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Sample Business Contracts

Employment Agreement - SkyMall Inc. and Cary L. Deacon

Employment Forms

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                              EMPLOYMENT AGREEMENT

THIS AGREEMENT (the "Agreement") is made effective this 4th day of August,  2000
(the  "Effective  Date"),  by and between  SKYMALL,  INC., a Nevada  corporation
("Employer"), and CARY L. DEACON ("Employee"):

                                    RECITALS

     WHEREAS, Employer wishes to retain the services of Employee; and

     WHEREAS,  Employee  wishes to be employed  by  Employer as Chief  Operating
Officer and President of Employer; and

     WHEREAS,  Employer  and  Employee  wish to  memorialize  the terms of their
agreement.

     NOW THEREFORE,  in consideration of Employer's employment of Employee,  the
compensation  to be paid to  Employee,  and the mutual  covenants  and  promises
contained herein, the parties agree as follows:

                                   AGREEMENT

     1.   EMPLOYMENT.  Employer shall employ Employee as Chief Operating Officer
and President of SkyMall,  Inc., and Employee shall report directly to the Chief
Executive  Officer of SkyMall,  Inc.  Employee shall accept such  employment and
agrees to perform his duties and  responsibilities  in accordance with the terms
and conditions herein.

     2.   TERM.  The term of the employment of Employee by Employer shall be for
a period of two years, commencing on September 18, 2000, and ending on September
18,  2002,  unless  sooner  terminated  in  accordance  with  Section 15 of this
Agreement.  The  employment  of Employee  may be renewed by a written  agreement
signed by the Employee and Employer  specifically renewing Employee's employment
and  specifying a renewal term.  Neither the Employee nor Employer will have any
obligation to renew the employment.

     3.   EMPLOYEE'S  OBLIGATIONS AND DUTIES. During the term of his employment,
Employee  shall  devote  his full time and  efforts to the  business  affairs of
Employer.  Employee  shall perform and discharge in a diligent and  professional
manner such duties and  responsibilities  as may be reasonably  prescribed  from
time to time by Employer.  Employee agrees to adhere to all of Employer's rules,
policies,  and procedures as may be in effect from time to time, including,  but
not limited to,  Employer's policy requiring  pre-employment  and routine random
drug screening, any policies contained in Employer's employee guidebooks and any
other  policies,  rules or  regulations  adopted by Employer  from time to time.
Employer may amend,  revise,  or  discontinue  any of its rules,  policies,  and
procedures,  as Employer deems  necessary or desirable.  The terms of Employer's
rules, policies, procedures and employee handbooks do not create any contractual
rights in favor of Employee.

<PAGE>

     4.   ANNUAL BASE SALARY.  During the term of  Employee's  employment  under
this  Agreement,  Employer shall pay Employee an annual base salary of a minimum
of Two Hundred Seventy Five Thousand Dollars  ($275,000.00).  From time to time,
or in connection with  performance  evaluations,  Employer may, but shall not be
obligated to,  increase the amount of this base salary.  All  compensation  paid
pursuant to this  Section  shall  accrue and be payable in  accordance  with the
payroll practices of Employer as may be in effect from time to time.  Employer's
current payroll practices provide for bi-weekly payment of wages.

     5.   INCENTIVE BONUS.  During the term of Employee's  employment under this
Agreement,  Employee will be eligible to  participate  in  Employee's  incentive
compensation  plan that will allow  Employee to earn a cash bonus of up to fifty
percent (50%) of his annual base salary.  The terms and  conditions of this plan
shall be those approved by the Company's Board from time to time.  Employee will
receive  a  one-time   guaranteed  minimum  bonus  of  Thirty  Thousand  Dollars
($30,000.00)  for  his  services  in  fiscal  2000  payable  in  fiscal  2001 in
accordance with Employer's standard policies as may be in effect during the term
of this Agreement.

     6.   STOCK OPTIONS.  Subject to Board approval,  Employee shall be eligible
to receive options to purchase Five Hundred  Thousand  (500,000) shares of stock
of SkyMall,  Inc. at the following  prices:  (a) as to 300,000 shares the lesser
of: (i) $2.50;  or (ii) the lowest closing price of SkyMall,  Inc.  Common Stock
between  the  Effective  Date of this  Agreement  and  seven (7)  business  days
thereafter  (b) as to  100,000  shares  $5.00 per  share,  and (c) as to 100,000
shares $10.00 per share. One-fourth of such options shall vest immediately,  and
the  remaining  options  shall  vest as  follows:  one-fourth  each  year on the
anniversary of the date of this  Agreement for each of the successive  three (3)
years, with the lowest priced options vesting first.  Employee shall be eligible
for additional option grants in accordance with Employer's policies as may be in
effect during the term of this  Agreement.  These options will be subject to the
terms of SkyMall's standard option agreement.

     7.   CHANGE-OF-CONTROL.  Should Employer experience a Change-of-Control (as
defined  herein),  Employee  will be paid an amount at least  equal to:  (i) two
years salary and benefits; (ii) bonuses for a two year period at a rate equal to
the greater of: the established  target bonus at the time of the event specified
in  Section  1  (a)(ii)  below,  or the  most  recent  bonus  paid  prior to the
Change-of-Control;  and (iii)  Employee  shall be entitled to retain any options
granted pursuant to this Agreement,  all of which shall  immediately vest upon a
Change-of-Control  in  accordance  with  the  terms  of  any  applicable  option
agreement.

          a.   DEFINITION     OF     CHANGE-OF-CONTROL.     As    used    herein
"Change-of-Control"  shall be deemed to have  occurred  if ONE of the  events in
items (1) through (4) of  Subsection  (i) below  occurs AND the event in Section
(ii) occurs within one (1) year of the date of the event in Subsection (i):

               (i)  ORGANIZATIONAL  CHANGE:  (1) any  "person"  (as such term is
used in Sections  13(d) and 14(d) of the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange  Act")),  other than a trustee or other fiduciary holding
securities of Employer under an employee  benefit plan of Employer,  becomes the
"beneficial  owner" (as defined in Rule 13d-3 promulgated under the Exchange Act


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<PAGE>

except  that a person  shall be deemed  to have  "beneficial  ownership"  of all
securities  that such  person  has a right to  acquire,  whether  such  right is
exercisable   immediately  or  only  after  September  18,  2000),  directly  or
indirectly,  of securities of Employer representing thirty percent (30%) or more
of the  outstanding  shares of Common  Stock of Employer (or its  successors  or
assigns)  (including,  without  limitation,  the  acquisition  of  shares by any
"person" who held shares of Employer  immediately  prior to September 18, 2000);
or (2) during any period of not more than two consecutive  years,  not including
any period prior to the date of this Agreement, individuals who at the beginning
of such period that  constitute the Board of Directors of Employer,  and any new
director  (other than a director  designated by a person who has entered into an
agreement  with Employer to effect a transaction  described in clause (1) or (3)
of this  Section)  whose  election  by the  Board or  nomination  by  Employer's
shareholders  was  approved  by a vote of at least a majority  of the  directors
still in office who either  were in office at the  beginning  of such  period or
whose election or nomination for election was previously so approved, ceases for
any reason to constitute a majority of the Board;  or (3) Employer is party to a
merger or  consolidation  which  results in the holders of voting  securities of
Employer outstanding  immediately prior thereto failing to continue to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving  entity) at least fifty percent (50%) of the combined voting power
of the voting  securities  of  Employer  or such  surviving  entity  outstanding
immediately  after such merger or  consolidation,  or Employer sells,  consigns,
conveys or otherwise  disposes of all or substantially  all of Employer's assets
or any transaction  having a similar effect is  consummated;  or (4) Employer is
liquidated or dissolved or adopts a plan of liquidation; and

               (ii) CHANGE   IN   RESPONSIBILITIES.   Following   any  event  in
Subsection  (i) above,  any one of the  following:  (i) any change in Employee's
title, authorities,  or responsibilities  (including reporting responsibilities)
which  represents  an  adverse  change  from  his  status,  title,  position  or
responsibilities  (including  reporting  responsibilities)  which were in effect
immediately  prior to the event in Subsection (i) above,  (ii) the assignment to
Employee of any material duties or work responsibilities  which are inconsistent
with such status, title, position or work responsibilities in effect immediately
prior to the event in Subsection (i) above, or (iii) termination or constructive
discharge of Employee.

     8.   PERSONAL  PAID TIME OFF.  Employee  shall be entitled to fifteen  (15)
days of personal paid time off days per year (accrued at the rate of 4.615 hours
per pay period).  Any unused days shall be  forfeited,  and no payment  shall be
made in lieu of taking time off.

     9.   401(K).  After  ninety  (90)  days of  employment,  Employee  shall be
eligible to  participate in Employer's  401(k) Plan.  Employer shall match fifty
percent (50%) of Employee's  contribution  to the 401(k) Plan (up to six percent
(6%) of  Employee's  annual base  salary,  or the maximum  allowable  under law)
subject to vesting, in accordance with the terms of the Plan documents.

     10.  EMPLOYEE BENEFITS. During the term of Employee's employment under this
Agreement,  Employee shall be eligible for medical,  dental and vision insurance
(beginning  on the first day of the month  after one full month of  employment),
short and long-term disability  insurance and life insurance,  all in accordance
with the standard  benefits  policies and procedures  applicable to employees of
Employer during the term of this Agreement.


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<PAGE>

     11.  EXPENSES.   During  the  term  of  Employee's  employment  under  this
Agreement, Employer shall reimburse Employee for all reasonable travel and other
expenses  incurred by Employee in connection with the performance by Employee of
his duties and responsibilities  hereunder,  subject to Employee's submission of
receipts for the expenses,  and in accordance with Employer's  standard policies
as may be in effect from time to time.

     12.  RELOCATION REIMBURSEMENT.  Employee shall be entitled to reimbursement
for reasonable  travel  expenses  associated  with up to three (3) visits during
which he and his spouse locate a home in Arizona, and reasonable moving expenses
associated   with  Employee's   relocation   from  Minnesota  to  Arizona.   The
reimbursement  shall include the  following  items that are actually paid for by
Employee and documented with applicable  receipts:  commission costs on the sale
of  Employee's  home  in  Minnesota;  packing,  loading  and  transportation  of
household  goods.  Employee shall provide  Employer with two written  relocation
estimates  prior  to  incurring  such  expenses.  Employer  shall  not  purchase
Employee's  current home.

     13.  WITHHOLDING OF TAXES.  Employer may withhold from any  compensation or
benefits  payable to Employee under this Agreement all federal,  state and local
taxes as may be required to be withheld by law, regulation or ruling.

     14.  PERFORMANCE  REVIEWS.  Employer  shall  provide  Employee  with annual
performance  reviews  in a manner  deemed  reasonable  by  Employer  in its sole
discretion.

     15.  TERMINATION. Employee's employment is at-will and may be terminated at
any time,  by either  party,  with or  without  Cause (as  defined  herein),  by
providing written notice to the other.

          a.   BY EMPLOYEE.  If Employee's  employment is terminated by Employee
for any reason, or for no reason,  Employer shall have no further  obligation or
liability  other than: (i) to provide  Employee his pro-rata  annual base salary
through the last date Employee  performs work for Employer;  and (ii) to provide
Employee continuing benefits as required under COBRA or other applicable law.

          b.   BY EMPLOYER.  If Employee's  employment is terminated by Employer
for any reason  other than  Cause,  then  Employer  shall,  in  Employer's  sole
discretion,  either: (1) through September 18, 2002 continue to regularly pay to
Employee  the annual base salary of Two Hundred  Seventy Five  Thousand  Dollars
($275,000.00),  in which case the Non-Compete  Agreement in Section 17(b) herein
shall be  limited to a period of one (1) year from the date of  termination;  or
(2)  immediately pay Employee a lump sum equal to the base salary Employee would
have been paid for the remainder of the term of this Agreement.  In either case,
the  stock  options  to  be  awarded   hereunder  shall  immediately  vest  upon
termination.  Employer  shall also be entitled to terminate  this  Agreement for
Cause and,  thereafter,  Employer shall have no further  obligation or liability
other than: (i) to provide  Employee his pro-rata annual base salary through the
last date  Employee  performs work for  Employer;  and (ii) to provide  Employee
continuing  benefits as required under COBRA or other applicable law;  provided,
however,  that in the event of termination  for Cause due to death or disability


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<PAGE>

as  defined  in  Subsection  (c)(vi)  and (vii)  below,  employee  shall also be
entitled  to a pro  rata  portion  of  any  bonus  payments  payable  under  any
applicable bonus or other incentive compensation plan.

          c.   CAUSE  DEFINED.  "Cause"  shall mean:  (i) any act of fraud which
results in or is intended to result in  Employee's  personal  enrichment  at the
direct expense of Employer,  including without limitation, theft or embezzlement
from Employer; (ii) public conduct by Employee substantially  detrimental to the
reputation  of Employer,  (iii)  violation  by Employee of any Employer  policy,
regulation or practice,  including the Employee  Handbook;  (iv) conviction of a
felony; (v) any disloyal,  untruthful or dishonest act of any kind which results
in harm of any kind to Employer, (vi) death of Employee,  (vii) Employee becomes
disabled such that Employee  cannot perform the essential  functions of his job,
and the  disability  shall have  continued for a period of more than one hundred
twenty (120)  consecutive  days, or (viii)  habitual  intoxication,  drug use or
chemical substance use by any intoxicating or chemical substance.

     16. CONFIDENTIALITY.

          a.   CONFIDENTIAL  MATERIAL. In the course of Employee's employment by
Employer,  Employee  will be given  access to and become  acquainted  with trade
secrets and various other  proprietary or confidential  technical and commercial
information,  including,  but  not  limited  to,  the  following:  (i)  business
strategies,  pricing,  marketing  and  cost  data;  (ii)  technical  information
regarding  Employer's  products  and  services;   (iii)  confidential   customer
information;  (iv)  customer and supplier  lists;  (v) contents of contracts and
agreements  with partners,  merchants,  customers and  suppliers;  (vi) customer
requirements  and   specifications;   and  (vii)  e-commerce   designs,   plans,
development  techniques  and  other  products  or  processes,   whether  or  not
copyrighted  by  Employer.  All items  described in the  foregoing  sentence are
defined herein as "Confidential  Material."  Employee further  acknowledges that
the Confidential Material has been developed or acquired by the Employer through
expenditure of substantial  time,  effort and money,  and that the  Confidential
Material provides Employer with an advantage over competitors.

          b.   NON  DISCLOSURE   AGREEMENT.   In  consideration  for  access  to
Confidential Material, Employee agrees that during his employment and continuing
for ten (10) years thereafter,  he shall not directly or indirectly  disclose or
use for any reason  whatsoever  any  Confidential  Material  obtained  by him by
reason of his  employment  with  Employer,  except as  required  to conduct  the
business of Employer or as authorized by express written permission of the Board
of Directors of Employer or as otherwise required by law.

          c.   OWNERSHIP  OF  DATA.  Employee  confirms  that  all  Confidential
Material and all  documents  reflecting  such  information  remain the exclusive
property of Employer. All business records,  papers, documents or other data, in
whatever  form,  kept or made by Employee  relating to the business of Employer,
shall be and shall remain the property of Employer during the term of Employee's
employment and at all times thereafter. Employee will grant and hereby grants to
Employer the sole and exclusive  ownership of (including  the sole and exclusive
right to  reproduce,  use or  disclose  for any  purpose)  any and all  reports,
drawings, data, programs,  plans, writings or other information made or prepared


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<PAGE>

by Employee alone or with others during the term of his  employment  that relate
to his employment or Employer's business.

          d.   REMEDIES.  Employee  hereby  agrees  that  damages  and any other
remedy  available  at law would be  inadequate  to redress or remedy any loss or
damage  suffered by Employer  upon any breach of the terms of this Section 16 by
Employee, and Employee therefore agrees that Employer, in addition to recovering
on any claim for damages or obtaining  any other remedy  available at law,  also
may enforce the terms of this Section 16 by injunction or specific  performance,
and may obtain  any other  appropriate  remedy  available  in  equity.  Employee
further  acknowledges  and agrees  that  Employer  shall be  entitled to recover
attorneys' fees and costs associated with enforcement of this Section 16.

     17. NON-COMPETE AGREEMENT.

          a.   HIGHLY-COMPETITIVE  MARKET. Employee acknowledges and agrees that
Employer's products and services are sold and performed in a  highly-competitive
market.  Employee acknowledges that the services he may render to Employer,  the
information  exchanged  between all parties in connection  with rendering  those
services, and Employer's relationships with customers, airlines,  transportation
companies,  catalog  retailers,  vendors,  banks,  accountants,  and  any  other
Employer program participants, business partners or similar parties, are each of
a unique  and  valuable  character.  Employee  acknowledges  that the market for
Employer's products and services is national and international in scope.

          b.   LIMITATION  OF  ACTIVITIES.  Except as  specifically  provided in
Section  15(b),  Employee  agrees that,  for a period of two (2) years after the
termination  of this  Agreement  or the date  employer  last  makes a payment to
employee under this Agreement,  he shall not engage in, plan for, organize, work
for, or assist,  directly  or  indirectly,  any  business  that is  competitive,
directly or indirectly, with Employer's business, nor solicit participants in or
customers of the Employer's program, nor use Employee's knowledge of Employer or
its business in any manner that competes with Employer.  As used in this Section
17, the term  Employer  includes  SkyMall,  Inc.  and any of its  affiliates  or
subsidiaries.  The  foregoing  restrictions  shall  be  understood  to  prohibit
Employee from participating in the following non-exclusive list of activities:

               (i)  Provide  services  as  an  employee,  director,  consultant,
agent,  or  representative  to any company or other entity that is  competitive,
directly or indirectly,  with Employer's plans and initiatives for the Internet,
Catalog or interactive shopping.

               (ii) Provide  services  as  an  employee,  director,  consultant,
agent,  or  representative  to any  catalog  company  or  other  entity  that is
competitive,  directly or indirectly, with Employer or its products and services
or entities in which SkyMall has an equity interest.

               (iii)Directly   or   indirectly   solicit   Employer's   vendors,
customers,  employees,  business  partners  or  similar  third  parties  for any
activity that is directly or indirectly competitive with Employer.

               (iv) Participate  in, be employed in any  capacity  by,  serve as
director,  consultant,  agent  or  representative  for,  or have  any  interest,
directly  or  indirectly,  in any  entity or  enterprise  which is  engaged in a


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<PAGE>

business directly or indirectly competitive to Employer, or which is competitive
to any products and services being actively  developed by Employer with the bona
fide intent to market same.

               (v)  Own,   either  directly  or  indirectly  or  through  or  in
conjunction  with one or more  members of his family or his  spouse's  family or
through any trust or other contractual arrangement,  a greater than five percent
(5%)  interest in, or  otherwise  control  either  directly or  indirectly,  any
partnership,  corporation,  or other entity which has products and services that
are  competitive  to any  products  and  services  being  developed or otherwise
offered by Employer or being  actively  developed  by Employer  with a bona fide
intent to market same.

          c.   REMEDIES.  Employee  hereby  agrees  that  damages  and any other
remedy  available  at law would be  inadequate  to redress or remedy any loss or
damage  suffered by Employer  upon any breach of the terms of this Section 17 by
Employee, and Employee therefore agrees that Employer, in addition to recovering
on any claim for damages or obtaining  any other remedy  available at law,  also
may enforce the terms of this Section 17 by injunction or specific  performance,
and may obtain any other appropriate remedy available in equity.

          d.   MODIFICATION. If any provision of this Section 17 is deemed, as a
matter of law, to be unreasonable as to time, area, or scope by any court,  then
such court  shall have  authority  to modify  this  Section as to time,  area or
scope, but only to the limited extent necessary to make this Section  reasonable
and enforceable.

     18.  EMPLOYEE'S  REPRESENTATIONS  AND WARRANTIES.  Employee  represents and
warrants  that  this  Agreement  does  not  violate  the  terms,  conditions  or
provisions of any  employment  relationship  with any prior  employer.  Employee
represents  and warrants that  Employee  serves on no other Boards of Directors,
except for Net Radio Corporation.  Employee shall not accept any appointments to
serve on any other Boards without prior written approval of Employer.

     19.  RETURN OF MATERIALS. Employee shall return to Employer promptly at its
request all  materials  furnished  to Employee  by  Employer  and all  materials
prepared by Employee that contain Confidential Material together with all copies
thereof.

     20.  NOTICES.  Any  notice or other  communication  required  or  permitted
hereunder  shall be sufficient  if given in writing and delivered  personally or
mailed by  registered  or certified  mail,  return  receipt  requested,  postage
prepaid and addressed to the parties at the addresses listed below. Either party
may designate a different address by notice so given.

                    Employer:  Christine Aguilera
                               General Counsel
                               SkyMall, Inc.
                               1520 East Pima Street
                               Phoenix, Arizona 85034


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<PAGE>

                    Employee:  Cary Leonard Deacon
                               6818 Highover Drive
                               Chanhassen, Minnesota 55317

     21.  GOVERNING  LAW,   ARBITRATION  AND  CHOICE  OF  FORUM.  The  validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the  State of  Arizona  without  regard to its  conflicts  of law
principles.  Except for the right of either party to apply for injunctive relief
as provided  herein,  any controversy or claim arising out of or related to this
Agreement or in connection  with a breach of this  Agreement  ("Claim")  will be
settled  by  arbitration  in  Phoenix,  Arizona  U.S.A.  under  the rules of the
American  Arbitration  Association in effect at the time such Claim is submitted
to arbitration. The arbitrator selected to arbitrate such Claim will be selected
from a panel  of  persons  having  experience  with  and  knowledge  of  catalog
businesses or the e-commerce  industry.  Such arbitrator will not, in any event,
have any authority to make any ruling, finding or award that does not conform to
the terms and conditions of this Agreement. The arbitral award will be final and
binding on all parties and may be entered as a judgment and  enforceable  by any
court of competent  jurisdiction.  The parties agree that any lawsuit,  dispute,
action or  proceeding  arising  out of or  related  to this  Agreement  shall be
instituted  in a state or federal  court of  competent  jurisdiction  located in
Maricopa County,  Arizona. The parties accept the exclusive  jurisdiction of the
aforesaid courts,  and irrevocably agree to be bound by any judgment rendered by
said  courts in  connection  with this  Agreement.  The party who  substantially
prevails in any cause of action to enforce this  Agreement  shall be entitled to
recover reasonable attorney's fees and costs.

     22.  SEVERABILITY.  The invalidity or  unenforceability of any provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

     23.  AMENDMENT. This Agreement shall not be modified,  amended or rescinded
except by written instrument duly executed by Employee and Employer.

     24.  COUNTERPARTS.  This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which  together  will
constitute one and the same instrument.

     25.  CAPTIONS AND HEADINGS. The captions and headings of this Agreement are
for  convenience  of reference  only and shall not be considered to be a part of
this Agreement,  affect the meaning or interpretation  of this Agreement,  or be
used in determining the intent of the parties.

     26.  SURVIVAL. The provisions of Sections 16 and 17 of this Agreement shall
remain  in full  force  and  effect  following  the  termination  of  Employee's
employment or the  termination of this Agreement,  except as otherwise  provided
herein.

     27.  SUCCESSORS AND ASSIGNS.  This Agreement  shall inure to the benefit of
and be  unenforceable  by  Employer's  successors  and  assigns,  and  is  fully


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<PAGE>

assignable by Employer to any of  Employer's  current or future  affiliates  and
subsidiaries.

     28.  ENTIRE AGREEMENT.  Except as stated herein,  this Agreement sets forth
the entire  understanding  of the  parties  hereto  with  respect to the subject
matter  hereof  and  supercedes  any  oral or  written  discussions  on  matters
contemplated herein.


EMPLOYER - SKYMALL, INC.,
A NEVADA CORPORATION


By: /s/ Lyle R. Knight                       Date: August 8, 2000
    --------------------------------               -----------------------------
    Lyle R. Knight
    Its:  Chair, Compensation Committee of the Board of Directors


EMPLOYEE - CARY LEONARD DEACON


/s/ Cary L. Deacon                           Date: August 4, 2000
------------------------------------               -----------------------------
    Cary Leonard Deacon


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