SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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[X] Preliminary proxy statement [ ] Confidential, for use of the
[ ] Definitive proxy statement Commission only (as permitted
[ ] Definitive additional materials by Rule 14a-6(e)(2))
[ ] Soliciting material 14a-12
SKYMALL, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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SKYMALL, INC.
1520 East Pima Street
Phoenix, Arizona 85034
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NOTICE AND PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD JUNE 9, 2000
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To the Shareholders of SkyMall, Inc.:
The Annual Meeting of Shareholders of SkyMall, Inc., a Nevada corporation
(the "Company"), will be held at the Company's Corporate Offices located at 1520
East Pima Street, Phoenix Arizona, 85034 on Friday, June 9, 2000, at 10:00 a.m.
local time for the following purposes:
1. To approve an amendment to the Company's Articles of Incorporation to
provide for the classification of the Board of Directors into three
classes of directors with staggered three-year terms of office;
2. To elect five directors to the Board of Directors to serve for terms
of one to three years, respectively, or until their successors are
elected and qualified if Proposal No. 1 is approved, or to elect the
same persons as directors for a term of one year if Proposal No. 1 is
not approved;
3. To approve amendments the Company's Non-Employee Director Stock Option
Plan (the "Director Plan") to (i) increase the aggregate number of
shares available for issuance thereunder from 100,000 to 375,000 and
(ii) increase the automatic grants under the Director Plan to 25,000
options upon election to the Board and 7,500 options annually subject
to the terms and conditions of the Directors Plan;
4. To ratify the appointment of Arthur Andersen LLP as the independent
public accountants of the Company for the fiscal year ending December
31, 2000; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Company is presently aware of no other
business to come before the Annual Meeting.
Shareholders of record at the close of business on April 26, 2000 (the
"Record Date"), are entitled to vote at the Annual Meeting or any adjournment or
postponement thereof. Shares may be voted at the Annual Meeting only if the
holder is present or represented by proxy. A list of shareholders entitled to
vote at the Annual Meeting will be available for inspection at the Company's
corporate headquarters for any purpose germane to the Annual Meeting during
ordinary business hours for ten (10) days prior to the Annual Meeting.
A copy of the Company's 1999 Annual Report to Shareholders, which includes
audited financial statements, is enclosed. Management and the Board of Directors
cordially invite you to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert M. Worsley
Chairman, Chief Executive Officer
and President
Phoenix, Arizona
May 8, 2000
SHAREHOLDERS ARE ENCOURAGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY. A
PRE-ADDRESSED ENVELOPE IS PROVIDED FOR THEIR CONVENIENCE. SHAREHOLDERS ARE
ENCOURAGED TO VOTE REGARDLESS OF WHETHER OR NOT THEY ATTEND THE ANNUAL MEETING
OF SHAREHOLDERS.
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SKYMALL, INC.
1520 East Pima Street
Phoenix, Arizona 85034
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PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
JUNE 9, 2000
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This Proxy Statement is furnished by the Board of Directors of SkyMall,
Inc., a Nevada corporation (the "Company" or "SkyMall"), in connection with the
solicitation of proxies to be used for the purpose of voting at the 2000 Annual
Meeting of Shareholders (the "Annual Meeting"). The Annual Meeting will be held
on Friday, June 9, 2000 at 10:00 a.m. local time at the Company's corporate
offices located at 1520 East Pima Street, Phoenix, Arizona 85034.
The enclosed proxy is solicited by the Board of Directors of the
Company. The proxy materials relating to the Annual Meeting were mailed on or
about May 8, 2000 to shareholders of record at the close of business on April
26, 2000 (the "Record Date"). Only shareholders of record at the close of
business on the Record Date will be entitled to vote at the Annual Meeting, or
any adjournment or postponement thereof, either in person or by valid proxy. As
of the Record Date, there were outstanding 13,120,134 shares of common stock,
$.001 par value per share (the "Common Stock") of the Company.
Shareholders are entitled to one vote for each share of Common Stock
held of record on each matter of business to be considered at the Annual
Meeting. Ballots cast at the Annual Meeting will be counted by the Inspector of
Elections and determinations of whether a quorum exists and whether the
proposals are approved will be announced at the Annual Meeting.
The Inspector of Elections will treat abstentions and broker non-votes
received as shares that are present and entitled to vote for purposes of
determining a quorum, but as unvoted for purposes of determining the approval of
any matter. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others for forwarding
solicitation materials to the beneficial owners of the outstanding Common Stock.
In addition to soliciting proxies by mail, proxies may be solicited by personal
interview or telephone. A person giving the enclosed proxy has the power to
revoke it at anytime before it is exercised by: (i) attending the Annual Meeting
and voting in person; (ii) duly executing and delivering a proxy bearing a later
date; or (iii) sending a written notice of revocation to the Secretary of the
Company at its corporate offices. The corporate offices of the Company are
located at 1520 East Pima Street, Phoenix, Arizona 85034 and its telephone
number at that address is (602) 254-9777.
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The information included herein should be reviewed in conjunction with
the financial statements, notes to financial statements, independent
accountants' report and other information included in the Company's 2000 Annual
Report to Shareholders that was mailed with this Proxy Statement to all
shareholders of record on the Record Date.
APPROVAL OF A CLASSIFIED BOARD OF DIRECTORS
(PROPOSAL NO. 1)
The Company's Board of Directors has unanimously approved and
recommended that the shareholders of the Company approve an amendment to its
Articles of Incorporation, as amended (the "Articles"), to provide for the
classification of the Board of Directors into three classes of directors with
staggered terms of office. The text of the proposed amendment to the Articles to
be added as a new paragraph is set forth in full in Appendix A to this Proxy
Statement.
The Company's Bylaws now provide that all directors are to be elected
annually to serve until their successors have been elected and qualified. The
Nevada General Corporation Law (the "Nevada GCL") permits provisions in the
articles of incorporation or bylaws approved by shareholders that provide for a
classified board of directors. The proposed classified board amendment to the
Articles would provide that directors will be classified into three classes, as
nearly equal in number as possible. One class of directors, consisting of Lyle
R. Knight, would hold office initially for a term expiring at the 2001 Annual
Meeting; a second class of directors, consisting of Thomas J. Litle and Randy
Petersen, would hold office initially for a term expiring at the 2002 Annual
Meeting; and a third class of directors, consisting of Robert M. Worsley and
David J. Callard, would hold office initially for a term expiring at the 2003
Annual Meeting. At each Annual Meeting following this initial classification and
election, the successors to the class of directors whose terms expire at that
meeting would be elected for a term of office to expire at the third succeeding
Annual Meeting after their election and until their successors have been duly
elected and qualified. See "Election of Directors" as to the composition of each
class of directors if this proposal is adopted.
The proposed classified board amendment will significantly extend the
time required to effect a change in control of the Board of Directors and may
discourage hostile takeover bids for the Company. Currently, a change in control
of the Board of Directors can be made by shareholders holding a majority of the
votes cast at a single Annual Meeting. If the Company implements a classified
board of directors, it will take at least two Annual Meetings for even a
majority of shareholders to effect a change in control of the Board of
Directors, because only a minority of the directors will be elected at each
meeting.
Under the Nevada GCL, directors chosen to fill vacancies on a
classified board shall hold office until the next election of the class for
which such directors shall have been chosen, and until their successors are
elected and qualified. The Nevada GCL also provides that, unless the articles of
incorporation provide otherwise, directors serving on a classified board of
directors may be removed with or without cause. The Company's Articles do not
provide otherwise. Presently, all directors of the Company are elected annually
and all of the directors may be removed, with or without cause, by shareholders
representing at least 51% of the outstanding shares of the Common Stock.
Cumulative voting is not authorized by the Articles.
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The classified board proposal is designed to assure continuity and
stability in the Board of Directors' leadership and policies. While management
has not experienced any problems with such continuity in the past, it wishes to
ensure that this experience will continue. The Board of Directors also believes
that the classified board proposal will assist the Board of Directors in
protecting the interests of the Company's shareholders in the event of an
unsolicited offer for the Company.
Because of the additional time required to change control of the Board
of Directors, the classified board proposal will tend to perpetuate present
management. Without the ability to obtain immediate control of the Board of
Directors, a takeover bidder will not be able to take action to remove other
impediments to its acquisition of the Company. Because the classified board
proposal will increase the amount of time required for a takeover bidder to
obtain control of the Company without the cooperation of the Board of Directors,
even if the takeover bidder were to acquire a majority of the Company's
outstanding stock, it will tend to discourage certain tender offers, perhaps
including some tender offers that shareholders may feel would be in their best
interests. The classified board proposal will also make it more difficult for
the shareholders to change the composition of the Board of Directors even if the
shareholders believe such a change would be desirable.
REQUIRED VOTE
Approval of the Amendment to the Articles of Incorporation requires the
affirmative vote of a majority of shares of Common Stock eligible to vote at the
Annual Meeting in person or by proxy. Abstentions are considered present for
this proposal, so they will have the same effect as votes against the Amendment.
Broker non-votes are not considered present for this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE ARICLES OF INCORPORATION TO PROVIDE FOR CLASSIFICATION OF
THE BOARD OF DIRECTORS.
ELECTION OF DIRECTORS
(PROPOSAL NO. 2)
The Board of Directors currently consists of five members. In the event
Proposal No. 1 is adopted at the Annual Meeting, the Directors of the Company
will be divided into three classes and, unless otherwise noted thereon, the
shares represented by the enclosed proxy will be voted for the election as
directors of the five nominees named below to serve for the terms indicated in
the table below, or until their successors have been duly elected and qualified.
If Proposal No. 1 is not approved by the shareholders at the Annual Meeting,
unless otherwise noted thereon, the shares represented by the enclosed proxy
will be voted for the election as directors of the five nominees named below to
serve until the 2001 Annual Meeting of shareholders or until their successors
have been duly elected and qualified. The five nominees receiving the highest
number of votes cast at the Annual Meeting will be elected. If any of the
nominees becomes unavailable for any reason or if a vacancy should occur before
the election (which events are not anticipated), the shares represented by the
enclosed proxy may be voted for such other person or persons as may be
determined by the holders of such proxy.
Information regarding the nominees is provided below and under
"SECURITY OWNERSHIP," "EXECUTIVE COMPENSATION" and "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."
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DIRECTOR NOMINEES
Director
Nominee Age Position Since
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CLASS I - TERM EXPIRES 2001
Lyle R. Knight (1)(2) 54 Director December 1996
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CLASS II - TERM EXPIRES 2002
Thomas J. Litle IV (1) 59 Director December 1996
Randy Petersen (2) 44 Director December 1996
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CLASS III - TERM EXPIRES 2003
Robert M. Worsley 44 Chairman of the Board, October 1996
President and Chief
Executive Officer
David J. Callard 62 Director January 2000
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(1) Member of Audit Committee
(2) Member of Compensation Committee
ROBERT M. WORSLEY has been the Chairman of the Board, Chief Executive
Officer and President of the Company since it was founded in 1989. From 1985 to
1989, Mr. Worsley was a principal of ExecuShare, Inc., an executive services
firm that provided time-shared financial executives for small companies. From
1980 to 1985, Mr. Worsley was an accountant with Price Waterhouse, a public
accounting firm, where he most recently held the position of Audit Manager. Mr.
Worsley received a bachelors degree in accounting from Brigham Young University
in 1980. Mr. Worsley is a Certified Public Accountant.
DAVID J. CALLARD has been a director of the Company since January 2000.
Mr. Callard has more than 40 years of investment banking and management
experience. Mr. Callard joined Wand Partners Inc. ("WPI") in 1990 and has served
as President since 1991. WPI and its affiliates are principally engaged in the
business of direct private equity investments. Prior to joining WPI, from 1972
to 1989, Mr. Callard was a General Partner, Managing Director and Director of
the investment banking firm of Alex. Brown & Sons Incorporated where, at various
times, he headed its investment banking department, created a significant
mergers and acquisitions business, headed its Strategic Planning Committee, and
created a real estate investment and advisory business. From 1959 to 1972, Mr.
Callard was employed by J.P. Morgan/Morgan Guaranty Trust, with interruptions
for military service, graduate school and service as Deputy Executive Director
of the President's Commission on an All Volunteer Armed Force. At Morgan
Guaranty, Mr. Callard worked as an officer in its Trust & Investment Division
where he managed portfolios of public securities and was involved in a range of
private financings. Mr. Callard also serves as a director of Panarama Trust, an
investment trust sponsoring registered mutual funds, Information Management
Associates, Inc. (NASDAQ - IMAA), a leader in Customer Relationship Management
products and services, and iGo Corporation (NASDAQ - IGOC), a provider of
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business-to-business electronic commerce solutions for the mobile and wireless
industry. Mr. Callard graduated from Princeton University in 1959 and received a
Law degree from New York University School of Law in 1969.
LYLE R. KNIGHT has been a director of the Company since December 1996.
Mr. Knight has more than twenty-eight years of banking experience. Mr. Knight
currently serves as President and a Director of First Interstate BancSystem in
Billings, Montana. From 1995 until 1996, Mr. Knight was a Management Consultant
for Norwest Banks, Arizona and from 1996 until 1997 he held the position of
Senior Vice President of Norwest Banks, Arizona. From 1997 until 1998, Mr.
Knight was the President of Pacific Century Bank, Arizona. From 1989 until 1992,
Mr. Knight was President and Chief Executive Officer of Security Pacific Bank,
Nevada. From 1992 until 1995, Mr. Knight served as President of Caliber Bank, a
wholly owned subsidiary of Independent Banks of Arizona, which subsequently
merged with Norwest Corporation. Mr. Knight is a principal of C&K Investments, a
property development and management company. Mr. Knight graduated from the
University of Utah in 1968 with a Bachelor of Science degree in Banking and
Finance and in 1982 graduated with honors from Pacific Coast Banking School. Mr.
Knight has served as Chairman of the Phoenix Chamber of Commerce, as Chairman of
the Arizona Chamber of Commerce, a Director of the Barrows Neurological
Institute, a Director of the Pacific Coast Banking School, and served on the
Arizona Community Foundation.
THOMAS J. LITLE has been a director of the Company since December 1996.
In 1985, Mr. Litle founded Litle & Company, Inc., which provided information
sharing, payment processing and electronic network services to the direct
marketing industry. Mr. Litle was Chairman of Litle & Company's Board of
Directors and its Chief Executive Officer until 1995, when the business was sold
to First USA. In connection with the sale to First USA, Mr. Litle retained the
networking and non-payment processing parts of the business and formed
OrderTrust LLC (formerly LitleNet LLC), of which he is the Chairman, which also
provides direct commerce connection and information sharing services to the
direct marketing industry. Mr. Litle received an M.B.A. from Harvard Graduate
School of Business Administration in 1964 after graduating from California
Institute of Technology with a Bachelor of Science degree in 1962. Mr. Litle
also serves on the Board of Directors of J. Jill Group, Inc. (NASDAQ - JILL).
RANDY PETERSEN (44) has been a director of the Company since December
1996. In 1986, Mr. Petersen founded and is currently the President and Chairman
of the Board of Frequent Flyer Services. Frequent Flyer Services publishes a
monthly frequent flyer magazine and an annual frequent flyer guidebook, produces
frequent traveler-oriented merchandise and provides various travel-related
services. Mr. Petersen is a member of the Association of Corporate Travel
Executives and serves on the Advisory Board of the International Airline
Passenger Association.
The Company's Bylaws provide that any shareholder entitled to vote in
an election of directors may nominate persons for election as directors only if
written notice of such shareholder's intent to make such nomination is given,
either by personal delivery or by United States mail, postage prepaid to the
Secretary, SkyMall, Inc., 1520 East Pima Street, Phoenix, Arizona 85034. Such
notice must be given not less than thirty (30) days and not more than sixty (60)
days prior to the Annual Meeting; provided that if less than forty-five (45)
days notice or prior public disclosure of the date of the Annual Meeting is
given or made to shareholders, such nomination must be mailed or delivered to
the Secretary not later than the close of business on the 10th day following the
date on which the notice of the meeting was mailed or public disclosure was
made, whichever occurs first.
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Each such notice must set forth: (a) with respect to each nominee, (i)
the name, age, business address and, if known, residence address of the nominee,
(ii) the principal occupation or employment of the nominee, (iii) the number of
shares of stock of the Company which are beneficially owned by the nominee, and
(iv) any other information concerning the nominee that must be disclosed with
respect to nominees in proxy solicitations pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such persons' written
consent to be named as a nominee and to serve as a director if elected); and (b)
as to the shareholder giving the notice, (i) the name and address, as they
appear on the Company's books, of such shareholder and (ii) the class and number
of shares of the Company that are beneficially owned by such shareholder; and
(c) as to the beneficial owner, if any, on whose behalf the nomination is made,
(i) the name and address of such person and (ii) the class and number of shares
of the Company that are beneficially owned by such person. The chairman of the
Annual Meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedures.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE. During 1999, Lyle R. Knight and Thomas J. Litle served
on the Company's Audit Committee. The Audit Committee is responsible for
reviewing and making recommendations regarding the Company's employment of
independent auditors, the annual audit of the Company's financial statements and
the Company's internal accounting controls, practices and policies. The Audit
Committee met four times in 1999.
COMPENSATION COMMITTEE. During 1999, Lyle R. Knight and Randy Petersen
served on the Company's Compensation Committee. The Compensation Committee is
responsible for making recommendations to the Board of Directors regarding
compensation arrangements for executive officers of the Company, including
annual bonus compensation, and consults with management of the Company regarding
compensation policies and practices. The Compensation Committee also makes
recommendations concerning the adoption of any compensation plans in which
management is eligible to participate, including the granting of stock options
or other benefits under such plans. The Compensation Committee did not meet
during 1999 because all matters relating to compensation issues during 1999 were
considered and acted upon by the entire Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Compensation Committee of the Board of Directors during 1999 consisted of
Messrs. Knight and Petersen, neither of whom was an employee of the Company
during 1999.
OTHER COMMITTEES. The Company does not maintain a standing nominating
committee.
BOARD MEETINGS. During 1999, the Board of Directors met twelve times.
Each director attended in excess of 75% of the meetings held in 1999 by the
Board and the committees of the Board on which such director served.
DIRECTORS' FEES AND EMPLOYMENT AGREEMENTS
Directors who are not employees of the Company receive a quarterly
retainer of $5,000, an option to purchase 25,000 shares of the Company's Common
Stock at its fair market value on the date of grant upon appointment to the
Board of Directors, and an annual option to purchase 7,500 shares of the
Company's Common Stock at its fair market value on the date of grant provided
they have attended a required minimum number of Board and committee meetings
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during the year. All directors are reimbursed for expenses incurred in
connection with attendance at meetings of the Board of Directors or committees
thereof. Directors who are also officers of the Company are not compensated for
their services as directors.
With the exception of Curtis D. Brown and Thomas C. Edwards, who have
employment agreements with the Company, each of the executive officers serve at
the pleasure of the Company's Board of Directors.
OTHER EXECUTIVE OFFICERS
Following are the executive officers of SkyMall, Inc. who are not also
directors:
CHRISTINE A. AGUILERA (35) joined SkyMall in February 1997 and served
as Vice President of Business Development, General Counsel and Secretary until
February 1999. In March 1999, Ms. Aguilera was appointed as Executive Vice
President of Business Development, General Counsel and Secretary of SkyMall and,
in connection with the Company's management restructuring, in December 1999, Ms.
Aguilera was also appointed as Acting General Manager and in February 2000, was
appointed as Acting Chief Financial Officer of SkyMall. Ms. Aguilera serves as
an officer and director of the Company's subsidiaries, skymall.com, inc., Durham
& Company, Disc Publishing, Inc. and SkyMall Ventures, Inc. From 1992 until
joining the Company, Ms. Aguilera was an attorney in private practice in
Phoenix, Arizona practicing in the areas of corporate and securities law,
including most recently at Squire, Sanders & Dempsey LLP. From 1986 until 1989,
Ms. Aguilera was a Certified Public Accountant with Coopers & Lybrand. Ms.
Aguilera received bachelors degrees in accounting and finance from New Mexico
State University in 1986 and received her law degree from the University of
Texas in 1992. Ms. Aguilera is a certified public accountant and a member of the
State Bar of Arizona.
MARK E. TRUXAL (39) joined SkyMall in 1998 and has served as Vice
President and Controller since April 1999 and as Principal Accounting Officer
since March 2000. Prior to joining the Company, from March 1996 until October
1998, Mr. Truxal was Chief Financial Officer of Steiner Company, Inc., a
manufacturing company located in Chicago, Illinois, and from 1991 until 1996, he
was Chief Financial Officer of General Leasing Company located in Scottsdale,
Arizona, and was President and Chief Financial Officer of General Leasing. Mr.
Truxal received his B.B.A. in accounting from Abilene Christian University in
1983.
SCOTT R. DASTRUP (44) joined SkyMall in May 1998 and has served as
Chief Information Officer until February 1999. In March 1999, Mr. Dastrup was
appointed as Executive Vice President of Operations and Chief Information
Officer of SkyMall and, in connection with the Company's management
restructuring, in December 1999, Mr. Dastrup was appointed as Senior Vice
President of Special Projects. From 1997 until joining the Company, Mr. Dastrup
was a principal of The SyntheSolutions Group in Tempe, Arizona, an information
technology consulting firm. From March 1996 through December 1996, Mr. Dastrup
was Vice President of Data Services for ProMark One, a telecommunications
service company located in Scottsdale, Arizona. From July 1993 through February
1996, Mr. Dastrup was Vice President of Operations for BankOne's credit card
processing services located in Phoenix, Arizona. Mr. Dastrup received his
bachelors degree from Brigham Young University in 1984 and received his M.B.A.
from the University of Utah in 1988.
MARK S. SCHNEIDER (48) joined SkyMall in September 1997 and served as
Vice President of Marketing until February 1999. In March 1999, Mr. Schneider
was appointed as Executive Vice President of Marketing and Merchandising and, in
connection with the Company's management restructuring, in December 1999, Mr.
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Schneider was appointed as Senior Vice President of Strategic Planning. From
1988 until joining the Company, Mr. Schneider was employed with the Airfone
division of GTE where he most recently held the position of Vice President of
Marketing and had principal responsibility for advertising, promotions, sales,
customer service, market planning, new business development and the
implementation of new products and services. Prior to joining GTE Airfone, Mr.
Schneider worked in various capacities in the airline industry for more than ten
years, including in various marketing and revenue management positions. Mr.
Schneider received his bachelors degree in economics from Colorado State
University and M.B.A. from the same university in 1977.
The following are the executive officers of SkyMall's subsidiaries,
skymall.com, inc., SkyMall Ventures, Inc., Disc Publishing, Inc. and Durham &
Company:
SKYMALL.COM, INC.
MARISHA K. GERAGHTY (40) joined the Company in September 1999 as
Senior Vice President of the Company's subsidiary, skymall.com, inc. In December
1999, in connection with the Company's management restructuring, Ms. Geraghty
was named President of skymall.com. Ms. Geraghty's 16 year retailing career
includes positions held in merchandising, marketing and advertising. From 1997
until August 1999, Ms. Geraghty was Divisional Vice President of Electronic
Commerce for Kmart Corporation and from 1994 until 1997 she was Electronic
Retail Manager of J.C. Penney Company, Inc. While at J.C. Penney, Ms. Geraghty
developed electronic shopping applications for Prodigy, CompuServe, American
Online, Bell Atlantic's Interactive TV Service, "Stargazer" and Magellan's "The
Merchant" CD-ROM. Under Ms. Geraghty's direction, J.C. Penney was the first
national department store to launch a fully transactional Web site. Ms. Geraghty
received her bachelors degree in Business Management from Bighamton University
in 1982.
CURTIS D. BROWN (36) joined the Company in February 1999 as Chief
Technology Officer of skymall.com. In December 1999, in connection with the
Company's management restructuring, Mr. Brown was named Senior Vice President of
Information Technology while continuing as Chief Technology Officer. From April
1994 until joining the Company, Mr. Brown was employed by N2K, Inc., the parent
company of MusicBoulevard.com, a leading music entertainment company on the
Internet, where he most recently served as Senior Director of Technology. Mr.
Brown received his bachelors degree in psychology from New York University in
1991.
SKYMALL VENTURES, INC.
THOMAS C. EDWARDS (42) joined the Company in January 1999 as Chief
Marketing Officer of skymall.com, inc. In December 1999, in connection with the
Company's management restructuring, Mr. Edwards resigned his position with
skymall.com, inc. and was elected as President of the Company's new subsidiary,
SkyMall Ventures, Inc. From 1989 until joining the Company, Mr. Edwards was
employed by Visa U.S.A., where he most recently served as Senior Vice President
of Emerging Technology and Business Development. Prior to joining Visa U.S.A.,
Mr. Edwards served as Vice President of Marketing and Product Development at
CitiCorp Credit Services, Inc. and in various marketing and management positions
with the American Express Company. Mr. Edwards received his bachelors degree in
general arts and sciences from Pennsylvania State University in 1979 and his
M.B.A. from the same university in 1980.
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DISC PUBLISHING, INC.
LORNE GRIERSON (48) has been President of Disc Publishing, Inc. since
1998. Disc Publishing, Inc. was acquired by SkyMall in September 1999. From 1996
to 1997, Mr. Grierson was President of Osborn Video, Inc. and from 1992 to 1996,
he was President of Centec, an interactive multimedia training firm. Mr.
Grierson received his bachelors degree in education in 1976 from the University
of British Columbia and a bachelors degree in psychology from Brigham Young
University in 1979.
DURHAM & COMPANY
KENT L. BARTON (41) has been President of Durham & Company since 1997.
Durham was acquired by SkyMall in October 1998. Mr. Barton joined Durham in
March 1997 and served in various capacities as Customer Service Manager, Vice
President of Customer Service and Vice President of Operations from 1987 through
1995. He served as Vice President and General Manager from 1995 through 1997.
Mr. Barton has been instrumental in the development of personnel and systems, as
well as the products and services which Durham provides. Since becoming
President of Durham, Mr. Barton has been responsible for all of the company's
operations and activities, including marketing, catalog production, sales and
customer service, and maintaining key client relationships. Mr. Barton received
his bachelors degree in Finance and Information Management from Brigham Young
University in 1986.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding annual and
long-term compensation for services rendered to the Company during the years
ended December 31, 1999, 1998 and 1997 by the Chief Executive Officer of the
Company and certain other executive officers of the Company (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Fiscal Compensation Options/SARs Compensation
Position Year Salary ($) Bonus ($) ($) (1)(#) (2)($)
- ------------------------ ------ ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Worsley 1999 190,000 138,000 4,497 (3) -0- 3,096
Chairman of the 1998 197,308 -0- 3,598 (3) -0- 2,553
Board and President 1997 190,000 28,500 3,598 (3) -0- 274
(Chief Executive Officer)
Christine A. Aguilera 1999 152,308 120,250 -0- -0- 4,800
Executive Vice President, 1998 93,462 -0- -0- 30,000 3,040
General Manager, 1997 69,854 (4) 10,000 -0- 70,000 174
Acting Chief Financial
Officer, General Counsel
and Secretary
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Fiscal Compensation Options/SARs Compensation
Position Year Salary ($) Bonus ($) ($) (1)(#) (2)($)
- ------------------------ ------ ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Edwards 1999 439,600(5) 250,000 -0- 85,000 4,800
President of SkyMall 1998 N/A N/A N/A N/A N/A
Ventures, Inc. 1997 N/A N/A N/A N/A N/A
Curtis D. Brown 1999 237,498(6) 150,000 -0- 75,000 -0-
Senior Vice President of 1998 N/A N/A N/A N/A N/A
Information Technology 1997 N/A N/A N/A N/A N/A
(Chief Technology Officer)
of skymall.com, inc.
Mark S. Schneider 1999 168,846 35,700 -0- -0- 4,800
Senior Vice President 1998 140,192 -0- -0- 30,000 4,356
of Strategic Planning 1997 38,942 (7) 5,000 -0- 70,000 -0-
- ------------------
</TABLE>
(1) Consists entirely of stock options.
(2) Employer matching contributions pursuant to the Company's 401(k) plan.
(3) Includes a pro rata portion of premiums paid on a life insurance policy on
the life of Mr. Worsley under which a portion of the benefits are payable
to beneficiaries other than the Company.
(4) Ms. Aguilera joined the Company in February 1997. Had Ms. Aguilera been
employed by the Company for the entire year, her annual base salary would
have been $90,000.
(5) Mr. Edwards joined the Company in January 1999. Had Mr. Edwards been
employed by the Company for the entire year, his annual base salary would
have been $250,000. In addition, pursuant to the terms of Mr. Edwards'
Employment Agreement, the Company paid Mr. Edwards $200,000 which was to be
paid by Riptide.
(6) Mr. Brown joined the Company in February 1999. Had Mr. Brown been employed
by the Company for the entire year, his annual base salary would have been
$250,000.
(7) Mr. Schneider joined the Company in September 1997. Had Mr. Schneider been
employed by the Company for the entire year, his annual base salary would
have been $135,000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth for each Named Executive Officer certain
information concerning individual grants of stock options during the 1999 fiscal
year.
10
<PAGE>
<TABLE>
<CAPTION>
Individual Grants Potential Realized
--------------------------------------------------- Value at Assumed
Number of % of Total Rates of Annual Stock
Securities Options/SARs Price Appreciation
Underlying Granted to Exercise For Option Term (2)
Name and Principal Options/SARs Employees in Price Expiration -----------------------
Position Granted (1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- -------------------------- ------------ ------------ -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Worsley 0 N/A N/A N/A N/A N/A
Chairman of the
Board and President
(Chief Executive Officer)
Christine A. Aguilera 0 N/A N/A N/A N/A N/A
Executive Vice President,
General Manager,
Acting Chief Financial
Officer, General Counsel
and Secretary
Thomas C. Edwards 75,000 (3) 11.8% $16.06 01/05/2009 $ 757,504 $1,919,663
President of SkyMall 10,000 (3) 1.6% $ 9.50 06/04/2009 $ 59,745 $ 151,406
Ventures, Inc.
Curtis D. Brown 75,000 (4) 11.8% $24.50 01/14/2009 $1,155,594 $2,928,502
Senior Vice President of
Information Technology
(Chief Technology Officer)
of skymall.com, inc.
Mark S. Schneider 0 N/A N/A N/A N/A N/A
Senior Vice President
of Strategic Planning
</TABLE>
- ------------------
(1) Consists entirely of stock options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% or 10% compounded
annually from the date the respective options were granted to their
expiration date and are not presented to forecast possible future
appreciation, if any, in the price of the Common Stock. The potential
realizable value of the foregoing options is calculated by assuming that
the market price of the underlying security appreciates at the indicated
rate for the entire term of the option and that the option is exercised at
the exercise price and sold on the last day of its term at the appreciated
price.
(3) Mr. Edwards received two option grants in 1999. The first grant was for
75,000 which option may be exercised for 33% of the underlying stock
beginning on January 5, 1999, another 33% beginning on January 5, 2000, and
the final 34% beginning on January 5, 2001. The second grant was for 10,000
which option may be exercised for 33% of the underlying stock beginning on
June 4, 1999, another 33% beginning on June 4, 2000; and the final 34%
beginning on June 4, 2001.
(4) The option may be exercised for 33% of the underlying stock beginning on
January 14, 1999, for another 33% beginning on January 14, 2000, and for
the final 34% beginning on January 14, 2001.
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth the number of shares covered by both
exercisable and unexercisable stock options as of fiscal year-end 1999, together
with the values for "in-the-money" options which represent the positive spread
between the exercise price of any such outstanding stock options and the
year-end price of the Company's Common Stock.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Fiscal Year End at Fiscal Year End
------------------------------- ------------------------------
Name Exercisable Unexercisable (1) Exercisable Unexercisable(2)
- ---------------------- ----------- ----------------- ----------- ----------------
<S> <C> <C> <C> <C>
Robert M. Worsley 0 0 $ 0 $ 0
Chairman of the
Board and President
(Chief Executive Officer)
Christine A. Aguilera 36,667 18,333 $ 0 $ 0
Executive Vice President, 20,000 25,000 $66,200 $87,475
General Manager,
Acting Chief Financial
Officer, General Counsel
and Secretary
Thomas C. Edwards 28,333 56,667 $ 0 $ 0
President of SkyMall
Ventures, Inc.
Curtis D. Brown 25,000 50,000 $ 0 $ 0
Senior Vice President of
Information Technology
(Chief Technology Officer)
of skymall.com, inc.
Mark S. Schneider 36,667 18,333 $ 0 $ 0
Senior Vice President 20,000 25,000 $66,200 $87,475
of Strategic Planning
- -------------
</TABLE>
(1) Consists entirely of stock options.
(2) Value is based on the difference between the exercise price of such options
and the closing price of the Company's Common Stock on the Nasdaq National
Market on December 31, 1999 of $7.375 per share.
EMPLOYMENT AGREEMENTS
THOMAS C. EDWARDS. As of January 5, 1999, the Company's Board of
Directors approved an employment agreement with Thomas C. Edwards for services
as Chief Marketing Officer of the Company's subsidiary, skymall.com, inc. This
agreement requires Mr. Edwards to devote his full time to the Company during
normal business hours in exchange for a base annual salary of $250,000, subject
to annual increases at the discretion of the Board of Directors. In addition,
Mr. Edwards received a signing bonus of $100,000, which was paid in accordance
with the employment agreement during 1999. Mr. Edwards is also entitled to
receive bonuses in accordance with the Company's bonus plans in effect from time
to time, with a guaranteed minimum bonus of $150,000 annually. The agreement has
an initial three-year term and is renewable at the discretion of Mr. Edwards and
the Company. Neither Mr. Edwards nor the Company has any obligation to renew Mr.
12
<PAGE>
Edward's employment. Pursuant to the agreement, Mr. Edwards may not compete with
the Company anywhere in the United States on the termination of his employment
for a period of two years.
In addition, during the term of Mr. Edward's employment agreement,
SkyMall is obligated to pay Mr. Edwards $200,000.00 each year for three years,
on behalf of Riptide, a consulting service provider, whose payments were
guaranteed by SkyMall. During 1999, SkyMall paid Mr. Edwards the $200,000.00
obligation on behalf of Riptide.
CURTIS D. BROWN. As of February 16, 1999, the Company's Board of
Directors approved an employment agreement with Curtis D. Brown for services as
Chief Technology Officer of the Company's subsidiary, skymall.com, inc. This
agreement requires Mr. Brown to devote his full time to the Company during
normal business hours in exchange for a base annual salary of $250,000, subject
to annual increases at the discretion of the Board of Directors. In addition,
Mr. Brown received a signing bonus totaling $100,000, which was paid in
accordance with the employment agreement during 1999. Mr. Brown is also entitled
to receive bonuses at the discretion of the Board of Directors in accordance
with the Company's bonus plans in effect from time to time. The agreement has an
initial three-year term and is renewable at the discretion of Mr. Brown and the
Company. Neither Mr. Brown nor the Company has any obligation to renew Mr.
Brown's employment. Pursuant to the agreement, Mr. Brown may not compete with
the Company anywhere in the United States on the termination of his employment
for a period of two years.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company has developed and implemented compensation policies and
programs which seek to improve the Company's overall financial performance and
thus improve shareholder value by aligning the interests of senior management
with those of its shareholders. The Company's Compensation Committee, which is
comprised entirely of independent, outside members of the Company's Board of
Directors, has furnished the following report on executive compensation.
OVERVIEW AND PHILOSOPHY
The Company's philosophy is to structure overall compensation for
executives at levels that enable the Company to attract, motivate and retain
highly qualified executives. The Company's compensation program for executive
officers is primarily comprised of base salary, bonus and long-term incentives
in the form of stock option grants.
In determining compensation for its officers, the Company emphasizes
incentive-based compensation, particularly cash bonuses and stock option grants.
The Company awards bonuses as a reward for performance based principally on the
Company's overall financial results and/or achievement of specified business
objectives. Stock option grants are intended to result in no reward if the stock
price does not appreciate, but may provide substantial rewards to executives as
shareholders benefit from stock price appreciation. The Company periodically
reviews the compensation levels of other companies in its industry to ensure
that the Company's executive compensation is appropriate in light of industry
practices.
13
<PAGE>
BASE SALARY AND BONUSES
Each Company executive receives a base salary, which when aggregated
with their other incentive-based compensation, is intended to be competitive
with similarly situated executives in the Company's industry. The Company
typically targets base pay at the minimum level necessary to attract highly
qualified executives, which in some cases may be less than market rates. In
determining salaries, the Company takes into account individual experience and
performance and specific needs particular to the Company.
In addition to base salary, the Company typically pays its executives
an annual bonus. The Company believes that bonuses properly motivate the
executive officers to perform to the greatest extent of their abilities to
generate the highest attainable profits for the Company. For 1998, the Company
declined to pay any bonuses to senior management because management failed to
achieve targets established by the Board for 1998. However, to retain certain
key management, the Board paid certain modest incentive bonuses to key
management in early 1999. In early 2000, the Board paid bonuses for 1999
performance to its key executives. These bonuses varied based on the individual
executive's performance and contribution to the Company's objectives.
OPTIONS
Because the long-term financial success of the Company depends to a
significant degree on its management team, the Company believes that it is
crucial for its management team to have an equity stake in the Company. Thus,
the Company makes option grants to key executives from time to time. In making
option awards, the Company reviews the level of awards granted to executives at
companies in the Company's industry, the awards granted to other executives
within the Company and the individual officer's specific role at the Company.
Although the Company, in some cases, pays base salaries to executives that are
less than market rates, the Company believes that its option awards enable it to
attract and retain highly qualified executives.
In 1999, the Board approved stock option grants to several officers.
These options were granted at the fair market value of the Company's Common
Stock on the date of grant. The majority of the options granted in 1999 were
subject to vesting over a three-year period, with approximately one-third of the
options becoming exercisable on each successive anniversary of the date of
grant, and expire ten years after the grant date. Certain options were granted
with one-third of the options immediately exercisable and the remaining
two-thirds exercisable on each successive anniversary of the date of grant, with
expiration ten years after the grant date.
OTHER BENEFITS
Executive officers are eligible to participate in benefit programs
designed for all full-time employees of the Company. These programs include
medical, dental, vision, disability and life insurance and a savings program
qualified under Section 401(k) of the Internal Revenue Code.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Worsley founded the Company in 1989 and has served as its Chief
Executive Officer since that time. Mr. Worsley's base salary is $190,000,
subject to adjustment by the Board from time to time. Mr. Worsley is eligible to
14
<PAGE>
receive standard benefits under the Company's insurance programs and 401(k)
Plan. Mr. Worsley has never been awarded stock options by the Company. The
Compensation Committee believes that Mr. Worsley's compensation is at or below
the compensation levels of chief executive officers of comparable, publicly held
companies.
COMPENSATION COMMITTEE
Lyle R. Knight
Randy Petersen
STOCK PRICE PERFORMANCE GRAPH
The Company's Common Stock commenced trading on the Nasdaq National
Market under the symbol "SKYM" on December 11, 1996. The following graph
compares the Company's cumulative shareholder return at the last trading day of
each month commencing on January 1, 1997 through December 31, 1999 with
shareholder returns on (i) the Nasdaq National Market Composite Index and (ii)
Nasdaq National Market Retail Trade Stocks. The graph assumes that the value of
the investment in the Common Stock and each index was $100 at December 31, 1996
and that all dividends, if any, were reinvested.
TOTAL RETURNS
<TABLE>
<CAPTION>
The Nasdaq The Nasdaq
Nasdaq Retail Nasdaq Retail
Stock Trade SkyMall, Stock Trade SkyMall,
Date Market Stocks Inc. Date Market Stocks Inc.
- ---------- -------- -------- -------- ---------- -------- -------- --------
Base Point
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/96 100.00 100.00 100.00 07/31/98 145.61 134.15 46.48
01/31/97 107.10 102.13 104.23 08/31/98 116.75 98.76 32.39
02/28/97 101.17 98.61 112.68 09/30/98 132.95 104.29 29.58
03/31/97 94.58 95.13 95.77 10/30/98 138.79 115.94 25.35
04/30/97 97.52 91.92 80.28 11/30/98 152.90 132.65 52.82
05/30/97 108.57 101.59 84.51 12/31/98 172.76 143.60 235.21
06/30/97 111.90 107.43 87.32 01/29/99 197.83 146.04 200.00
07/31/97 123.69 112.28 50.70 02/26/99 180.09 134.72 162.68
08/29/97 123.51 114.21 52.11 03/31/99 193.63 142.86 142.25
09/30/97 130.83 121.78 71.83 04/30/99 199.84 144.11 152.11
10/31/97 124.02 115.19 64.79 05/28/99 194.51 133.21 123.24
11/28/97 124.67 117.79 54.23 06/30/99 211.87 138.55 105.63
12/31/97 122.52 117.44 56.34 07/30/99 208.13 133.55 95.77
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
The Nasdaq The Nasdaq
Nasdaq Retail Nasdaq Retail
Stock Trade SkyMall, Stock Trade SkyMall,
Date Market Stocks Inc. Date Market Stocks Inc.
- ---------- -------- -------- -------- ---------- -------- -------- --------
Base Point
<S> <C> <C> <C> <C> <C> <C> <C>
01/30/98 126.40 119.11 56.34 08/31/99 216.82 119.56 85.92
02/27/98 138.29 129.94 53.52 09/30/99 217.01 124.57 61.97
03/31/98 143.40 140.94 49.30 10/29/99 233.94 128.00 92.25
04/30/98 145.81 141.14 57.75 11/30/99 261.28 140.06 115.49
05/29/98 137.71 135.96 53.52 12/31/99 319.72 127.50 83.10
06/30/98 147.33 143.81 50.70
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and beneficial owners of more than 10%
of the Common Stock to file with the Securities and Exchange Commission initial
statements of beneficial ownership and statements of changes in beneficial
ownership of the Common Stock and other equity securities of the Company held by
such persons. Except as noted below, the Company believes, based solely upon a
review of the copies of such beneficial ownership statements furnished to it,
that during the fiscal year ended December 31, 1999, all Section 16(a) filing
requirements applicable to the Company's officers, directors and owners of more
than 10% of the Company's Common Stock were complied with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information as of April 14, 2000
concerning the beneficial ownership of the Company's Common Stock by (i) each
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
executive officer of the Company, including the Named Executive Officers, (iii)
each director of the Company, and (iv) all directors and executive officers of
the Company as a group. To the knowledge of the Company, all persons listed in
the table have sole voting and investment power with respect to their shares,
except to the extent that authority is shared by their respective spouses under
applicable law.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
--------------------------------
Name and Address of Beneficial Owner (2) Number Percent
- ---------------------------------------- ------------ -------------
<S> <C> <C>
RS Emerging Growth Pacific Partners (Jaguar) (3)(4) 311,798 (5) 2.4% (3)
RS Emerging Growth Partners LP (Wildcat) (3)(4) 145,698 (6) 1.1% (3)
RS Premium Partners LP (Puma) (3)(4) 185,361 (7) 1.4% (3)
Special Situations Cayman Fund L.P. (8)(9) 101,265 (10) * (8)
Special Situations Fund III L.P. (8)(9) 290,879 (11) 2.2% (8)
Special Situations Private Equity Fund L.P. (8)(9) 277,186 (12) 2.1% (8)
The Paisley Fund (3)(4) 75,000 * (3)
The Paisley Pacific Fund (3)(4) 300,000 2.3% (3)
Wand Equity Portfolio II L.P. (13)(14) 1,620,515 (15) 12.4% (13)
Wand Affiliates Fund L.P. (13)(14) 93,771 (16) * (13)
Wand Partners Inc. (13)(14) 1,964,286 (17) 15.0% (13)
Robert M. and Christi M. Worsley (2) 4,798,530 (18) 36.6%
Christine A. Aguilera (2) 79,150 (19) *
Curtis D. Brown (2) 50,000 (20) *
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
--------------------------------
Name and Address of Beneficial Owner (2) Number Percent
- ---------------------------------------- ------------ -------------
<S> <C> <C>
Scott R. Dastrup (2) 25,999 (21) *
Thomas C. Edwards (2) 53,333 (22) *
Marisha K. Geraghty (2) 0 *
Mark S. Schneider (2) 63,666 (23)
Mark E. Truxal (2) 5,489 (24) *
David J. Callard (2) 25,000 (25) *
Lyle R. Knight (2) 156,086 (26) *
Thomas J. Litle (2) 286,286 (27) *
Randy Petersen (2) 57,644 (28) *
All directors and executive officers as a group
(12 persons)(18)(19)(20)(21)(22)(23)(24)(25)(26)(27)(28) 5,601,183 42.7%
</TABLE>
- -------------------
* Less than 1%
(1) A person is deemed to be the beneficial owner of securities that can be
acquired within 60 days from the date set forth above through the exercise
of any option, warrant or right. Shares of Common Stock subject to options,
warrants or rights that are currently exercisable or exercisable within 60
days are deemed outstanding for computing the percentage of the person
holding such options, warrants or rights, but are not deemed outstanding
for computing the percentage of any other person. The amounts and
percentages are based upon 13,120,134 shares of Common Stock outstanding as
of April 14, 2000.
(2) The business address for all directors and officers of the Company is c/o
the Company, 1520 E. Pima Street, Phoenix, Arizona 85034.
(3) RS Growth Group LLC is the General Partner of RS Emerging Growth Pacific
Partners (Jaguar), RS Emerging Growth Partners LP (Wildcat), RS Premium
Partners LP (Puma), The Paisley Fund and The Paisley Pacific Fund. As a
group, these shareholders beneficially own a total of 1,017,857 shares of
Common Stock of the Company, or 7.8% as of April 14, 2000.
(4) The business address of this shareholder is 388 Market Street, Second
Floor, San Francisco, California 94111.
(5) Includes 103,933 shares of Common Stock issuable upon exercise of warrants
issued to RS Emerging Growth Pacific Partners (Jaguar) in the Company's
December 20, 1999 private placement.
(6) Includes 48,566 shares of Common Stock issuable upon exercise of warrants
issued to RS Emerging Growth Partners LP (Wildcat) in the Company's
December 20, 1999 private placement.
(7) Includes 61,787 shares of Common Stock issuable upon exercise of warrants
issued to RS Premium Partners LP (Puma) in the Company's December 20, 1999
private placement.
(8) MGP Advisers Limited Partnership (MGP), a Delaware limited partnership, is
the general partner of the Special Situations Fund III, L.P., a Delaware
limited partnership. AWM Investment Company, Inc. (AWM), a Delaware
corporation, is the general partner of MGP and the general partner of and
investment adviser to the Special Situations Cayman Fund, L.P. MG Advisers
L.L.C. (MG), a New York limited liability company, is the general partner
of the Special Situations Private Equity Fund, L.P., a Delaware limited
partnership. Austin W. Marxe and David M. Greenhouse are the principal
owners of MG, MGP and AWM and are principally responsible for the
selection, acquisition and disposition of the portfolios securities by the
investment advisers on behalf of their funds. As a group, these
shareholders beneficially own a total of 669,330 shares of Common Stock of
the Company, or 5.1% as of April 14, 2000.
(9) The business address of this shareholder is 153 E. 53rd Street, New York,
New York 10022-1200.
(10) Includes (i) 32,150 shares of Common Stock issuable to Special Situations
Cayman Fund L.P. upon exercise of warrants issued in the Company's November
1999 private placement and (ii) 16,072 shares of Common Stock issuable upon
exercise of warrants issued in the Company's December 20, 1999 private
placement.
(11) Includes (i) 96,450 shares of Common Stock issuable to Special Situations
Fund III L.P. upon exercise of warrants issued in the Company's November
1999 private placement and (ii) 47,143 shares of Common Stock issuable upon
exercise of warrants issued in the Company's December 20, 1999 private
placement.
(12) Includes (i) 85,700 shares of Common Stock issuable to Special Situations
Private Equity Fund L.P. upon exercise of warrants issued in the Company's
November 1999 private placement and (ii) 43,929 shares of Common Stock
issuable upon exercise of warrants issued in the Company's December 20,
1999 private placement.
17
<PAGE>
(13) These shareholders are co-managed under a management agreement with Wand
Partners Inc. As a group, these shareholders beneficially own a total of
1,964,286 shares of Common Stock of the Company, or 15% as of April 14,
2000.
(14) The business address of this shareholder is 630 Fifth Avenue, Suite 2435,
New York, New York 10111.
(15) Includes (i) 540,172 shares of Common Stock issuable upon exercise of
warrants issued to Wand Equity Portfolio II L.P. in the Company's December
30, 1999 private placement.
(16) Includes 31,257 shares of Common Stock issuable upon exercise of warrants
issued to Wand Affiliates Fund L.P. in the Company's December 30, 1999
private placement.
(17) Includes 250,000 shares of Common Stock issuable upon exercise of the
advisory fee warrants issued to Wand Partners Inc. in connection with the
Company's December 30, 1999 private placement. In addition, Wand Partners
Inc. may be deemed to be the beneficial holder of the shares held by Wand
Equity Portfolio II L.P. and Wand Affiliates Fund L.P.
(18) Mr. Worsley is Chairman of the Board, President and Chief Executive Officer
of the Company. Includes 71,429 shares of Common Stock issuable upon
exercise of certain warrants issued to The Robert Merrill Worsley and
Christi Marie Worsley Family Revocable Trust dated July 28, 1998 of which
Mr. and Mrs. Worsley are the Trustees (the "Worsley Trust") in the
Company's November 1999 private placement and 1,660,908 shares of Common
Stock held by the Worsley Trust.
(19) Ms. Aguilera is Executive Vice President, Acting General Manager, Acting
Chief Financial Officer, General Counsel and Secretary of the Company.
Includes 75,000 shares issuable upon exercise of stock options granted to
Ms. Aguilera pursuant to the Company's 1994 Stock Option Plan.
(20) Mr. Brown is Senior Vice President of Information Technology and Chief
Technology Officer of the Company's subsidiary, skymall.com, inc. Includes
50,000 shares issuable upon exercise of stock options granted to Mr. Brown
pursuant to the Company's 1994 Stock Option Plan.
(21) Mr. Dastrup is Senior Vice President of Special Projects of the Company.
Includes 24,999 shares issuable upon exercise of stock options granted to
Mr. Dastrup pursuant to the Company's 1994 Stock Option Plan.
(22) Mr. Edwards is President of the Company's subsidiary, SkyMall Ventures,
Inc. Includes 53,333 shares issuable upon exercise of stock options granted
to Mr. Edwards pursuant to the Company's 1994 Stock Option Plan.
(23) Mr. Schneider is Senior Vice President of Strategic Planning of the
Company. Includes 53,666 shares issuable upon exercise of stock options
granted to Mr. Schneider pursuant to the Company's 1994 Stock Option Plan.
(24) Mr. Truxal is Vice President-Controller and the Principal Financial Officer
of the Company. Includes 5,489 shares issuable upon exercise of stock
options granted to Mr. Truxal pursuant to the Company's 1994 Stock Option
Plan.
(25) Mr. Callard serves as a director of the Company. Includes 25,000 shares of
Common Stock issuable to Mr. Callard upon exercise of options to purchase
shares of Common Stock granted pursuant to the Company's Non-Employee
Director Stock Option Plan in January 2000. Mr. Callard is President of
Wand Partners Inc. and may be deemed to be the beneficial owner of the
securities held or controlled by Wand Partners Inc. Mr. Callard has
disclaimed beneficial ownership of such securities. See Footnote 13, above.
(26) Mr. Knight serves as a director of the Company. Includes (i) 7,286 shares
of Common Stock issuable upon exercise of warrants issued to Mr. and Mrs.
Knight in the Company's December 20, 1999 private placement, (ii) 7,143
shares of Common Stock issuable upon exercise of warrants issued to the
Lyle R. Knight IRA account in the Company's December 20, 1999 private
placement, and (iii) 46,000 shares of Common Stock issuable to Mr. Knight
upon exercise of options to purchase shares of Common Stock granted
pursuant to the Company's Non-Employee Director Stock Option Plan.
(27) Mr. Litle serves as a director of the Company. Includes (i) 71,429 shares
of Common Stock issuable upon exercise of warrants issued to Mr. Litle in
the Company's December 20, 1999 private placement and (ii) 46,000 shares of
Common Stock issuable to Mr. Litle upon exercise of options to purchase
shares of Common Stock granted pursuant to the Company's Non-Employee
Director Stock Option Plan.
(28) Mr. Petersen serves as a director of the Company. Includes (i) 1,786 shares
of Common Stock issuable upon exercise of warrants issued to Mr. Petersen
in the Company's December 20, 1999 private placement and (ii) 46,000 shares
of Common Stock issuable to Mr. Petersen upon exercise of options to
purchase shares of Common Stock granted pursuant to the Company's
Non-Employee Director Stock Option Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 19, 1996, the Company entered into an agreement with
OrderTrust LLC (formerly LitleNet LLC), a company in which Thomas Litle, a
Director of the Company, has a controlling ownership interest, pursuant to which
OrderTrust LLC provides the Company with order processing management services.
On December 4, 1998, the Company entered into a new agreement with OrderTrust
LLC to continue to provide such services. In 1999, the Company incurred
processing fees of approximately $485,000 pursuant to such agreements.
Prior to SkyMall's acquisition of Disc Publishing, Inc., Disc
Publishing entered into a note payable agreement with Lorne Grierson, President
of Disc Publishing, for $198,000. The note bears interest at 6% annually and
matures in October 2001. As of December 31, 1999, $180,000 in principal remained
due and owing.
Disc Publishing, Inc. maintains an agreement with Crystal Canyon,
a media development company, to provide development services. The owners of
Crystal Canyon are former shareholders of Disc Publishing. The expenses related
to this Agreement totaled $71,000 in 1999.
On April 8, 1999, SkyMall, Inc. entered into an agreement with The
Edwards Group, which is owned by Kathy Edwards, wife of Thomas Edwards,
President of SkyMall Ventures, Inc., to provide professional services. The
expenses totaled $97,000 related to this agreement in 1999. This agreement was
terminated effective September 13, 1999.
At December 31, 1998, SkyMall, Inc. recorded an employee receivable of
approximately $401,000 for the exercise price of employee stock options for
Angela Ellis, Director of Airline Marketing. This receivable was collected in
1999.
RECENT FINANCINGS
NOVEMBER 1999 PRIVATE PLACEMENT. In November 1999, the Company
completed a private placement of approximately $8 million in shares of the
Company's Common Stock and warrants to purchase additional shares of Common
Stock pursuant to a Stock and Warrant Purchase Agreement dated as of November 2,
1999 (the "November 1999 Private Placement"). A total of 1,142,885 shares of
Common Stock were issued at a purchase price of $7.00 per share, together with
warrants to purchase an additional 571,444 shares of Common Stock. The warrants
have an exercise price of $8.00 per share and, subject to certain conditions,
are redeemable by the Company at a nominal price if the Company's Common Stock
trades over $12 per share for twenty consecutive trading days. The Robert
Merrill Worsley and Christi Marie Worsley Revocable Trust dated July 28, 1998,
of which Robert M. Worsley, Chairman of the Board and President of the Company,
is a trustee and beneficiary, purchased 142,857 shares of Common Stock and
71,429 warrants in the November 1999 Private Placement, for a total purchase
price of $1,000,000.
DECEMBER 1999 PRIVATE PLACEMENT OF SERIES A JUNIOR CONVERTIBLE
PREFERRED STOCK AND WARRANTS. In December 1999, the Company completed a private
placement of approximately $9 million in shares of the Company's Series A Junior
Convertible Preferred Stock (the "Series A Preferred") and warrants to purchase
additional shares of Common Stock (the "December 20, 1999 Private Placement")
pursuant to a Stock and Warrant Purchase Agreement dated as of December 20, 1999
(the "December 20, 1999 Agreement"). A total of 91,320 shares of Series A
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Preferred were issued to investors, together with warrants to purchase an
additional 652,289 shares of Common Stock. The warrants have an exercise price
of $8.00 per share and, subject to certain conditions, are redeemable by the
Company at a nominal price if the Company's stock trades over $12 per share for
twenty consecutive trading days. Lyle R. Knight, Thomas J. Litle and Randy
Petersen, directors of the Company, participated as investors in the December
20, 1999 Private Placement, as follows:
o Lyle R. Knight and his wife, together with the Lyle R. Knight IRA
account, purchased a total of 2,020 shares of Series A Preferred and
14,429 warrants in the December 20, 1999 Private Placement, for a
total purchase price of $202,000.
o Thomas J. Litle purchased a total of 10,000 shares of Series A
Preferred and 71,429 warrants in the December 20, 1999 Private
Placement, for a total purchase price of $1,000,000.
o Randy Peterson purchased a total of 250 shares of Series A Preferred
and 1,786 warrants in the December 20, 1999 Private Placement, for a
total purchase price of $25,000.
Pursuant to the terms of the December 20, 1999 Agreement, at the close
of business on March 10, 2000, all shares of Series A Preferred were
automatically converted into 1,304,571 shares of Common Stock of the Company
upon receipt of shareholder approval of such conversion at a Special Meeting of
Shareholders held on March 10, 2000. As a result of the conversion of the Series
A Preferred into shares of Common Stock, Mr. and Mrs. Knight and the Lyle R.
Knight IRA account, received a total of 28,857 shares of Common Stock, Mr. Litle
received 142,857 shares of Common Stock and Mr. Petersen received 3,571 shares
of Common Stock. The resale of the shares of Common Stock issued upon conversion
of the Series A Preferred and the shares of Common Stock issuable upon exercise
of the warrants have been registered under the Securities Act of 1933, as
amended.
DECEMBER 1999 PRIVATE PLACEMENT OF SERIES B JUNIOR CONVERTIBLE
PREFERRED STOCK AND WARRANTS. In December 1999, the Company completed a private
placement of $8 million in shares of the Company's Series B Junior Convertible
Preferred Stock (the "Series B Preferred") and warrants to purchase additional
shares of Common Stock (the "December 30, 1999 Private Placement") pursuant to a
Stock and Warrant Purchase Agreement dated as of December 30, 1999 (the
"December 30, 1999 Agreement"). A total of 80,000 shares of Series B Preferred
were issued to investors, together with warrants to purchase an additional
571,429 shares of Common Stock. The investors in the December 30, 1999 Private
Placement were Wand Equity Portfolio II L.P. and Wand Affiliates Fund L.P. David
J. Callard, a director of the Company is the President of Wand Partners Inc.,
which may be deemed to be the beneficial holder of the shares held by the Wand
entities. The warrants have an exercise price of $8.00 per share and, subject to
certain conditions, are redeemable by the Company at a nominal price if the
Company's stock trades over $12 per share for twenty consecutive trading days.
Pursuant to the terms of the December 30, 1999 Agreement, at the close
of business on March 10, 2000, all shares of Series B Preferred were
automatically converted into 1,142,857 shares of Common Stock of the Company
upon receipt of shareholder approval of such conversion at a Special Meeting of
Shareholders held on March 10, 2000. The resale of the shares of Common Stock
issued upon conversion of the Series B Preferred and the shares of Common Stock
issuable upon exercise of the warrants have been registered under the Securities
Act of 1933, as amended.
In addition, in connection with the December 30, 1999 Private
Placement, Wand Partners Inc. rendered advisory services relating to the
transactions contemplated by the December 30, 1999 Agreement. Pursuant to such
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agreement, the Company issued warrants to Wand Partners Inc. to acquire up to
250,000 shares of Common Stock of the Company (the "Wand Partners Warrants").
The Wand Partners Warrants are exercisable for three years at an exercise price
of $8.00 per share. The resale of the shares of Common Stock issuable upon
exercise of the Wand Partners Warrants has been registered under the Securities
Act of 1933, as amended.
APPROVAL OF AMENDMENTS TO SKYMALL, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(PROPOSAL NO. 3)
GENERAL
At the Annual Meeting, the Company will seek shareholder approval of
amendments to the Company's Non-Employee Director Stock Option Plan (the "Plan")
to (i) increase the number of shares authorized for issuance thereunder from
100,000 to 375,000; (ii) increase the number of shares initially granted to each
newly appointed director of the Company from 5,000 to 25,000; and (iii) increase
the number of shares granted to each non-employee director on an annual basis
from 3,000 to 7,500. The Company's Board of Directors has approved the
amendments to the Plan and has directed that the amendments be submitted as a
proposal for shareholder approval at the Annual Meeting. The Plan was originally
adopted in October 1996.
CURRENT PLAN PROVISIONS
The Plan provides for the non-discretionary grant of options to the
Company's non-employee directors. Under the Plan, a grant of options to purchase
5,000 shares of the Company's Common Stock is made to each non-employee director
appointed to serve on the Company's Board (the "Initial Option Grants").
Additionally, options to purchase 3,000 shares of the Company's Common Stock are
granted annually to each non-employee director upon the end of the third
business day after announcement of the Company's earnings for the immediately
preceding fiscal year, subject to certain meeting attendance requirements (the
"Annual Option Grants"). Pursuant to the terms of the Plan, all the shares
subject to an option vest immediately upon the date of grant. All options
granted under the Plan expire ten years from the date of grant. Options are not
transferable other than by will, the laws of descent or pursuant to a qualified
domestic relations order. The Plan terminates ten years after the effective date
of the Plan, except as to outstanding options.
AMENDMENTS TO PLAN
In August 1999, the Board of Directors reviewed the options remaining
in the option pool for the Plan and determined that it was appropriate to
increase the number of shares authorized for issuance under the Plan. Therefore,
the Board adopted an amendment to the Plan that would increase the number of
shares authorized for issuance thereunder from 100,000 to 375,000.
The Board of Directors also reviewed the number of shares subject to
the Initial Option Grants and the Annual Option Grants and determined that it
was appropriate to increase the number of shares subject to such Option Grants.
The Board believes that such increase will ensure that non-employee directors
have an adequate incentive to actively direct and contribute to the Company's
growth by enabling them to acquire a proprietary interest in the Company.
Currently, the Plan provides for Initial Option Grants and Annual Option Grants
of 5,000 and 3,000 shares, respectively, to non-employee directors. The
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amendment to the Plan increases the number of shares underlying Initial Option
Grants and Annual Option Grants to 25,000 and 7,500, respectively.
The following table sets forth the options granted to each of the
Company's non-employee directors subject to approval by the shareholders of the
Plan amendments contemplated by this Proposal No. 3:
Number of Securities Exercise
Director Underlying Options Price(1)
-------- -------------------- --------
David J. Callard 25,000 $8.00
Lyle R. Knight 24,500 $7.25
7,500 $8.00
Thomas J. Litle 24,500 $7.25
7,500 $8.00
Randy Petersen 24,500 $7.25
7,500 $8.00
(1) The per share exercise price of all option grants is equal to the
fair market value of the Company's Common Stock on the date of
grant.
FEDERAL INCOME TAX CONSEQUENCES FOR NONSTATUTORY STOCK OPTIONS
Options granted under the Plan are nonstatutory stock options ("NSOs"),
which do not qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Plan is not a
"qualified plan" as defined in Section 401(a) of the Code.
An optionee does not realize any compensation income upon the grant of
an NSO. Additionally, the Company may not take a tax deduction at the time of
the grant. Upon exercise of an NSO, an optionee realizes and must report as
compensation income an amount equal to the difference between the fair market
value of the Common Stock on the date of exercise and the exercise price. The
Company is entitled to take a deduction at the same time and in the same amount
as the optionee reports as compensation income, provided the Company withholds
federal income tax in accordance with the Code and applicable Treasury
regulations.
When an optionee disposes of shares of Common Stock received upon
exercise of an NSO, he or she will realize capital gain income if the amount
realized on the sale exceeds the optionee's basis in the shares. If the
optionee's basis in the shares exceeds the amount realized on the sale, the
optionee will realize a capital loss. There is no tax impact to the Company upon
the sale of shares by an optionee.
Special rules apply with respect to shares of Common Stock transferred
directly to or acquired upon exercise of an NSO by an individual (officers,
directors or 10% shareholders of the Company) who is subject to the "short-swing
profits" provisions of the Securities Exchange Act of 1934, as amended.
The foregoing is a general discussion of certain federal income tax
consequences and does not purport to be complete.
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REQUIRED VOTE
Approval of the Amendment to the Plan requires the affirmative vote of
a majority of shares of Common Stock eligible to vote at the Annual Meeting in
person or by proxy. Abstentions are considered present for this proposal, so
they will have the same effect as votes against the Amendment. Broker non-votes
are not considered present for this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE SKYMALL, INC. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF AUDITORS
(PROPOSAL NO. 4)
The Board of Directors has selected Arthur Andersen LLP ("Andersen") as
the independent public accountants for the Company for fiscal 1999, and
recommends that the shareholders vote for ratification of such appointment.
Shareholder ratification of the selection of Andersen as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of Andersen for shareholder
ratification as a matter of good corporate practice. Andersen has audited the
Company's financial statements since 1996. Notwithstanding the selection, the
Board, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board feels that such a
change would be in the best interests of the Company and its shareholders. A
representative of Andersen is expected to be present at the Annual Meeting with
the opportunity to make a statement if he or she so desires and to be available
to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any shareholder who wishes to present any proposal for shareholder
action at the next Annual Meeting of Shareholders to be held in 2001, must have
been received by the Company's Secretary, at the Company's offices, not later
than January 8, 2001, in order to be included in the Company's proxy statement
and form of proxy for that meeting. Such proposals should be addressed to the
Corporate Secretary, SkyMall, Inc., 1520 East Pima Street, Phoenix, Arizona
85034. If a shareholder proposal is introduced at the 2001 Annual Meeting of
Shareholders without any discussion of the proposal in the Company's proxy
statement, and the shareholder does not notify the Company on or before March
24, 2001, as required by SEC Rule 14(a)-4(c)(1), of the intent to raise such
proposal at the Annual Meeting of Shareholders, then proxies received by the
Company for the 2001 Annual Meeting will be voted by the persons named as such
proxies in their discretion with respect to such proposals. Notice of such
proposal is to be sent to the above address.
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<PAGE>
OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the
Notice that accompanies this Proxy Statement. The Board of Directors is not
aware of any other business to be considered or acted upon at the Annual
Meeting.
1999 ANNUAL REPORT ON FORM 10-K
The Company files annual reports on Form 10-K with the Securities and
Exchange Commission. A copy of the Annual Report for the Fiscal Year Ended
December 31, 1999 is available upon written request to SkyMall, Inc., 1520 East
Pima Street, Phoenix, Arizona 85034, Attention: Investor Relations. Copies of
all exhibits to the Form 10-K Annual Report are subject to a payment of $0.15
per page.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert M. Worsley
Chairman, Chief Executive Officer
and President
Phoenix, Arizona
May 8, 2000
<PAGE>
APPENDIX A
Set forth below in full is the text of the proposed Certificate of
Amendment to the Articles of Incorporation of the Corporation as described in
this Proxy Statement together with notes indicating the changes to be made to
the Corporation's present Articles of Incorporation, as amended.
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SKYMALL, INC.
---------------------------------------------------------
Pursuant to Section 78.390 of the Nevada Revised Statutes
---------------------------------------------------------
The undersigned, being the President and the Secretary of SkyMall, Inc., a
corporation organized and existing under the laws of the State of Nevada, (the
"Corporation") does hereby certify:
1. The name of the Corporation is SkyMall, Inc.
2. The total number of outstanding shares of the Common Stock the Corporation
having voting power as of April 26, 2000 was 13,120,134 and the total
number of votes entitled to be cast by the holders of all said outstanding
shares of the Common Stock was 13,120,134. As of April 26, 2000, there were
no shares of Preferred Stock the Corporation issued and outstanding.
3. The amendment set forth below was adopted, pursuant to Section 78.390 of
the Nevada Revised Statutes, by the affirmative vote of shareholders owning
at least a majority of the outstanding shares entitled to vote therein
given at the annual meeting of the shareholders.
4. That Section 5 be removed in its entirety and the following be inserted in
lieu thereof:
"The governing board of this Corporation shall be known as
directors, and the number of directors of the Corporation may
from time to time be increased up to nine (9) or decreased in
such manner as shall be provided in the Bylaws of this
Corporation. Effective with the 2000 Annual Meeting of
Shareholders, the Board of Directors of the Corporation shall
be divided into three (3) classes, as nearly equal in number
as may be, to serve in the first instance until the first,
second and third annual meetings of the shareholders of the
Corporation be held, respectively, and until their successors
shall be elected and qualified or until such director's
earlier resignation, removal from office, death or disability.
In the case of any increase in the number of directors of the
Corporation, the additional directors shall be so classified
so that all classes of directors shall be increased equally as
nearly as may be, and the additional directors shall be
elected as provided herein by the Directors or by the
shareholders at an annual meeting. In case of any decrease in
the number of directors of the Corporation, all classes of
directors shall be decreased equally, as nearly as may be.
Election of directors shall be conducted as provided in the
Articles of Incorporation, by law or in the Bylaws."
NOTES
1. Present Section 5 is deleted in its entirety and new Section 5 is inserted
in lieu thereof.
<PAGE>
[FRONT OF PROXY CARD]
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PROXY
SKYMALL, INC.
1520 EAST PIMA STREET
PHOENIX, ARIZONA 85034
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF SKYMALL, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of SkyMall, Inc., a Nevada corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, dated May 8, 2000, and hereby appoints Robert M. Worsley,
Christine A. Aguilera and Mark E. Truxal, and each of them, proxies and
attorneys-in-fact, with full power of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the Annual Meeting of
Shareholders of SKYMALL, INC. to be held at the corporate offices of the Company
located at 1520 East Pima Street, Phoenix, Arizona 85034 on June 9, 2000, at
10:00 a.m., local time, and at any adjournment(s) or postponement(s) thereof,
and to vote all shares of Common Stock that the undersigned would be entitled to
vote if then and there personally present, on the matter set forth on the
reverse side.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
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<PAGE>
[PROXY CARD INSTRUCTION SHEET AND REVERSE OF PROXY CARD]
SKYMALL, INC. VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
PROXY SERVICES instructions. Have your proxy card in hand when you
P. O. BOX 9079 call. You will be prompted to enter your 12-digit
FARMINGDALE, NY 11735 Control Number which is located below and then follow
the simple instructions the Vote Voice provides you.
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the Internet to transmit your voting instructions
and for electronic delivery of information. Have your
proxy card in hand when you access the web site. You
will be prompted to enter your 12-digit Control Number
which is located below to obtain your records and create
an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we've provided or return to
SkyMall, Inc., c/o ADP, 51 Mercedes Way, Edgewood,
NY 11717
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
SKYMALL KEEP THIS PORTION FOR YOUR RECORDS
================================================================================
[REVERSE SIDE OF PROXY CARD] DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
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SKYMALL, INC.
I will attend the Annual Meeting [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER(S). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
Vote On Proposal
1. To approve an amendment to the Company's Articles of FOR AGAINST ABSTAIN
Incorporation to provide for the classification of the [ ] [ ] [ ]
Board of Directors into three classes of directors
with staggered three-year terms of office.
2. To elect five directors to the Board of Directors to serve for terms of one
to three years, respectively, or until their successors are elected and
qualified if Proposal No. 1 is approved, or to elect the same persons as
directors for a term of one year if Proposal No. 1 is not approved.
Election of the following nominees as Directors: 1. Robert M. Worsley
2. David J. Callard 3. Lyle R. Knight 4. Thomas J. Litle 5. Randy Petersen
FOR ALL WITHHELD For all, except vote withheld from the following
[ ] [ ] nominees (please use corresponding number)
________________________________________________
3. To approve amendments the Company's Non-Employee FOR AGAINST ABSTAIN
Director Stock Option Plan (the "Director Plan") to [ ] [ ] [ ]
(i) increase the aggregate number of shares available
for issuance thereunder from 100,000 to 375,000 and
(ii) increase the automatic grants under the Director
Plan to 25,000 options upon election to the Board and
7,500 options annually subject to the terms and
conditions of the Directors Plan.
4. To ratify the appointment of Arthur Andersen LLP as FOR AGAINST ABSTAIN
the independent public accountants of the Company for [ ] [ ] [ ]
the fiscal year ending December 31, 2000.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE
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Signature Date Signature (Joint Owners) Date
[PLEASE SIGN WITHIN BOX]
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