants to SkyMall(R) the
first right of refusal to provide the SkyMall(R) Program on inter-active video
to Continental for the Continental Fleets, and Continental will not itself
provide such program, nor contract with any other source for or otherwise obtain
from any other source such program or a similar program. Continental reserves
its rights to provide certain services to its passengers, as follows: (A)
Continental may offer in its own in-flight magazine the sale of (a) merchandise
marked with Continental's own trademarks ("Continental's Trademarked
Merchandise"), Continental's airfare
2
8
and vacation packages, air transportation services, or any other proprietary
items or services of Continental, and (b) merchandise and services offered by
other advertisers; and (B) Continental may offer a catalog for the sale of duty
free merchandise.
4.0 TERM OF AGREEMENT
4.1 TERM OF AGREEMENT. This Agreement shall be binding and effective as
of the date first above written. The Term of this Agreement shall consist of the
Initial Term, any New SkyMall Distribution Center Renewal Term, and any Annual
Renewal Terms (the "Term of this Agreement").
4.2 INITIAL TERM. The Initial Term of this Agreement shall commence on
January 1, 1992, and shall continue in full force and effect until the later of:
(A) June 30, 1995; or (B) the date on which the third (3rd) edition of the
SkyMall merchandise and services catalog (the "SkyMall(R) Services Catalog" or
"Catalog") produced pursuant to this Agreement has been continually distributed
aboard Continental's aircraft for at least three (3) consecutive calendar months
(the "Initial Term").
4.3 New SkyMall Distribution Center Renewal Term. Should Continental
and SkyMall determine that it is in their mutual best interests for SkyMall to
open a new SkyMall merchandise distribution center ("SkyMall Distribution
Center") at any of the airports serving Continental, then because of the
substantial cost to SkyMall to open and maintain such a facility, the renewal
terms after the Initial Term will be for a period of three (3) years for each
new SkyMall Distribution Center (the "New SkyMall Distribution Center Renewal
Term").
4.4 Annual Renewal Terms. After the Initial Term, and subject to any
New SkyMall Distribution Center Renewal Term as stated in the SECTION on NEW
SKYMALL DISTRIBUTION CENTER RENEWAL TERM, this Agreement shall renew
automatically for periods of one (1) year (the "Annual Renewal Terms"), unless
terminated earlier by either Party pursuant to the terms and conditions of this
Agreement.
4.5 Termination of the Agreement. Subject to the Initial Term, any New
SkyMall Distribution Center Renewal Term, and the SECTION on TERMINATION, either
Party may terminate this Agreement at any time for any reason upon not less than
one hundred eighty (180) days prior written notice to the other Party, or either
Party may otherwise terminate this Agreement pursuant to its terms and
conditions.
5.0 SKYMALL(R) PROGRAM AND SKYMALL(R) SERVICES CATALOG
5.1 SkyMall(R) Program. SkyMall shall provide to Continental the parts
of the SkyMall(R) Program stated in this Agreement.
5.2 SkyMall(R) Services Catalog Merchandise, Services, Design and
Production. Subject to approval by Continental of the SkyMall(R) Services
Catalog pursuant to the SECTION on CONTINENTAL APPROVAL OF SKYMALL(R) SERVICES
CATALOG, SkyMall shall be responsible on an annual basis for creating,
designing, developing, coordinating, producing, and printing at least three (3)
successive editions of a commercially acceptable SkyMall(R) Services Catalog,
each edition consisting of between
3
9
twenty-four (24) and one-hundred fifty (150) pages, but not to exceed twelve
(12) ounces per Catalog. Merchandise and services to be offered in the
SkyMall(R) Services Catalog shall be selected and priced by SkyMall, except for
those offered in the Continental Pages. SkyMall will consider accommodating the
reasonable requests of Continental for additional Catalog products and services,
and participating merchants.
5.2.1 Continental Approval of SkyMall(R) Services Catalog.
A. Continental's Approval. Continental shall have the
right to review and approve or disapprove in a commercially reasonable manner
and in writing each edition of the SkyMall(R) Services Catalog including,
without limitation, all art work for covers and order forms, and any product or
service on any reasonable grounds (except prices), provided that any such
approval or disapproval is made in writing within five (5) business days after
receipt from SkyMall of the listing in which such art work, product or service
first appears. Continental will be deemed to have approved all such artwork,
product and service if Continental's written approval or disapproval is not made
to SkyMall within such five (5) day period.
B. SkyMall's Notice. Notwithstanding this SECTION on
CONTINENTAL APPROVAL OF SKYMALL(R) SERVICES CATALOG, should Continental select
any merchandise, includinG Continental's Trademarked Merchandise, that in
SkyMall's commercially reasonable belief will not sell, is illegal, is
dangerous, might not meet federal safety requirements, or may have unreasonable
purchase commitments required for a profitable program, then SkyMall may notify
Continental in writing at the time merchandise selections are made of such
belief. Notwithstanding ▇▇▇▇▇▇▇'s written objection, in the event that
Continental notifies SkyMall in writing that it chooses to include such
merchandise in the Catalog, Continental will assume total liability for such
merchandise, including without limitation, the cost of providing the inventory
to supply such merchandise, any overages in inventory, full indemnification of
SkyMall for all costs and damages in connection with such merchandise, law
suits, federal or state penalties, and other costs of defense and reasonable
attorneys' fees pertaining to such merchandise.
C. Continental's Right to Have Catalogs Withdrawn
from Distribution. After a Catalog edition is approved by Continental pursuant
to this SECTION on CONTINENTAL APPROVAL OF SKYMALL(R) SERVICES CATALOG,
Continental or SkyMall may withdraw the Catalogs of that editioN from
distribution on the following conditions: (a) Should the approved Catalog
edition, or a part thereof, create a public disturbance with Continental's
passengers and SkyMall cannot resolve such disturbance within a commercially
reasonable cost and period of time, then Continental will have the right to
remove all such Catalogs from its aircraft, and Continental shall, unless
otherwise agreed in writing by the Parties, reimburse SkyMall for fifty percent
(50%) of all costs for reproducing such Catalogs; (b) Continental may
unilaterally remove any one Catalog edition for any reason in which case
Continental shall reimburse SkyMall for all costs of reproducing such Catalog
edition and redistributing it to the Continental Hubs; and (c) SkyMall may
unilaterally require the removal of any one Catalog edition for any reason in
which case SkyMall shall reimburse Continental for all costs of removing and
replacing such Catalog edition. The unilateral removal of more than one Catalog
edition by any Party will be governed by the SECTION on TERMINATION.
5.2.2 Continental Pages. The Parties agree that in each
edition of the SkyMall(R) Services Catalog, a mutually agreed upon number of
pages not to exceed four (4) shall be devoted to the sale of merchandise marked
with Continental's own trademarks ("Continental's Trademarked
4
10
* Confidential portion has been omitted and
filed separately with the Commission.
Merchandise") and Continental's space advertising devoted to non-merchandise
offerings ("Continental's Advertising") as designated by Continental
(collectively, the "Continental Pages"). SkyMall shall provide Continental Pages
at cost to Continental pursuant to the Continental Pages Reimbursement Formula
in EXHIBIT B. Should Continental elect to feature merchandise for sale in the
Continental Pages, Continental and SkyMall will enter into a separate and
mutually acceptable revenue sharing agreement regarding the sale and delivery of
such merchandise, and the processing and accounting by SkyMall for such sales
(the "Continental Pages Agreement"). See EXHIBIT D.
5.2.3 Suppliers Including GTE Airfone(R). Except as otherwise
agreed by SkyMall and Continental, SkyMall shall solicit and contract with each
supplier of merchandise or services separately with respect to that supplier's
participation in the SkyMall(R) Program ("Supplier"), and SkyMall shall be
solely responsible and liable for each Supplier's merchandise and services
offered in the SkyMall(R) Services Catalog, and Continental shall have no
obligation, liability or responsibility whatsoever to any such SkyMall Supplier,
but Continental shall be solely responsible and liable for Continental's
merchandise and services offered in the Continental Pages, including
Continental's suppliers. Continental agrees not to interfere with or otherwise
affect the terms upon which SkyMall may enter into contracts (or negotiate for
prospective contracts) with any actual or potential Supplier, including GTE
Airfone, Inc. ("GTE") provided that such contracts do not materially interfere
or conflict with Continental's agreements with other vendors.
5.2.4 Continental Approval of Advertising and Promotional
Material. All advertising or promotional material which refers to Continental
and is distributed in connection with this Agreement shall be subject to and
require the prior written approval of Continental.
5.2.5 Continental Employee Discounts. Subject to proper
identification, Continental employees will be allowed a * percent (*%)
discount on their orders for merchandise and concierge services offered in
the SkyMall(R) Services Catalog.
5.2.6 Rights to the Catalog Name, Services and Purchase
Information. All rights, title and interest to the Catalog, its contents, and
its name or names, including, without limitation, the right to copyright the
Catalog and the SkyMall names "SkyMall"(R), "SkyMall(R) Services Catalog", and
"SkyMall(R) Merchandise & Concierge Service", as SkyMall selects as the name of
the Catalog, and the designs and other information created or developed by
SkyMall, or jointly by SkyMall and Continental, in connection with the Catalog
and the SkyMall(R) Program, and the goodwill attributable thereto, shall be
owned by and remain the property of SkyMall. All rights, title and interest to
the SkyMall(R) Concierge Service and its contents, and its name or names, as
SkyMall selects and the designs and other information created or developed by
SkyMall, or jointly by SkyMall and Continental in connection with the Catalog
and/or SkyMall(R) Concierge Service, and the goodwill attributable thereto,
shall be owned and remain the property of SkyMall. All rights, title and
interest to the names, addresses and other direct marketing information of
persons who order from the SkyMall(R) Services Catalog shall be owned and remain
the property of SkyMall and shall be part of SkyMall's buyer file (the
"SkyMall(R) Buyer File") which SkyMall may use or make available for rental to
third parties as long as the file information is not selectable or identifiable
by airline, including Continental, nor indicates that an individual is a
passenger of Continental and/or a member of Continental's frequent flyer club.
5.2.7 Minimum Catalog Production Formula. Since it is in the
best interests of SkyMall and Continental to provide a Catalog for every
passenger, Continental and SkyMall agree that
5
11
pursuant to a minimum Catalog production formula (the "Minimum Catalog
Production Formula") in EXHIBIT A, SkyMall shall produce, and Continental shall
distribute, SkyMall(R) Services Catalogs based on three percent (3%) to five
percent (5%) of Continental's annual projected passenger enplanements (the
"Projected Passenger Enplanements") which Continental projects to be thirty-nine
million six hundred thousand (39,600,000) during the next twelve (12) months.
SkyMall shall use Continental's projected passenger enplanements (the "Projected
Passenger Enplanements") and the actual passenger enplanements (the "Actual
Passenger Enplanements") and Continental's internal confirmation of Catalogs
placed in aircraft seat-back pockets (the "Catalog Stocked Seats Information")
to calculate and monitor the actual customer Catalog response rates (the
"Catalog Response Rates") and monitor the ratio of Catalog-stocked seats (the
"Ratio of Catalog Stocked Seats"). Subject to the Catalog Response Rates and if
desired by Continental, SkyMall may, in its sole discretion, produce additional
Catalogs at its sole cost and expense for Continental's use. Continental shall
provide SkyMall on a timely basis the Projected Passenger Enplanements, the
Actual Passenger Enplanements, and the Catalog-Stocked Seats Information, and
any updates thereto, during the Term of this Agreement for the purposes of
performing their respective obligations under this Agreement. Should the Minimum
Catalog Production Formula yield a quantity that is less than the number of
SkyMall(R) Services Catalogs actually needed to satisfy the provisions of this
Agreement (a "Catalog Deficiency"), Continental and SkyMall agree that neither
Party shall have any liability to the other resulting or arising from such
Catalog Deficiency.
5.3 SkyMall Shipment and Continental Distribution of Catalogs. During
the Term of this Agreement, subject to the Minimum Catalog Production Formula in
EXHIBIT A, SkyMall shall deliver the SkyMall(R) Services Catalogs to
Continental's facilities at up to two (2) Continental hub locations (the
"Continental Hubs") according to reasonable instructions by Continental
(including delivery locations, quantities, delivery schedule, and reorder
directions) at least three (3) weeks prior to the date of distribution of the
SkyMall(R) Services Catalogs by Continental in the seatback pockets of
Continental's aircraft. Other hub locations may be added to the Continental Hubs
upon mutual written agreement by the Parties. Continental shall use commercially
reasonable efforts, and at a minimum will use the same efforts Continental uses
in connection with its own in-flight magazine PROFILES MAGAZINE to timely
distribute and properly board or place an adequate quantity of the SkyMall(R)
Services Catalogs on all aircraft in the Continental fleet to ensure that each
passenger has available to him or her on an as-needed or requested basis, a
reasonably unsoiled and presentable copy of the SkyMall(R) Services Catalog.
Continental will carry twenty (20) copies of the current Catalog on each
scheduled aircraft of Continental Fleets to replace any Catalogs taken daily by
passengers. Continental will not destroy or otherwise remove the SkyMall(R)
Services Catalogs from any Continental aircraft unless the condition of a
Catalog is no longer reasonably unsoiled and presentable to Continental
passengers, or the edition of the Catalog has expired. Continental may change
the Continental Hubs delivery locations upon thirty (30) days written notice to
SkyMall, but the total number of Continental Hubs shall not exceed three (3).
SkyMall and Continental will determine the allocation of the number of Catalogs
to be delivered among the hub locations designated by Continental by contacting
Continental's designated coordinator. SkyMall will follow-up with the hub
locations to help promote and assure proper distribution of the Catalogs on the
Continental Fleet.
5.4 Continental Promotion of Catalog Services. Continental and its
employees shall use commercially reasonable efforts to promote and encourage
Continental passenger use of the SkyMall(R) Services Catalog, and at a minimum
using the same efforts they use in connection with Continental's in-flight
magazine PROFILES MAGAZINE. Such promotion and encouragement may include,
without limitation, on-board announcements, boarding area announcements, flight
club area announcements,
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information booths, and possible video introduction, provided that prior written
consent of SkyMall shall be required for any formal or written advertising or
promotional campaign which includes, without limitation, any references to
SkyMall, SkyMall or any SkyMall trademarks, service marks, programs or services
in broadcast or printed advertisements or other promotional materials and
efforts.
5.5 Continental Aircraft Seat Phones. Since the SkyMall(R) Program
emphasizes in-flight telephone orders for merchandise or services, Continental
will continue to equip its aircraft with seat phones, or other in-flight
telephone equipment, as business conditions warrant and consistent with the
timetable previously mutually agreed upon by Continental and GTE Airfone, Inc.
(or another inflight phone provider). Continental shall promptly notify SkyMall
should Continental cease equipping its aircraft with such telephone equipment.
6.0 SKYMALL(R) CUSTOMER ORDERING AND SERVICES
6.1 SkyMall(R) Order Processing and Deliver. SkyMall shall provide
purchasing, inventory, warehousing, shipment and staff to properly facilitate
rapid delivery of all merchandise and services offered through the SkyMall(R)
Services Catalog, as described in this Agreement.
6.1.1 SkyMall(R) Order Processing. SkyMall shall offer
customer order inquiry and processing for merchandise and services twenty-four
(24) hours per day, three-hundred sixty-five (365) days per year, but SkyMall in
its sole discretion may use voice messaging and other equipment to handle or
facilitate customer order inquiry and processing during early morning hours,
Sundays, holidays, and other appropriate times. SkyMall shall maintain an "800"
customer order telephone number, including an in-flight equivalent of an "800"
telephone number (speed dial number) using the GTE Airfone(R) or telephone
equipment offered by other in-flight services providers.
6.1.2 SkyMall(R) Product Services. SkyMall may offer certain
product enhancement services, including: (A) Gift Wrapping, within certain size
restrictions, any product in the SkyMall(R) Services Catalog for a published
charge; and (B) Monogramming any clothing items, luggage items, or soft goods in
the SkyMall(R) Services Catalog for a published charge.
6.1.3 SkyMall(R) National Merchandise Deliveries. Subject to
the approval of the customer's credit, and at customer's choice, SkyMall shall
offer delivery of orders received and accepted by SkyMall for shipment to all
points within the continental limits of the United States, Alaska, Hawaii,
Puerto Rico, and the Virgin Islands, as follows:
A. 48 Hour Air Delivery. For a per-order charge,
orders placed by 5:00 p.m. EST will be shipped the same day (Continental United
States only), by an air express carrier who generally delivers the order within
forty-eight (48) hours during business days.
B. Airport Deliver on Arrival. For a per-order charge
and depending on the airport, orders normally placed any time prior to thirty
(30) to forty-five (45) minutes before arrival at an airport which has a SkyMall
distribution center ("SkyMall(R) Distribution Center") will be delivered at a
designated place when the passenger arrives at such airport. SkyMall expects to
provide such deliveries during reasonable time periods such as between 7:00 a.m.
or 8:00 a.m. to 10:00 p.m., Monday through Saturday, but SkyMall in its sole
discretion may limit the availability of such deliveries to avoid late evening
or early morning hours, Sundays, holidays, or other appropriate times.
SkyMall(R) Distribution Centers with airport delivery are available currently in
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Phoenix, Chicago (▇'▇▇▇▇), and Atlanta.
Continental shall acknowledge the existence of this
Agreement to any inquiring airport authorities, and shall cooperate in good
faith with SkyMall in SkyMall's dealings with airport authorities regarding the
matters of this Agreement. SkyMall shall obtain any necessary airport security
clearance to effect SkyMall merchandise deliveries to airports.
6.1.4 SkyMall(R) International Orders and Deliveries. SkyMall
may accept orders from the Catalog used on Continental Fleets for delivery to an
international destination.
6.1.5 Credit Card Companies. SkyMall shall be solely
responsible for establishing appropriate contractual arrangements between
SkyMall and those companies issuing credit cards to be honored by SkyMall.
6.1.6 Payment for Merchandise and Services. SkyMall, in its
sole discretion, may limit payment for merchandise to United States currency
cash equivalent negotiable instruments redeemable for United States currency,
and major credit cards.
6.1.7 SkyMall Employees. Unless separately agreed to by the
Parties, SkyMall's order processing and delivery personnel are SkyMall's
employees or independent contractors, and not the employees of Continental, and
are under SkyMall's exclusive direction and control, and SkyMall shall at all
times provide the direction and supervision required for the proper performance
of SkyMall employees and independent contractors. Although Continental shall
have no supervision or control over ▇▇▇▇▇▇▇'s employees and independent
contractors, ▇▇▇▇▇▇▇ agrees to give prompt attention to any complaint or
requested change in procedure with respect to SkyMall's employees or independent
contractors or the performance of SkyMall's order processing or delivery
services. SkyMall's employees and independent contractors shall be screened to
comply with reasonable security measures, and will be well-groomed and suitably
attired to present a professional appearance to the public.
6.2 Resolution of Customer Problems. SkyMall shall be responsible for
the resolution of all customer service problems. SkyMall will receive and handle
all correspondence, claims or complaints generated by the SkyMall(R) Program and
the SkyMall(R) Services Catalog, except for Continental's Trademarked
Merchandise and Continental's Services represented on the Continental Pages
which problems and correspondence SkyMall will forward to Continental for
handling unless otherwise agreed by the Parties in a separate Continental Pages
Agreement. SkyMall shall handle all complaints, requests or adjustments promptly
and to the satisfaction of Continental and the customer. Further, at
Continental's option, Continental may respond directly to any such customer
request or complaint. SkyMall shall handle such customer requests or complaints
on a priority exception basis, and shall furnish Continental with data regarding
such correspondence, claims and complaints as requested by Continental but
within thirty (30) days.
6.3 SkyMall Support of Continental Personnel. SkyMall will provide, and
Continental will cooperate in good faith to have SkyMall provide, both start-up
and on-going assistance to help with the orientation, training, and logistical
concerns of all affected Continental personnel and
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departments to support Continental and its personnel on a schedule for
implementation of the SkyMall(R) Program to be mutually agreed to by Continental
and SkyMall.
6.3.1 On-Going Support. On-going SkyMall support will be
provided on an as needed basis to answer Continental's questions and to resolve
any problems which may arise during the implementation and administration of the
SkyMall(R) Program.
6.4 Complimentary Air Travel. Since SkyMall is paying Continental a
Minimum Fee Payment, Continental shall provide three (3) monthly complimentary
round-trip passes on a stand-by basis on regularly scheduled domestic flights to
selected SkyMall personnel for the sole purposes of providing (A) A SkyMall
service representative as a liaison during the start-up of the SkyMall(R)
Program, (B) In-person orientation of Continental personnel during start-up of
the SkyMall(R) Program, (C) Establishment of any SkyMall(R) Distribution
Centers, (D) Any on-going problem solving requiring a personal visit, and (E)
Evaluation and monitoring of SkyMall's in-flight shopping service on the
SkyMall(R) evaluation service card (the "SkyMall(R) Evaluation of Service Card")
(collectively, the "Complimentary Air Travel"). These complimentary round-trip
tickets will be non-transferable coach tickets to be used for business travel on
a space available basis to be requested and approved by the Continental
Marketing Programs Department. SkyMall's personnel who use the Complimentary Air
Travel will adhere to all dress code requirements of Continental. SkyMall
employees will complete a SkyMall Evaluation of Service Card every time they fly
on Continental's scheduled flights, including the use of Complimentary Air
Travel, and SkyMall shall provide Continental with a copy of all such cards.
6.5 Optional Other Services.
6.5.1 Frequent Flyer Mileage Credit Service. Continental and
SkyMall may agree to credit Continental's frequent flyer mileage to the mileage
program accounts of Continental members who purchase SkyMall(R) Services Catalog
merchandise and services, and to have SkyMall enroll Continental passengers in
the Continental frequent flyer program, pursuant to a cost effective formula to
be mutually agreed upon by Continental and SkyMall (the "Frequent Flyer Services
Agreement"). See EXHIBIT E.
6.5.2 Counter-to-Counter Deliver Service. Continental and
SkyMall may agree to use Continental's Counter-to-Counter Delivery Service to
facilitate the delivery of merchandise ordered by Continental's passengers,
pursuant to a cost effective formula to be mutually agreed upon by Continental
and SkyMall (the "Counter-to-Counter Delivery Service Agreement"). See EXHIBIT
F.
6.5.3 On-Board Sales and Deliveries Service. Continental and
SkyMall may agree to provide On-Board Sales and Deliveries to facilitate the
sale and delivery of merchandise ordered by Continental's passengers, pursuant
to a cost effective formula to be mutually agreed upon by Continental and
SkyMall (the "On-Board Sales and Deliveries Service Agreement"). See EXHIBIT G.
6.6 Optional SkyMall Independent Mailing Services.
6.6.1 Continental Frequent Flyer Customers. If cost effective
to SkyMall and agreed to by Continental, on a periodic basis, SkyMall will
consider mailing SkyMall(R) Services Catalogs or other promotional material to
all or selected Continental frequent flyer members with the periodic frequent
flyer statements of Continental. The incremental increase in mailing costs above
what
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Continental normally pays for mailing its periodic frequent flyer statements can
be shared equally by SkyMall and Continental, at Continental's discretion.
6.6.2 All Continental Customer Participants. If cost effective
to SkyMall and agreed to by Continental, on a periodic basis, SkyMall will
consider mailing SkyMall(R) Services Catalogs or other promotional materials to
all or selected Continental passengers who have made a purchase from SkyMall
within the prior twelve (12) months. Mailing costs can be shared equally by
SkyMall and Continental, at Continental's discretion.
6.7 Additional Services to Promote Continental. SkyMall offers
additional services to promote Continental to the customer, including:
6.7.1 Continental Free-Standing Inserts. Continental
promotional inserts weighing less than two (2) ounces may be included in SkyMall
shipments at no cost to Continental.
6.7.2 Continental Scripts for SkyMall Customer Service
Representatives. Unique Continental scripts of up to fifteen (15) seconds for
any compatible promotion Continental chooses may be added to SkyMall's standard
order processing scripts for SkyMall's Customer Service Representatives at no
cost to Continental.
6.7.3 Continental Future Promotional Programs. Subject to
mutual agreement between Continental and SkyMall, Continental will coordinate
the offering of SkyMall(R) Program services with existing and future Continental
promotional programs including, without limitation, Continental's frequent flyer
program.
6.8 SkyMall(R) Program Costs and Expenses. The costs and expenses
associated with the SkyMall(R) Program shall be paid as follows:
6.8.1 SkyMall. SkyMall shall pay for all costs and expenses
associated with its provision of the SkyMall(R) Program except for those
Continental shall pay for stated in the SECTION on SKYMALL(R) PROGRAM COSTS AND
EXPENSES (CONTINENTAL) below. Such SkyMall costs and expenseS include, without
limitation:
(A) The creation, design, production, and delivery to Continental
of the SkyMall(R) Services Catalog;
(B) The purchase, inventory, and delivery of SkyMall Catalog
merchandise;
(C) Provision of SkyMall staff, including telemarketing staff, to
professionally handle customer orders, questions and
complaints, and to support Continental personnel;
(D) Provision of SkyMall facilities, equipment and their use to
facilitate express delivery of merchandise to selected airport
and non-airport delivery locations subject to payment of
published charges to be paid by customers;
(E) All credit card fees for the sale of SkyMall(R) Services
Catalog merchandise and services;
(F) All payroll, unemployment insurance, disability, benefit
insurance, worker's compensation, employers' liability
insurance for SkyMall employees;
(G) Any other local, state or federal taxes or levies associated
with SkyMall's employees; and
(H) The collection and payment of all applicable sales and excise
taxes on the sales of
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* Confidential portion has been omitted and
filed separately with the Commission.
SkyMall(R) Services Catalog merchandise and services, and the
filing of the corresponding reports and returns, including any
penalties and interest.
6.8.2 Continental. Continental shall provide and pay for:
(A) The Continental Pages on a reimbursement basis to SkyMall
according to the Continental Pages Reimbursement Formula in
EXHIBIT B;
(B) Other costs to be agreed to regarding the inventory and
delivery of Continental's Trademarked Merchandise and
Continental's Services featured in the Continental Pages
according to Continental Pages Agreement in EXHIBIT D;
(C) The distribution from the Continental Hubs by Continental of
the SkyMall(R) Services Catalog to the aircraft in the
Continental Fleets under the SECTION on SKYMALL SHIPMENT AND
CONTINENTAL DISTRIBUTION OF CATALOGS;
(D) The promotional costs associated with the SECTION on
CONTINENTAL PROMOTION OF CATALOG SERVICES;
(E) Space at no charge to SkyMall in which SkyMall and Continental
personnel can meet to implement the SkyMall(R) Program, and
booths where appropriate;
(F) The Complimentary Air Travel costs under the SECTION on
COMPLIMENTARY AIR TRAVEL; and
(G) The costs to be agreed to regarding any optional SkyMall(R)
Program Services, including the SECTIONS on OPTIONAL OTHER
SERVICES, OPTIONAL SKYMALL INDEPENDENT MAILING SERVICES,
ADDITIONAL SERVICES TO PROMOTE CONTINENTAL and SKYMALL(R)
PROGRAM COSTS AND EXPENSES.
7.0 CONTINENTAL SALES COMMISSIONS AND FEES
7.1 Minimum Fee Payment. Subject to the SECTIONS on REPORTS, RECORDS
AND AUDITS, BREACH OR DEFAULT, FORCE MAJEURE EXCUSING PERFORMANCE and
TERMINATION, SkyMall shall make a minimum fee payment to Continental every month
that the Continental Fleets carry SkyMall(R) Services Catalog during the term of
the Agreement (the "Minimum Fee Payment"). The monthly Minimum Fee Payment, or
any portion thereof, will be in addition to the Sales Commission and will be pro
rated based on the actual period of time the Catalogs are carried on-board the
Continental Fleets if there is an interruption of the continual distribution of
the Catalog on-board the Continental Fleets, breach or default in performance,
or termination of the Agreement according to the terms of the Agreement.
Therefore, the maximum monthly Minimum Fee Payment, if any, will be * Dollars
($*), and the maximum annual Minimum Fee Payment, if any, will be * Dollars
($*). The payment date of the monthly Minimum Fee Payment will be on the first
day of the second month following the end of the month. ▇▇▇▇▇▇▇ agrees that
payment of Continental's Minimum Fee Payment will be retroactive to January 1,
1992, and such retroactive Minimum Fee Payment shall be paid to Continental
within one (1) week after the signing of this Agreement.
7.2 Net Sales. For purposes of this Agreement, "Net Sales" is defined
as gross merchandise sales and SkyMall(R) Concierge Service Fees received in a
calendar month from the SkyMall(R) Program from orders made from the SkyMall(R)
Services Catalog provided to Continental, less revenues relating to any returned
merchandise or refunds, canceled SkyMall(R) Concierge Service, sales and excise
taxes and duties, shipping and handling, giftwrapping and monogramming, and bad
debts (the "Net Sales", and the "Net Sales Formula" in EXHIBIT C).
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* Confidential portion has been
omitted and filed separately
with the Commission.
7.3 SkyMall Payment of Continental Sales Commissions. Subject To the
SECTIONS on REPORTS, RECORDS AND AUDITS, BREACH OR DEFAULT, FORCE MAJEURE
EXCUSING PERFORMANCE and TERMINATION, SkyMall shall also pay sales commissions
to Continental based on "Net Sales" as defined in the SECTION on NET SALES and
based upon the following schedule of Net Sales and its corresponding Sales
Commission (the "Sales Commission"):
Schedule of Quarterly Net Sales and Sales Commission
Quarterly Net Sales Levels Quarterly Sales Commission Levels
-------------------------- ---------------------------------
Level 1 - From * to $* *%
Level 2 - From $* to $* *%
Level 3 - From $* to $* *%
Level 4 - Over $* *%
A. Calculation Formula:
Sales Commission Payment = Quarterly Net Sales X Quarterly Sales
Commission Level
B. Example:
Level 1 - $ * X *% = $ *
Level 2 - $ * X *% = $ *
Level 3 - $ * X *% = $ *
Level 4 - $ * X *% = $ *
----------- --------
TOTALS $* $ *
C. Payment Date and Statement. The monthly Sales Commissions
shall be payable to Continental on the first day of the second
month following the sales (the "Sales Commissions Payment
Date") and will be accompanied by a supporting statement which
includes the (a) Number of orders filled for the payment
month, (b) Net dollar amount of sales related to the orders,
and (c) Calculation of Continental's Sales Commission based
upon said sales. For purposes of calculating Sales
Commissions, the Commission Level indicated is paid only on
Net Sales for each calendar month at that level, and not
retroactively on aggregate Net Sales.
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8.0 ANNUAL ADJUSTMENTS
8.1. Formulas. SkyMall and Continental agree that on the annual
anniversary date of this Agreement they will review and adjust for the new year,
if necessary, any cost or expense formulas in this Agreement, including without
limitation, the Minimum Catalog Production Formula, Continental Pages
Reimbursement Formula, and Net Sales Formula, to cover any increase or decrease
in actual costs or expenses to either Continental or SkyMall which have changed
more than five percent (5%) based on actual invoice charges during the prior
twelve (12) calendar months.
8.2. Adjustment of Total Payments. Continental desires that the Minimum
Fee Payment and its Sales Commission (the "Total Payments") cover Continental's
fuel costs for carrying the Catalog on Continental Fleets. SkyMall is concerned
about the accuracy of any fuel formula regarding the actual number of Catalogs
actually carried by the Continental Fleets during any period of time. The
Parties will use their good faith and best commercially reasonable efforts to
assure that Continental's fuel formula accurately reflects actual fuel costs for
carrying actual Catalogs on Continental Fleets. SkyMall will provide Continental
with its input regarding Continental's fuel formula. If the Total Payments do
not cover such actual Continental's fuel costs during a Catalog edition, then
Continental will so notify SkyMall in writing with the fuel costs needed to
cover the current and next or subsequent Catalog edition on Continental Fleets
(the "Subsequent Catalog Edition"), all at least sixty (60) days prior to the
printing of a Subsequent Catalog Edition. ▇▇▇▇▇▇▇ will decide whether or not the
anticipated income from such current and Subsequent Catalog Edition on board
Continental Fleets will allow SkyMall to pay the increased fuel costs. If
SkyMall concludes that the income from such Catalog edition will not cover the
increased amount requested by Continental, and SkyMall otherwise does not elect
to cover the increased cost, then the Parties agree that the Catalog may be
either removed from the Continental Fleets, or removed from all but the first
class seats on the Continental Fleets, and that the Catalog will then be (A)
Mailed to Continental passengers who purchased from the Catalog during the
preceding twelve (12) months (the "Mailed Catalog Edition"), and (B) Distributed
to Continental employees and to locations where it may be seen by and be
available to Continental passengers at airports, in passenger lounges, etc.
SkyMall will pay Continental the Sales Commission from the Mailed Catalog
Edition and the Catalogs so distributed, but not the corresponding Minimum Fee
Payment for fuel costs since the Catalogs will not be boarded on the Continental
Fleets and since SkyMall will pay the costs of mailing the Catalog. Continental
agrees to use commercially reasonable efforts to distribute the Catalog to
Continental employees and to locations where it may be seen by and be available
to Continental passengers at airports, in passenger lounges, etc. The Parties
agree that the Catalog will be distributed to passengers on the Continental
Fleets once the fuel costs return to a level where the Total Payments cover
Continental's fuel costs.
9.0 REPORTS, RECORDS AND AUDIT
9.1 SkyMall Reports and Records. During the Term of this Agreement,
SkyMall shall, from time to time in a manner to be agreed by the Parties,
furnish Continental with accurate and complete reports and information regarding
the fulfillment of SkyMall's obligations to Continental under this Agreement,
including without limitation, Catalog design, merchandise and other information
referenced throughout the SECTION on SKYMALL(R) PROGRAM AND SKYMALL(R) SERVICES
CATALOG, customer problems referenced in the SECTION on RESOLUTION OF CUSTOMER
PROBLEMS, and Continental's Sales Commissions and Fees referenced in the SECTION
on CONTINENTAL SALES COMMISSIONS AND FEES (the "SkyMall Reports"). The SkyMall
Reports do not include any reports or information relating to SkyMall corporate
activities or the activities of SkyMall with any one other than Continental.
SkyMall
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agrees to maintain the SkyMall Reports and supporting documentation during the
Term of this Agreement and for one (1) year following termination of the
Agreement, and as otherwise required by federal or state tax or other record
keeping laws or regulations (the "Record Maintenance Period").
9.2 Continental Audit of Records. ▇▇▇▇▇▇▇ agrees that during the Record
Maintenance Period, Continental or such auditors as Continental may select and
authorize, at Continental's sole cost and expense, shall have the right from
time to time upon reasonable advance notice to SkyMall to examine and make
copies of the SkyMall Reports and supporting documentation at SkyMall's
headquarters offices during normal office hours. At Continental's request,
▇▇▇▇▇▇▇ agrees to generate and provide Continental or such auditors as
Continental may select and authorize with adhoc reports for auditing purposes.
9.3 Continental Reports and Records. During the Term of this Agreement,
Continental shall, from time to time in a manner to be agreed by the Parties,
furnish SkyMall with accurate and complete reports and information regarding the
fulfillment of Continental's obligations to SkyMall under this Agreement,
including without limitation, Continental information required to design,
produce, deliver, distribute, and promote the Catalog referenced throughout the
SECTION on SKYMALL(R) PROGRAM AND SKYMALL(R) SERVICES CATALOG, Catalog
production information (Projected PassengeR Enplanements, Actual Passenger
Enplanements, and Catalog Stocked Seats) referenced in the SECTION on MINIMUM
CATALOG PRODUCTION FORMULA, cost or expense formulas including Continental's
fuel formula referenced in the SECTION on ANNUAL ADJUSTMENTS. and the
Continental Scheduled Flight Information referenced in the SECTION on
CONTINENTAL SCHEDULED FLIGHT INFORMATION below (the "Continental Reports"). The
Continental Reports do not include any records or information relating to
Continental corporate activities or the activities of Continental with any one
other than SkyMall. Continental agrees to maintain the Continental Reports and
supporting documentation during the Term of this Agreement and for one (1) year
following termination of the Agreement, except as otherwise required by federal
or state tax or other record keeping laws or regulations (the "Record
Maintenance Period").
9.3.1 Continental Scheduled Flight Information. Continental
shall cooperate in good faith to provide SkyMall with Continental's schedule
changes (the "Scheduled Changes") of Continental's current scheduled domestic
flights. SkyMall shall use such information in its order entry and delivery
process and shall restrict its usage of such information to these processes (the
"Continental Scheduled Flight Information").
9.4 SkyMall Audit of Records. Continental agrees that during the Record
Maintenance Period, SkyMall or such auditors as SkyMall may select and
authorize, at SkyMall's sole cost and expense, shall have the right from time to
time upon reasonable advance notice to Continental to examine and make copies of
the Continental Reports and supporting documentation at Continental's
headquarters offices during normal office hours.
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10.0 LIMITED LICENSE OF USE OF CONTINENTAL'S NAMES
By this Agreement and during the Term of this Agreement and subject to
Continental's prior approval of any written, oral, radio or TV copy, Continental
licenses SkyMall with a non-exclusive license to use Continental's corporate
name "Continental Airlines" and Continental's tradenames and service marks,
including "Continental Airlines," "Continental," and Continental's other
trademarks and service marks, logos, and logotype solely in connection with the
production and promotion of the SkyMall(R) Services Catalog for Continental, and
the advertisement and sale of any merchandise or service bearing a Continental
trademark or service mark in the SkyMall(R) Services Catalog or SkyMall(R)
Program, with all such Continental names and logos to be used solely as directed
by Continental ("SkyMall's Non-Exclusive License"). Except as provided in this
SECTION on LIMITED LICENSE OF USE OF CONTINENTAL'S NAMES, SkyMall will not use,
publish, or reproduce (including without limitation in any form of advertising)
any Continental name or logo. SkyMall's Non-Exclusive License creates no third
party rights. SkyMall's Non-Exclusive License shall terminate automatically at
the termination of this Agreement in accordance with the SECTION on TERM OF
AGREEMENT.
11.0 CONFIDENTIAL INFORMATION
11.1 Confidential and Proprietary Information. Both Continental and
▇▇▇▇▇▇▇ agree that in performing their respective obligations under this
Agreement that they may, from time to time, furnish to each other certain
information and materials, both oral and written, relating to their respective
companies which each Party considers confidential and/or proprietary information
which would by its appropriation, disclosure or misuse have a detrimental effect
on each such Party (the "Confidential Information"). Each Party will mark any
such Confidential Information as "Confidential", "Proprietary", or "Trade
Secret" (the "Confidential Marks") which marks shall serve as proper notice to
the other Party that such information or material shall be considered
Confidential Information and shall be so treated according to the requirements
of this Agreement. Such Confidential Information may include, without
limitation, marketing philosophies and objectives, data, plans, designs, orders,
forecasts, competitive advantages and disadvantages, the types of services
provided, trade secrets, ideas, creations, materials and information regarding
each other's intellectual property (which includes, without limitation, patents,
copyrights, trademarks and service marks and their designs, logos, slogans,
etc.), data processing programs or procedures, source code, object code,
business methods and procedures, employees, suppliers, and customers.
11.2 Exceptions. Confidential Information excludes: (A) Information
approved by either Party for release to the public without qualification as to
the recipient; (B) Information which either Party obtained, had or possessed
independently of the other Party, unless such information is confidential
pursuant to another agreement or understanding; (C) Information which either
Party has placed or in the future places in the public domain; and (D) The
SkyMall(R) Buyer File.
11.3 Continental and SkyMall Actions. ▇▇▇▇▇▇▇ agrees that all of
Continental's Confidential Information shall be considered Continental's
property, and confidential and proprietary to Continental, and Continental shall
have all ownership and use rights to the same. Continental agrees that all of
SkyMall's Confidential Information shall be considered SkyMall's property, and
confidential and proprietary to SkyMall, and SkyMall shall have all ownership
and use rights to the same. Both Continental and SkyMall respectively and their
directors, officers, employees, contractors, and agents shall: (A) Protect and
preserve the confidential and proprietary nature of all of the other's
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Confidential Information; (B) Not disclose, give, sell or otherwise transfer or
make available, 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 provided in this Agreement; (D)
Immediately notify the other of any loss or misplacement of its Confidential
Information or copies of the same; (E) Comply with such security procedures as
may be reasonably prescribed by the other from time to time for protection of
its Confidential Information, including, without limitation, procedures
concerning the transportation and storage of such information; and (F) At a
minimum, employ the same degree of care in protecting Confidential Information
as each Party employs in protecting its own Confidential Information.
11.4 Enforcement. Both Continental and SkyMall agree that in the event
of a breach or threatened breach of the provisions of the SECTION on
CONFIDENTIAL INFORMATION, their respective remedies at law would be inadequate
and each Party shall be entitled to a temporary restraining order or injunction
(without any bond or other security being required) to prevent disclosure or use
of the Confidential Information; provided, however, the foregoing shall not be
construed to preclude either Party from pursuing any action or further remedy,
at law or in equity, for any breach or threatened breach of such provisions or
any other provisions of this Agreement, including, but not limited to, the
recovery of damages, reasonable attorneys' fees, costs and other expenses in
connection with the actions. Should a Party be served with a subpoena or other
legal process requiring the production or disclosure of any Confidential
Information owned by the other Party, then the served Party will immediately
notify the owner Party thereof, and will in good faith attempt to permit the
owner Party at the owner Party's expense to intervene and contest such
disclosure or production.
11.5 Survival. All rights and obligations of the Parties with regard to
the Confidential Information shall indefinitely survive the expiration or
termination of this Agreement.
12.0 NO-COMPETITION
Continental and SkyMall acknowledge that they will be exchanging
Confidential Information and other information. and that SkyMall has developed
its SkyMall(R) Program, it's SkyMall(R) Services Catalog, and its SkyMall(R)
Concierge Service at significant effort and expense to itself. Accordingly,
during the Term of this Agreement and for a period of 3 years thereafter, both
SkyMall and Continental, and their respective directors, officers, employees,
contractors, and agents, shall not compete with each other in any way, nor use
any information or knowledge about the other in competition with the other, nor
provide any such information or knowledge to any other person, entity or
competitor of the other. All rights and obligations of the Parties regarding the
No-Competition Requirements shall survive the termination of this Agreement for
three (3) years.
13.0 INDEMNIFICATIONS
13.1 Claims. As used in this SECTION on INDEMNIFICATIONS, the word
claims means any and all claims, liabilities, damages, demands, suits, causes of
action, proceedings, recoveries, judgments, expenses, taxes, fines, penalties or
executions, including without limitation, litigation costs and expenses and
reasonable attorneys' fees, which may be made, had, brought or recovered by any
third party.
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13.2 SkyMall's Indemnification of Continental. Except for Claims
arising from or in connection with merchandise or services, advertising or
promotions offered or provided by Continental in the SkyMall(R) Services Catalog
or otherwise in connection with SkyMall, or failure by Continental to provide
any merchandise or service offered by Continental in connection thereto, or the
negligence of Continental, its directors, officers, employees, contractors or
agents arising out of or in connection thereto, SkyMall shall indemnify defend
and hold harmless Continental, its directors, officers, employees, and agents,
from and against all Claims for: (A) Personal injury, or bodily injury, or
death, to any person, and for damage to the property of anyone arising out of
services provided from SkyMall (excluding property of Continental); (B)
Offering, providing, or failing to provide any SkyMall(R) Services Catalog
merchandise or services; (C) SkyMall(R) Program advertising, promotions, or
activities; (D) Performance, non-performance, or improper performance of
SkyMall's obligations or SkyMall's acts or omissions pursuant to this Agreement;
(E) Use by Continental of patents, copyrights, trademarks, tradenames, logos,
slogans, imprints or any copy, whether graphic or printed, supplied solely by
SkyMall and used by Continental solely as directed by SkyMall; and (F) Any claim
that merchandise being sold in the SkyMall(R) Services Catalog infringed upon
the valid patent rights of a third party.
13.3 Continental's Indemnification of SkyMall. Except for Claims
arising from or in connection with merchandise or services, advertising or
promotions offered or provided by SkyMall in the SkyMall(R) Services Catalog or
otherwise in connection with SkyMall, or failure by SkyMall to provide any
merchandise or service offered by SkyMall in connection thereto, or the
negligence of SkyMall, its directors, officers, employees, contractors or agents
arising out of or in connection thereto, Continental shall indemnify defend and
hold harmless SkyMall, its directors, officers, employees, and agents, from and
against all Claims for: (A) Personal injury, or bodily injury, or death, to any
person, and for damage to the property of anyone arising out of services
provided from Continental (excluding property of SkyMall); (B) Offering,
providing, or failing to provide any merchandise or services which are to be
provided by Continental in the SkyMall(R) Services Catalog; (C) Continental
advertising, promotions, or activities; (D) Performance, non-performance, or
improper performance of Continental's obligations or Continental's acts or
omissions pursuant to this Agreement; (E) Use by SkyMall of patents, copyrights'
trademarks, tradenames, logos, slogans, imprints or any copy, whether graphic or
printed, supplied solely by Continental and used by SkyMall solely as directed
by Continental; and (F) Any claim that merchandise which is provided by
Continental to be sold in the SkyMall(R) Services Catalog, or otherwise in
connection with SkyMall, infringed upon the valid patent rights of a third
party.
13.4 Notification, Defense of Claims and Settlement. The Party seeking
indemnification under this SECTION on NOTIFICATION, DEFENSE OF CLAIMS AND
SETTLEMENT (the "Notifying Party") shall be subject to the following provisions:
A. Notice. The Notifying Party shall notify the other Party
(the "Other Party") upon learning of a claim or other matter for which
indemnification is sought (the "Indemnity Matter"). The omission by the
Notifying Party to promptly notify the Other Party of any Indemnity Matter shall
relieve the Other Party from any obligation it may have to indemnify the
Notifying Party to the extent, but only to the extent, that the delay in
notification materially prejudices the Other Party's defense of the Indemnity
Matter;
B. Defense of Claim. Upon receipt by the Other Party of notice
of an Indemnity Matter given by the Notifying Party as provided in this SECTION
on NOTIFICATION, DEFENSE OF CLAIMS
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AND SETTLEMENT (NOTICE), then:
(a) The Other Party will be entitled to participate
in the Indemnity Matter at its own expense; and
(b) The Other Party will be entitled to assume the
defense of the Indemnity Matter, with counsel reasonably acceptable to the
Notifying Party. After notice from Other Party to the Notifying Party of Other
Party's election to assume such defence, Other Party shall not be liable to
Notifying Party under this Agreement for any legal or other expenses
subsequently incurred by Notifying Party in connection with such Indemnity
Matter, other than the reasonable costs of investigating the matter by the
Notifying Party, if any. Notifying Party shall have the right to employ its own
counsel in such Indemnity Matter, but the fees and expenses of such counsel
incurred after notice from Other Party of its assumption of the defense shall be
at the expense of Notifying Party unless (i) the employment of counsel by
Notifying Party has been authorized by Other Party, or (ii) Notifying Party
shall have reasonably concluded based on the opinion of its counsel that there
may be a conflict of interest or position between Other Party and Notifying
Party in the conduct of the defense of such action, or (iii) Other Party 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 for the Notifying Party shall be
at the expense of the Other Party if it is determined ultimately that the Other
Party is responsible to indemnify the Notifying Party with respect to the
Indemnity Matter; and
C. Settlement. The Other Party shall not be obligated to
reimburse the costs of any settlement to which it has not agreed in writing. If
in any Indemnity Matter, the Notifying Party shall have unreasonably failed to
enter into a settlement offered, or assented to, by the opposing party or
parties which settlement was agreed to by the Other Party in writing, then the
indemnification obligation of the Other Party to the Notifying Party in
connection with such Indemnity Matter shall not exceed the total of the amount
of such settlement proposal and the expenses incurred by the Notifying Party up
to the time such settlement proposal could have been effected.
13.5 Survival. All rights and obligations of the Parties with regard to
Indemnification shall indefinitely survive the termination of this Agreement.
14.0 INSURANCE
14.1 SkyMall Insurance. SkyMall shall:
A. Comprehensive General Liability, Etc. Procure and keep in
force policies of insurance with respect to the Indemnifications given except
for third party patents, products to be provided, and services to be performed
by SkyMall under this Agreement, as follows: (A) Comprehensive general liability
insurance in an amount not less than Five Million Dollars ($5,000,000) combined
single limit coverage; (B) Products liability insurance in an amount not less
than Five Million Dollars ($5,000,000) combined single limit coverage; (C)
Advertisers liability insurance in an amount of not less than Five Million
Dollars ($5,000,000); and (D) Automobile liability insurance in an amount of not
less than One Million Dollars ($1,000,000).
B. Workers Compensation. Procure and keep in force policies of
workers compensation insurance in amounts as required by statute.
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C. Endorsements. Endorse all policies of liability insurance
procured by SkyMall pursuant to this SECTION on INSURANCE - SKYMALL INSURANCE
(ENDORSEMENTS) (A) to provide that said insurance shall be primary insurance and
to acknowledge that any other insurance policy or policies of Continental shall
be secondary or excess insurance notwithstanding any provisions in such policies
regarding other insurance, (B) to name Continental, its parent, subsidiaries and
affiliates and their directors, officers, agents and employees as additional
insureds, (C) to provide that all provisions of such insurance, except for the
limits of liability, shall operate in the same manner as if there were a
separate policy issued to each insured, (D) to specifically cover the indemnity
and hold harmless obligations of SkyMall to Continental under this Agreement
except for third party patents, (E) to contain a waiver of subrogation clause in
favor of Continental and all other additional insureds, and (F) to contain a
provision requiring the insurers to provide Continental with a written notice of
any cancellations or adverse material change in such insurance, and providing
that the same shall not be effective as to the benefit and/or interest of
Continental for thirty (30) days after written notice of such cancellation or
adverse material change is received by Continental.
D. Acceptable Insurers. Procure and keep in force all
insurance required to be maintained under this Agreement from insurers with an
independent rating of A or better.
E. Certificates. Furnish certificates evidencing the insurance
coverage required under this Agreement to Continental at an address to be
furnished to SkyMall by Continental.
14.2 Continental Insurance. Continental shall:
A. Comprehensive General Liability, Etc. Procure and keep in
force policies of insurance with respect to the Indemnifications given except
for third party patents, products to be provided, and services to be performed
by Continental under this Agreement, as follows: (A) Comprehensive general
liability insurance in an amount not less than Five Million Dollars ($5,000,000)
combined single limit coverage; (B) Products liability insurance in an amount
not less than Five Million Dollars ($5,000,000) combined single limit coverage;
(C) Advertisers liability insurance in an amount of not less than Five Million
Dollars ($5,000,000); and (D) Automobile liability insurance in an amount of not
less than One Million Dollars ($1,000,000).
B. Endorsements. Endorse all policies of liability insurance
procured by Continental pursuant to this SECTION on INSURANCE - CONTINENTAL
INSURANCE (ENDORSEMENTS) (A) to provide that said insurance shall be primary
insurance and to acknowledge that any other insurance policy or policies of
SkyMall shall be secondary or excess insurance notwithstanding any provisions in
such policies regarding other insurance, (B) to name SkyMall, its directors,
officers, agents and employees as additional insureds, (C) to provide that all
provisions of such insurance, except for the limits of liability, shall operate
in the same manner as if there were a separate policy issued to each insured,
(D) to specifically cover the indemnity and hold harmless obligations of
Continental to SkyMall under this Agreement except for third party patents, (E)
to contain a waiver of subrogation clause in favor of SkyMall and all other
additional insureds, and (F) to contain a provision requiring the insurers to
provide SkyMall with a written notice of any cancellations or adverse material
change in such insurance, and providing that the same shall not be effective as
to the benefit and/or interest of SkyMall for thirty (30) days after written
notice of such cancellation or adverse material change is received by SkyMall.
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C. Acceptable Insurers. Procure and keep in force all
insurance required to be maintained under this Agreement from insurers with an
independent rating of A or better.
D. Certificates. Furnish certificates evidencing the insurance
coverage required under this Agreement to SkyMall at an address to be furnished
to Continental by SkyMall.
14.3 Survival. All rights and obligations of the Parties with regard to
Insurance shall indefinitely survive the termination of this Agreement.
15.0 MISCELLANEOUS
15.1 Agreement.
This COPYRIGHTED AND CONFIDENTIAL AIRLINE CUSTOMER SERVICES AGREEMENT
WITH CERTAIN PROPRIETARY INFORMATION consists of the TITLE PAGE, TABLE OF
CONTENTS, MAIN SECTIONS INCLUDING BUT NOT LIMITED TO RECITALS and AGREEMENTS,
the EXHIBITS and any subsequent duly signed AMENDMENTS (the "Agreement"). This
Agreement states the entire agreement and understanding of the Parties regarding
the subject matters contemplated in this Agreement, and supersedes all
pre-existing oral or written agreements or commitments regarding these matters.
No Party shall be bound by or be deemed to have made any agreement,
representation or warranty except as set forth in this Agreement.
15.2 Agreement - Amendments and Waivers.
This Agreement may not be amended, changed or modified except by an
amending agreement in writing signed by a duly authorized representative of each
Party (the "Amendment"). All AMENDMENTS, if any, shall be construed and be
deemed to be attached to this Agreement, and they are fully incorporated herein
and are made part of the Agreement. No waiver of any provision or any breach of
this Agreement by either Party, whether expressed or implied, shall be effective
unless stated in writing and signed by a duly authorized representative of the
Party alleged to have waived such provision or breach. Any single waiver shall
not operate as a continuing waiver or waive any other provision or breach of
this Agreement, whether in the past or in the future.
15.3 Agreement - Failure of Enforcement.
The failure of either Party to enforce any agreement, condition,
covenant or term of this Agreement by reason of breach by the other Party, after
notice had, shall not be deemed to void or affect the right of such Party to
enforce the same or any other agreement, condition, covenant or term on the
occasion of a subsequent breach or default by the other Party.
15.4 Approval or Consent.
Whenever a Party's approval or consent is required by this Agreement,
such approval or consent will not be unreasonably withheld or delayed.
15.5 Assignments and Successions.
SkyMall and Continental may assign this Agreement to a wholly owned
subsidiary, to a
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successor of substantially all of its business or assets, and in the case of
Continental to its parent corporation. Neither SkyMall nor Continental may
otherwise assign, whether in whole or in part, or delegate any of their
respective rights or obligations under this Agreement, whether by operation of
law or otherwise, without the prior written consent of the other Party.
15.6 Attorneys' Fees.
In any litigation or arbitration action or proceeding regarding a
dispute arising out of or related to this Agreement, the prevailing Party shall
be entitled to receive, in addition to any other remedy or award, reasonable
attorneys' fees, costs and other expenses incurred in connection with such
action or proceeding as determined by the court (but not by a jury), or
arbitrator.
15.7 Benefits of Parties, Successors and Assigns.
This Agreement shall be binding on, and inure to the benefit of, the
Parties and, subject to the SECTION on ASSIGNMENTS AND SUCCESSIONS, on their
respective heirs, executors, administrators, legal representatives, successors
and assigns. Nothing in this Agreement, expressed or implied, is intended to or
shall confer on any person other than the Parties or their respective heirs,
executors, administrators, legal representatives, successors or assigns, any
rights, obligations, remedies or liabilities under this Agreement.
15.8 Breach or Default.
Subject to SECTIONS on FORCE MAJEURE EXCUSING PERFORMANCE, BREACH AND
DEFAULT REMEDIES, and TERMINATION, the existence or occurrence of any one or
more of the following shall constitute a breach or default under this Agreement
unless such breach or default is promptly cured within any applicable grace
periods provided and written notices required, all as stated below:
A. Confidential Information. The Parties agree that in the
event of a threatened breach or actual breach of the provisions of the SECTIONS
on CONFIDENTIAL INFORMATION AND NO-COMPETITION, that the non-defaulting Party's
remedies at law would be inadequate and will cause the other Party irreparable
injury and damage. Therefore, the non-defaulting Party shall be entitled to a
temporary restraining order or injunction (without any bond or other security
being required) to prevent disclosure or use of the Confidential Information or
No Competition information pursuant to the SECTION on BREACH AND DEFAULT
REMEDIES.
B. Non-Payment. Either Party's refusal, failure, or neglect in
making any required payment or performing any monetary term, condition,
covenant, warranty or representation within fifteen (15) days after its due date
under this Agreement, and written notice thereof from the other Party;
C. Performance or Condition. Either Party's refusal, failure,
or neglect in the performance of, or breach of, any non-monetary term,
condition, covenant, warranty or representation contained in this Agreement
shall have occurred and be continuing for thirty (30) days after written notice
thereof from the other Party; provided however that such thirty (30) day period
may be extended if, within such period, a duly authorized representative of the
defaulting Party delivers to the other Party a certificate stating that the
breach is not susceptible of cure within such thirty (30) day period but can be
cured within a period of ninety (90) days from receipt of the initial notice and
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further stating the actions being taken and to be taken to effect a cure, then
the defaulting Party shall be entitled to a total period of up to ninety (90)
days from the initial notice to cure such breach, but only for as long as the
defaulting Party diligently and vigorously pursues such cure, then, without
further notice, the non-defaulting Party may pursue any and all rights and
remedies available to it;
D. Bankruptcy or Insolvency. Notwithstanding Continental's
current bankruptcy proceeding in the U.S. Bankruptcy Court of the District of
Delaware, either Party: (a) Becomes insolvent; (b) Does not pay its bills when
due without just cause; (c) Takes any material steps leading to its cessation as
a going concern; (d) Ceases or suspends operations; (e) Makes a general
assignment for the benefit of creditors, or there is filed by or against a Party
a voluntary or involuntary petition or application for a custodian, or the
appointment of a receiver, provided, however, that any Party against whom an
involuntary petition is filed shall have sixty (60) days to secure the dismissal
thereof before the filing shall be deemed a default under this Agreement; or (f)
Commences any action under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or proceedings for a Party's relief, or for
the composition, extension, arrangement or adjustment of any of a Party's
obligations, or affecting any significant portion of a Party's property
(collectively the "Bankruptcy Proceedings"), provided, however, that if any of
the foregoing Bankruptcy Proceedings are filed against a Party involuntarily,
such Party shall have sixty (60) days to secure dismissal thereof before such
filing shall be deemed to be a default under this Agreement;
E. Bankruptcy - Non-Defaulting Party. Notwithstanding
Continental's current bankruptcy proceeding in the U.S. Bankruptcy Court of the
District of Delaware, if Bankruptcy Proceedings are commenced with respect to
the defaulting Party and if this Agreement has not otherwise terminated, then
the non-defaulting Party may suspend all further performance of this Agreement,
other than making payments which are due under this Agreement subject to the
SECTION on BREACH OR DEFAULT - LIQUIDATED DAMAGES below, 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. Any such
suspension of further performance by the non-defaulting Party pending the
defaulting Party's assumption or rejection will not be a breach of this
Agreement and will not affect the non-defaulting Party's right to pursue or
enforce any of its rights under this Agreement or otherwise.
F. Liquidated Damages. In the event that Continental (a)
commences Bankruptcy Proceedings (other than its pending Chapter 11 proceeding),
including a conversion from the pending Chapter 11 case into a Chapter 7 case,
or (b) stops flying on a regular scheduled basis twenty-five percent (25%) of
its January 1, 1991 weekly scheduled flights, or (c) otherwise defaults under
this Agreement (collectively the "Special Breaches"), then SkyMall will sustain
both a financial loss and a loss of business that are difficult to ascertain
because of SkyMall's production of the Catalogs and lost Continental sales.
Therefore, the Parties agree that in the event of any Special Breach SkyMall
shall have a claim for liquidated damages in the amount(s) of the Minimum Fee
Payment and any Sales Commissions that SkyMall might otherwise owe Continental.
The Parties agree that such liquidated damages amount(s) shall be set-off by
SkyMall against any amounts SkyMall may otherwise owe Continental.
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15.9 Breach and Default Remedies.
Subject to the SECTIONS on FORCE MAJEURE EXCUSING PERFORMANCE AND
TERMINATION, upon the occurrence of any breach or default of this Agreement as
defined in the SECTION on BREACH OR DEFAULT which is not cured within any
applicable grace periods provided and written notices required, the
non-defaulting Party may, consistent with applicable laws, at its option, do one
or more of the following:
A. Temporary Restraining Order or Injunction. Proceed
immediately, when Confidential Information or No-Competition Requirements are
involved, to obtain a temporary restraining order or injunction (without any
bond or other security being required) to prevent disclosure or use of any
Confidential Information or No-Competition information respectively identified
under the SECTIONS on CONFIDENTIAL INFORMATION AND NO-COMPETITION, recognizing
that the Parties have agreed that remedies at law would be inadequate for such
threatened or actual breaches; provided, however, the foregoing shall not be
construed to preclude the non-defaulting Party from pursuing any action or
further remedy, at law or in equity, for any breach or threatened breach of such
provisions or any other provisions of this Agreement, including, but not limited
to, the recovery of damages, reasonable attorneys' fees, costs and other
expenses in connection with the actions;
B. Damages for Breach. Proceed by appropriate court action(s)
at law or equity to recover damages for the breach of this Agreement, including
reasonable attorneys' fees, costs and other expenses in connection with the
breach of any obligations stated in the SECTION on INDEMNIFICATIONS;
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.
15.10 Consequential Damages. EXCEPT AS PROVIDED UNDER THE SECTIONS ON
INDEMNIFICATIONS AND TERM OF AGREEMENT, ABOVE, 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 ITS PERFORMANCE OR FAILURE TO PERFORM OR ITS ACTS OR OMISSIONS, UNDER THIS
AGREEMENT.
15.11 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and all counterparts so executed shall
constitute one and the same Agreement which is binding upon all Parties even
though all Parties do not sign the same counterpart.
15.12 Days.
The word days in this Agreement shall mean calendar days unless the
text in a provision expressly provides for business days.
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15.13 Dealings with Third Parties.
No Party is, nor shall any Party hold itself out to be, vested with any
power or right to represent, act on behalf of, or contractually bind any other
Party as its agent, partner, or otherwise.
15.14 Exhibits.
All EXHIBITS to this Agreement, identified as such and attached to this
Agreement are fully incorporated herein and are made part of this Agreement.
15.15 Force Major Excusing Performance.
Notwithstanding anything in this Agreement to the contrary, no Party
shall be liable to the other Party for any failure or delay in performing all or
any part of this Agreement and shall be excused to the extent that such
non-performance or delay arises out of any cause beyond the reasonable control
of either Party by reasons including, without limitation, 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 seriously
adverse weather conditions. All requirements of notice and other performance
required by this Agreement within a specified period shall be automatically
extended to accommodate the period of pendency of any such contingency which
interferes with such performance, provided, however, that within thirty (30)
days of the conclusion of any Force Major cause a duly authorized representative
of the Party invoking such cause delivers to the other Party a certificate
stating such cause, the performance of this Agreement which it delayed, the
reasonable efforts taken to overcome such cause, and the period of time such
cause was in effect.
15.16 Further Actions and Assurances.
Each Party agrees that it shall cooperate in good faith to take such
further actions and duly sign, acknowledge and deliver, or cause to be so done,
all further documents, assurances and certificates as may be necessary or
expedient, or as either Party may reasonably request of the other, in order to
carry out the purpose and intent of this Agreement. In addition, each Party
agrees that it shall not take any action which would adversely affect any right
granted by it to the other Party by this Agreement.
15.17 Governing Law.
It is the express intention of the Parties that this Agreement is to be
governed and interpreted under the laws of the State of Arizona.
15.18 Headings and Interpretation.
The headings contained in this Agreement are for convenience and
reference only, and are not to be considered in interpreting this Agreement.
When the context so requires in this Agreement, the singular number includes the
plural, and vice versa.
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15.19 Joint Venture or Partnership.
Nothing in this Agreement, expressed or implied, is intended to or
shall constitute, create or establish any agency, joint venture, or partnership
relationship between the Parties. The Parties are independent contractors.
15.20 Notices.
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of delivery if delivered personally to the Party to whom notice is to be
given, or seventy-two (72) hours after mailing, if mailed to the Party to whom
notice is to be given by United States first class mail, registered or
certified, with return receipt requested, postage prepaid, and properly
addressed to the Party at the address set forth below, or at any other address
that any Party may designate by written notice to the other Party.
Continental Airlines
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Manager, Leisure Marketing Program
With a copy to:
Continental Airlines
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager of Contract Administration
SkyMall, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
With a copy to:
▇▇▇▇▇ and ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
15.21 Severability.
If any court or tribunal of competent jurisdiction shall refuse, in
that jurisdiction, to enforce any part or provision of this Agreement due to a
determination of unenforceability, illegality or invalidity, it is expressly
understood and agreed by the Parties that neither this Agreement, nor any part
thereof, shall be void, and only the particular restriction deemed to be
unenforceable, illegal or invalid shall then be reduced or otherwise modified by
such court or tribunal, but only to the minimum extent necessary to permit its
enforcement. If any provision cannot be so reduced or
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modified, that provision shall then be severed from this Agreement, and the
remaining provisions shall be interpreted in such a way as to give maximum
validity and maximum enforcement to this Agreement in that jurisdiction.
15.22 Survival
Notwithstanding any provisions in this Agreement to the contrary, the
Parties agree that all applicable agreements, obligations, covenants, terms,
conditions, representations and warranties made in this Agreement shall survive
the execution and delivery of this Agreement until all obligations of SkyMall to
Continental and of Continental to SkyMall under this Agreement shall have been
fully paid and performed including, without limitation, the SECTIONS on
CONFIDENTIAL INFORMATION, NO-- COMPETITION, INDEMNIFICATIONS, INSURANCE,
CONTINENTAL SALES COMMISSIONS AND FEES, and TERMINATION.
15.23 Termination.
A. Termination for Convenience. Subject to the requirements of
the SECTIONS on TERM OF AGREEMENT AND TERMINATION - TERMINATION RIGHTS AND
OBLIGATIONS, either Continental or SkyMall may terminate this Agreement for any
reason without cause by written notice to the other Party one-hundred eighty
(180) days prior to the date upon which Continental or SkyMall desires
termination to be effective.
(a) SkyMall Termination. Upon any termination by
SkyMall, SkyMall shall (i) be solely responsible for all SkyMall merchandise
inventory that, because of SkyMall's termination, will not be sold to
Continental's passengers through SkyMall(R) Services Catalogs based upon
historical levels of purchases over the preceding one hundred twenty (120) days
including any shipping, handling and restocking, (ii) fulfill all Continental
customer orders arising from SkyMall(R) Services Catalogs distributed prior to
termination, for a period of ninety (90) days following the effective date of
termination, and pay Continental the corresponding Sales Commissions due
Continental for Net Sales made during this time period, and (iii) be solely
responsible for all costs, damages, liabilities and claims arising from, in
connection with or allocable to this Agreement including, without limitation,
Catalog design, printing, and distribution, merchandise selection, purchase and
inventory, marketing, public relations, suffered by SkyMall (1) during the
Initial Term if SkyMall terminates the Agreement before the end of the Initial
Term, and (2) during any Continuing Term for the period of time in which SkyMall
is preparing a new edition of the Catalog (the "Catalog Lead Time") and for the
period of time such new edition of the SkyMall(R) Services Catalog is or would
have been distributed aboard the Continental Domestic Fleets (the "Catalog
Distribution Time"). For purposes of this Agreement, a Catalog Lead Time is
generally one hundred twenty (120) days, and a Catalog Distribution Time is
generally one hundred thirty (130) days. Upon receipt of any termination notice
by SkyMall, Continental shall use all reasonable commercial efforts to mitigate
its costs, damages and in connection with this Agreement for a termination
occurring during the Initial Term, any Continuing Term, or during any Catalog
Lead Time or any Catalog Distribution Time. In any termination, Continental will
be solely responsible for disposing of all SkyMall(R) Services Catalogs in its
possession at the time of termination.
(b) Continental Termination. Upon any termination by
Continental, Continental shall (i) be solely responsible for all SkyMall
merchandise inventory that, because of Continental's termination, will not be
sold to Continental's passengers through SkyMall(R) Services
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Catalogs based upon historical levels of purchases over the preceding one
hundred twenty (120) days including any shipping, handling and restocking
subject to SkyMall using all reasonable commercial efforts to return such
merchandise inventory to the merchandise Suppliers or selling such inventory,
all within one hundred twenty (120) days from SkyMall's receipt of the notice of
termination, and (ii) be solely responsible for all costs, damages, liabilities
and claims arising from, in connection with or allocable to this Agreement
including, without limitation, Catalog design, printing, and distribution,
merchandise selection, purchase and inventory, marketing, public relations,
suffered by SkyMall (1) during the Initial Term if Continental terminates the
Agreement before the end of the Initial Term, and (2) during any Continuing Term
for the period of time in which SkyMall is preparing a new edition of the
Catalog (the "Catalog Lead Time") and for the period of time such new edition of
the SkyMall(R) Services Catalog is or would have been distributed aboard the
Continental Domestic Fleets (the "Catalog Distribution Time"). For purposes of
this Agreement, a Catalog Lead Time is generally one hundred twenty (120) days,
and a Catalog Distribution Time is generally one hundred thirty (130) days. Upon
receipt of any termination notice by Continental, SkyMall shall use all
reasonable commercial efforts to mitigate its costs, damages and in connection
with this Agreement for a termination occurring during the Initial Term, any
Continuing Term, or during any Catalog Lead Time or any Catalog Distribution
Time. In any termination, Continental will be solely responsible for disposing
of all SkyMall(R) Services Catalogs in its possession at the time of
termination.
B. Termination For Cause. Subject to the SECTIONS on TERM OF
AGREEMENT, BREACH OR DEFAULT, BREACH AND DEFAULT REMEDIES, SURVIVAL, and
TERMINATION, Continental or SkyMall may cancel this Agreement for cause.
C. Termination Rights and Obligations. Subject to the
applicable Sections of this Agreement, any termination of this Agreement, with
or without cause, shall not affect any rights or obligations of the Parties
which are of a continuing nature or which shall have accrued prior to the
effective date of such termination including, without limitation, the SECTIONS
on TERMINATION, CONFIDENTIAL INFORMATION, NO-COMPETITION, INDEMNIFICATIONS,
INSURANCE, CONTINENTAL SALES COMMISSIONS AND FEES, BREACH OR DEFAULT, BREACH AND
DEFAULT REMEDIES and SURVIVAL.
15.24 Time.
Time is of the essence of this Agreement and each of its provisions.
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IN WITNESS WHEREOF, the duly authorized representatives of the Parties
with full power and authority to legally bind their respective Parties have duly
signed and executed this Airline Customer Services Agreement as of the date
first written above.
CONTINENTAL AIRLINES
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Marketing
SKYMALL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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EXHIBIT A
MINIMUM CATALOG PRODUCTION FORMULA
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The Minimum Catalog Production Formula is as follows:
Minimum Catalog Production Formula
A. Definitions:
(a) Projected Passenger Enplanements is defined as the
latest official Continental projections of the
applicable passenger enplanements for the following
six (6) months.
(b) Catalog Period is defined as the time period during
which Continental will distribute and board the
corresponding edition of the SkyMall(R) Services
Catalog. Catalog Periods are generally four (4)
months, and Catalog Lead Times are generally four (4)
months.
(c) Catalog Production Percent is defined as the percent
needed to produce the agreed upon minimum number of
Catalogs.
B. Calculation Formula:
Minimum Catalog Production Quantities to be printed for a
Catalog Period =
Monthly Projected Passenger Enplanements X Catalog Period X
Catalog Production Percent
C. Example:
3,300,000 Monthly Passengers X 4 Months X 5% = 660,000
Catalogs.
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EXHIBIT B
CONTINENTAL PAGES REIMBURSEMENT FORMULA
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The Continental Pages Reimbursement Formula is as follows:
Continental Pages Reimbursement Formula
A. Definitions:
(a) Continental Pages are defined as those pages offered
by SkyMall to Continental in the SkyMall(R) Services
Catalog which advertise Continental's Trademarked
Merchandise and Continental's Advertising that
Continental chooses to place on those pages.
(b) CPPPC is defined as the actual cost per page per
catalog and is to be determined after all invoices
are received.
B. Calculation Formula:
Continental's Reimbursement to SkyMall =
(a) Actual number of Continental Pages printed
X (b) Actual CPPPC
X (c) Catalogs printed
C. Example:
4 Continental Pages X .0032 X $800,000 = $10,240 of
Reimbursement due SkyMall.
D. Payment: All such reimbursement costs shall be paid to SkyMall
within thirty (30) days of SkyMall's presentation of the
invoice for such costs to Continental, including appropriate
supporting documentation.
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EXHIBIT C
NET SALES FORMULA
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The Net Sales Formula is as follows:
Net Sales Formula
A. Definitions:
(a) Gross SkyMall(R) Catalog Merchandise Sales is defined
as all gross merchandise sales from the SkyMall(R)
Services Catalog for Continental.
(b) SkyMall(R) Concierge Service Fees is defined as the
charge SkyMall collects from Continental customers
for each concierge service request and is exclusive
of the price of goods or services acquired to fulfill
each customer's request (the "SkyMall(R) Concierge
Service Fees").
(c) Returned Merchandise Revenue is defined as the sale
amounts on all returned merchandise or refunds from
Continental customers
(d) Canceled SkyMall(R) Concierge Service Fees is defined
as any SkyMall(R) Concierge Service Fees charged by
SkyMall for services rendered and thereafter canceled
by Continental customers, and the cost to cancel or
return the applicable service or product.
(e) Sales, Excises Taxes and Duties is defined as all
applicable sales and excise taxes and duties on
SkyMall Catalog merchandise and services paid by
SkyMall for Continental customers.
(f) Shipping and Handling Charge is defined as all
shipping, handling and insurance costs for all
SkyMall(R) Catalog merchandise and services sold to
Continental customers.
(g) Giftwrapping and monogramming Charges is defined as
all extra and special services requested and paid by
Continental customers.
(h) Bad Debts is defined as all bad debts incurred by
▇▇▇▇▇▇▇ in administering the SkyMall(R) Programs for
Continental (i.e., accounts receivable that are
deemed uncollectible).
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B. Calculation Formula:
Net Sales =
(a) Gross SkyMall(R) Catalog Merchandise Sales
+ (b) SkyMall(R) Concierge Service Fees
+ (e) Sales, Excises Taxes and Duties
+ (f) Shipping and Handling Charges
+ (g) Giftwrapping and Monogramming Charges
(Less):
- (c) Returned Merchandise Revenue
- (d) Canceled SkyMall(R) Concierge Service Fees
- (e) Sales, Excises Taxes and Duties
- (f) Shipping and Handling Charges
- (g) Giftwrapping and Monogramming Charges
- (h) Bad Debts
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
Canceled 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
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EXHIBIT D
CONTINENTAL PAGES AGREEMENT
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The Continental Pages Agreement is as follows: NONE
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EXHIBIT E
FREQUENT FLYER MILEAGE CREDIT AGREEMENT
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The Frequent Flyer Mileage Credit Agreement is as follows: NONE
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EXHIBIT F
COUNTER-TO-COUNTER DELIVERY SERVICES AGREEMENT
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The Counter-to-Counter Delivery Services Agreement is as follows: NONE
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EXHIBIT G
ON-BOARD SALES AND DELIVERIES AGREEMENT
PART OF THE AIRLINE CUSTOMER SERVICES AGREEMENT BETWEEN
CONTINENTAL AND SKYMALL
The On-Board Sales and Deliveries Agreement is as follows: NONE
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