Sample Business Contracts

Airline Customer Services Agreement - SkyMall Inc.

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                                 [AIRLINE NAME]


                                  SKYMALL, INC.
                              1520 EAST PIMA STREET
                             PHOENIX, ARIZONA 85034


                           ____________________, 1995
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                                TABLE OF CONTENTS

1.       Recitals..............................................................       1
         1.1      Airline Business.............................................       1
         1.2      SkyMall Business.............................................       1
         1.3      Offer of SkyMall Program.....................................       1

2.       The SkyMall(R) Program and Guarantees.................................       1
         2.1      The Catalog..................................................       1
         2.2      Concierge Service............................................       1

3.       SkyMall Program Agreement.............................................       1
         3.1      Exclusive Rights.............................................       1
         3.2      Reserved Services............................................       1

4.       Term of Agreement.....................................................       2
         4.1      Initial and Renewal Terms....................................       2
         4.2      Termination..................................................       2

5.       The Catalog...........................................................       2
         5.1      Catalog Production...........................................       2
         5.2      Shipment and Distribution of Catalogs........................       3

6.       Customer Orders, Customer Services and Promotion......................       3
         6.1      Order Processing and Delivery................................       3
         6.2      Resolution of Customer Problems..............................       4
         6.3      Promotion of Catalog.........................................       4
         6.4      Aircraft Seat Phones.........................................       4
         6.5      Complimentary Air Travel.....................................       4

7.       SkyMall(R) Program Costs and Expenses..................................      4
         7.1      SkyMall Expenses..............................................      4
         7.2      Airline Expenses..............................................      5

8.       Airline Sales Commissions.............................................       5
         8.1      Sales Commission.............................................       5
         8.2      Payment Due Date.............................................       5

9.       Reports, Records and Audit............................................       5
         9.1      SkyMall Reports and Records..................................       5
         9.2      Airline Reports and Records..................................       5
         9.3      Audit of Records.............................................       5

10.      Use and Approval of Names.............................................       5
         10.1     Limited License to Use Airline's Names........................      5
         10.2     Mutual Approval of Advertising and Promotional Material.......      6

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11.      Rights to the Catalog, Services and Purchase Information........         6

12.      Confidential Information........................................         6
         12.1     Confidential and Proprietary Information...............         6
         12.2     Use and Protection of Confidential Information.........         6
         12.3     Enforcement............................................         7

13.      No-Competition..................................................         7

14.      Default and Remedies............................................         7
         14.1     Default................................................         7
         14.2     Remedies...............................................         8
         14.3     Consequential Damages..................................         8
         14.4     Force Majeure Excusing Performance.....................         8

15.      Indemnification.................................................         8
         15.1     Claims.................................................         8
         15.2     SkyMall's Indemnification of Airline...................         8
         15.3     Airline's Indemnification of SkyMall...................         9
         15.4     Notification, Defense of Claims and Settlement.........         9

16.      Insurance.......................................................        10
         16.1     Insurance Amounts and Certificates.....................        10
         16.2     Endorsements...........................................        10

17.      Miscellaneous...................................................        10
         17.1     Entire Agreement.......................................        10
         17.2     Amendments and Waivers.................................        10
         17.3     Assignments and Successors.............................        10
         17.4     No Joint Venture or Partnership........................        10
         17.5     Severability...........................................        10
         17.6     Survival...............................................        11
         17.7     Further Actions and Assurances.........................        11
         17.8     Governing Law..........................................        11
         17.9     Attorneys' Fees........................................        11
         17.10    Notices................................................        11
         17.11    Counterparts...........................................        11
         17.12    Exhibits...............................................        11
         17.13    Time...................................................        11
         17.14    Effective Date.........................................        12

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      This Airline Customer Services Agreement (the "Agreement"), is between
[Airline Name], a ________________ corporation ("Airline"), and SkyMall, Inc.,
an Arizona corporation ("SkyMall"). Airline and SkyMall agree as follows:


      1.1     Airline Business. Airline operates aircraft to domestic (U.S.) and
              international destinations. The "Airline Fleet" includes Airline's
              aircraft flying domestic trips.

      1.2     SkyMall Business. SkyMall provides in-flight and in-transit sales
              and rapid delivery of merchandise and services for travelers.

      1.3     Offer of SkyMall Program. This agreement grants SkyMall the
              exclusive right to offer the SkyMall(R) Program (as defined below)
              to Airline's domestic air passengers.

2.    THE SKYMALL(R) PROGRAM AND GUARANTEES.  The "SkyMall(R) Program" includes:

      2.1     The Catalog. The SkyMall(R) Catalog offers merchandise and
              services which may be ordered by Airline's passengers (the
              "Catalog"). SkyMall provides a total customer satisfaction
              guarantee on merchandise offered in the Catalog, except as
              expressly provided in Section 5.1 below.

      2.2     Concierge Service. The SkyMall(R) Concierge Service offers
              concierge services (the "Concierge Service") for a fee to
              customers (the "Concierge Service Fee") plus the price of the
              product or service. SkyMall provides a limited customer
              satisfaction guarantee on the Concierge Service, depending on the
              services requested.


      3.1     Exclusive Rights. Airline grants SkyMall the exclusive right to
              provide the SkyMall(R) Program to Airline for Airline's Fleet.
              Airline will not itself provide, nor obtain from any other source,
              a similar program. Airline also grants to SkyMall a first right of
              refusal to provide the SkyMall(R) Program on inter-active video
              for Airline's Fleet.

      3.2     Reserved Services. Airline reserves the right to provide to its
              passengers: (a) through its in-flight magazine (1) merchandise
              marked with Airline's trademarks ("Airline's Trademarked
              Merchandise") and Airline's airfare and vacation packages and air
              transportation services ("Airline's Services") or any other
              proprietary items or services of Airline, and (2) merchandise and
              services offered by other advertisers; and (b) a catalog for the
              sale of duty free merchandise.

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4.    TERM OF AGREEMENT.   The Term of this Agreement includes:

      4.1     Initial and Renewal Terms. The Initial Term from
              _________________, until _________________. After the Initial Term
              this Agreement will renew annually (an "Annual Renewal Term"),
              unless terminated earlier by either Party pursuant to this

      4.2     Termination.

              (a)  Termination for Convenience. After the Initial Term, either
                   Party may terminate this Agreement for any reason without
                   cause by 90 days written notice to the other Party.

              (b)  Termination For Cause. Either Party may immediately terminate
                   this Agreement for cause by giving written notice to the
                   other Party.

              (c)  Cooperation Upon Termination. Upon notice of termination (1)
                   the Parties will cooperate until termination to continue
                   distributing Catalogs and to secure customer orders, (2) each
                   party will use its best efforts to minimize the costs and
                   damages of the termination, and (3) Airline is solely
                   responsible for recycling or disposing of Catalogs in its
                   possession at the time of termination.

              (d)  Termination Rights and Obligations. Termination will not
                   affect rights or obligations of the Parties which are of a
                   continuing nature or which accrued prior to the effective
                   date of termination.


      5.1     Catalog Production. SkyMall will produce, at its expense, three or
              more editions of the Catalog each year, each up to _____ pages but
              not weighing more than _____________. SkyMall (a) will select and
              price all merchandise and services and (b) will consider
              reasonable requests of Airline for additional merchants, products,
              or services (but is not obligated to secure particular merchants,
              products, or services).


              (a)  Airline Approval of the Catalog. Airline will approve each
                   edition of the Catalog prior to production. Airline is deemed
                   to approve a Catalog edition if Airline's written disapproval
                   is not delivered to SkyMall within three business days after
                   Airline receives the prototype Catalog. Airline may
                   disapprove any merchant, product, or service on any
                   reasonable grounds except price, but will not unreasonably
                   disapprove a merchant, product, or service.

              (b)  Airline Pages. If Airline requests, up to ____ pages in each
                   Catalog (the "Airline Pages") may be devoted to merchandise
                   marked with Airline's

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                   trademarks and Airline's airfare, vacation, and
                   transportation services ("Airline's Goods and Services").
                   SkyMall does not guarantee Airline's Goods and Services and
                   Airline (a) assumes responsibility for the merchandise and
                   services and (b) indemnifies SkyMall for all product
                   liability and other costs and expenses arising in connection
                   with Airline's Goods and Services, including costs of legal
                   or other proceedings, judgments, fines, and penalties, costs
                   of defense, and reasonable attorneys' fees.

              (c)  Cover and Name. The cover of each catalog will be customized
                   to identify Airline and will not be identical to SkyMall's
                   general catalog. At Airline's option, the catalog will bear
                   SkyMall's name or another name selected by Airline. SkyMall
                   does not own, and acknowledges Airline's ownership of, any
                   custom name selected by Airline for the Catalog and any
                   associated goodwill.

              (d)  Suppliers. SkyMall will contract with each supplier of
                   merchandise or services (a "Supplier") for the SkyMall(R)
                   Program. SkyMall is solely responsible for each Supplier's
                   merchandise and services.

      5.2     Shipment and Distribution of Catalogs.

              (a)  Delivery to Hubs. SkyMall will deliver the Catalogs to
                   Airline's facilities at up to _______ Airline hub locations
                   (the "Airline Hubs"). Airline may change the hub locations.
                   SkyMall will deliver the Catalogs in proportions as directed
                   by Airline at least five days before the scheduled
                   distribution of the Catalogs to the Airline Fleet.

              (b)  Distribution to Airline Fleet. Airline will use reasonable
                   efforts (at least the same efforts used in connection with
                   Airline's in-flight magazine) to distribute Catalogs to the
                   seatbacks of all aircraft in Airline's Fleet, so that each
                   Airline passenger has access to a reasonably unsoiled and
                   presentable copy of the Catalog. Airline will carry 20
                   additional copies of the Catalog on each aircraft to replace
                   Catalogs taken daily by passengers. Until a Catalog expires
                   Airline will not remove a Catalog from an aircraft (except
                   for soiled and unpresentable Catalogs).

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      6.1     Order Processing and Delivery. SkyMall, at its sole expense, will
              deliver merchandise and services offered through the Catalog.
              SkyMall will give prompt attention to any complaint or requested
              change with respect to SkyMall's order processing or delivery

              (a)  Order Processing. SkyMall will offer customer order inquiry
                   and processing 24 hours per day, 365 days per year (but may
                   use voice messaging and other equipment during early morning
                   hours, Sundays, holidays, and at other appropriate times).
                   SkyMall will maintain an "800" customer order telephone
                   number, including an in-flight equivalent of an "800"
                   telephone number for Airline's in-flight telephone equipped

              (b)  Merchandise Deliveries. SkyMall or its vendors will offer
                   delivery within the United States, Puerto Rico and the Virgin
                   Islands. SkyMall may, in its sole discretion, offer delivery
                   to international destinations.

              (c)  Payment for Merchandise and Services. SkyMall may require
                   payment for merchandise by cash (U.S. Dollars), cash
                   equivalents, and major credit cards. SkyMall is solely
                   responsible for establishing appropriate contractual
                   arrangements with companies issuing credit cards honored by

              (d)  No Airline Liability. Airline assumes no liability for, and
                   is not responsible for the credit worthiness of, any Airline
                   passengers or customers.

              (e)  SkyMall Employees. SkyMall's order processing and delivery
                   personnel are SkyMall's employees or independent contractors.
                   SkyMall's employees and independent contractors will comply
                   with reasonable security measures imposed by Airline.

              (f)  Airline Employee Discounts. Subject to proper identification,
                   SkyMall will allow Airline employees a ____% discount on
                   merchandise and services to the extent permitted by SkyMall's

      6.2     Resolution of Customer Problems. SkyMall is solely responsible for
              handling, to the reasonable satisfaction of its customer and
              Airline, all correspondence, claims, and complaints generated by
              the SkyMall(R) Program. Airline may, at its option, respond
              directly to any customer request or complaint.

      6.3     Promotion of Catalog. Airline will use reasonable efforts to
              promote use of the Catalog (at least the same efforts used for
              Airline's in-flight magazine), including in flight, boarding area,
              and flight club area announcements, information booths, and video

      6.4     Aircraft Seat Phones. Airline (a) will equip its aircraft with
              seat phones or other in-flight telephone equipment as business
              conditions warrant and (b) will keep

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              SkyMall informed about the installation or change out of in-flight
              telephone equipment on its aircraft.

      6.5     Complimentary Air Travel. Airline will provide, at its discretion,
              complimentary round-trip passes to SkyMall to be used for business
              travel related to performance of this Agreement (the
              "Complimentary Air Travel"). The Complimentary Air Travel must be
              booked at least one week in advance and is available on a positive
              space basis.

7.    SKYMALL(R) PROGRAM COSTS AND EXPENSES. The costs and expenses associated
      with the SkyMall(R) Program will be paid as follows:

      7.1     SkyMall Expenses. SkyMall will pay for all costs and expenses
              associated with the SkyMall(R) Program except for those assumed by

      7.2     Airline Expenses. Airline will provide and pay for: (a) the cost
              of distribution of the Catalog from the Airline Hubs to Airline's
              Fleet and of carrying the Catalog on Airline's Fleet; (b) the
              promotional costs incurred by Airline to the extent mutually
              agreed upon prior to instituting a promotion; (c) the
              Complimentary Air Travel costs; and (d) the costs of any optional
              service as mutually agreed by SkyMall and Airline.


      8.1     Sales Commission. SkyMall will pay a monthly sales commission (the
              "Sales Commission") to Airline equal to the greater of (a)
              $__________ per month or (b) _____% of Net Sales (as defined in
              EXHIBIT A).

      8.2     Payment Due Date. SkyMall will pay the Sales Commission to Airline
              on the first day of the second month after the month when the
              sales occurred. SkyMall will deliver, with the payment, a
              supporting statement showing (a) the number of orders filled for
              the month, (b) the net dollar amount of sales related to the
              orders, and (c) the calculation of the Sales Commission.


      9.1     SkyMall Reports and Records. SkyMall will provide Airline monthly
              reports of SkyMall's performance under this Agreement and of
              Airline's Sales Commissions (collectively, the "SkyMall Reports").
              The SkyMall Reports will be in a form agreed by the Parties, but
              need not include information about activities with anyone other
              than Airline. SkyMall will maintain the SkyMall Reports during the
              Term and for one year after termination (the "Record Maintenance

      9.2     Airline Reports and Records. Airline will provide SkyMall
              information reasonably requested by SkyMall, including data about
              actual and projected passenger enplanements and actual and planned
              aircraft schedules (collectively, the "Airline Reports"). The
              Airline Reports will be in a form agreed by the Parties, but need
              not include information about activities with anyone other

<PAGE>   9
              than SkyMall. Airline will maintain the Airline Reports for the
              Record Maintenance Period.

      9.3     Audit of Records. During the Record Maintenance Period each Party
              (or auditors it selects) may, at a mutually convenient time and at
              its sole cost and expense, examine and make copies of the other's
              Reports at the other's offices.


      10.1    Limited License to Use Airline's Names. Airline grants SkyMall a
              non-exclusive license to use Airline's corporate name and
              Airline's tradenames, trademarks, and service marks (the "Airline
              Names") (a) solely as directed and approved in writing by Airline
              and (b) solely in connection with the production and promotion of
              the Catalog for Airline. SkyMall will not otherwise use, publish
              or reproduce (including, without limitation, in any form of
              advertising) any Airline Names. This license creates no third
              party rights and will immediately terminate upon termination of
              this Agreement.

      10.2    Mutual Approval of Advertising and Promotional Material. Airline
              must give written approval before any distribution of material
              which refers to Airline. SkyMall must give written approval before
              any distribution of material which refers to SkyMall.

      the Catalog and the Concierge Service, their contents, their name or
      names, the designs and other information created or developed by SkyMall
      (or jointly by SkyMall and Airline) in connection with the Catalog and the
      SkyMall(R) Program, and the associated goodwill and (b) the names,
      addresses and other direct marketing information about persons who order
      from the Catalog (the "SkyMall Buyer File"). SkyMall may use the SkyMall
      Buyer File, or make it available to third parties, so long as the file
      information is not selectable by airline and does not indicate that an
      individual is a passenger of Airline or a member of Airline's frequent
      flyer program.


      12.1    Confidential and Proprietary Information. The Parties may furnish
              to each other confidential or proprietary information (the
              "Confidential Information"). Confidential Information must be
              marked in a manner that indicates it is proprietary and includes
              information about marketing philosophies and objectives, plans,
              designs, orders, forecasts, competitive advantages and
              disadvantages, types of services provided, trade secrets, ideas,
              creations, materials, intellectual property (including, without
              limitation, patents, copyrights, trademarks, service marks,
              designs, logos, and slogans), data processing programs or
              procedures, source code, object code, business methods and
              procedures, employees, suppliers, and customers. Confidential
              Information excludes: (a) information approved for release to the
              public without qualification as to the recipient; (b) information
              which a Party obtained, had, or possessed independently of the
              other Party (unless such information is confidential

<PAGE>   10
              pursuant to another agreement or understanding); (c) information
              in the public domain; and (d) the SkyMall Buyer File.

      12.2    Use and Protection of Confidential Information. Each Party has
              exclusive ownership and use of its own Confidential Information.
              The Parties and their officers and employees will: (a) preserve
              the confidentiality of the other's Confidential Information; (b)
              not disclose, directly or indirectly, any of the other's
              Confidential Information to any third party for any purpose; (c)
              not use the other's Confidential Information except as expressly
              permitted by this Agreement; (d) immediately notify the other of
              any loss or disclosure of the other's Confidential Information;
              (e) comply with reasonable security procedures for protection of
              Confidential Information; and (f) employ at least the same degree
              of care in protecting the other's Confidential Information as it
              employs in protecting its own Confidential Information. A Party
              served with a subpoena or other legal process requiring the
              production or disclosure of the other's Confidential Information,
              will promptly notify the other and will in good faith attempt to
              permit the other (at the other's expense) to intervene and contest
              such disclosure or production.

      12.3    Enforcement. If a Party breaches or threatens to breach its
              confidentiality obligations, the other's remedies at law would be
              inadequate. Each Party is entitled to a temporary restraining
              order or injunction (without any bond or other security) to
              prevent disclosure or use of the Confidential Information. This
              remedy does not preclude any other action or remedy for any breach
              or threatened breach of this Agreement, including the recovery of
              damages, reasonable attorneys' fees, costs and other expenses in
              connection with the actions.

13.   NO-COMPETITION. During the Term, the Parties will not compete with each
      other in any way, including use of information or knowledge about the
      other in competition with the other, and will not provide any information
      or knowledge about the other to any competitor of the other.


      14.1    Default.  The following are defaults under this Agreement:

              (a)  Non-Payment. Failure to make a required payment, or to
                   perform a monetary obligation, within 30 days after written

              (b)  Performance or Condition. Failure to perform, or breach of,
                   any non- monetary obligation under this Agreement which
                   continues for 45 days after written notice;

              (c)  Bankruptcy or Insolvency. Either Party: (1) becomes
                   insolvent; (2) does not pay its bills when due without just
                   cause; (3) takes any material steps leading to its cessation
                   as a going concern; (4) ceases or suspends operations; (5)
                   makes a general assignment for the benefit of creditors or
                   files a

<PAGE>   11
                   voluntary application for appointment of a custodian or
                   receiver; or (6) has an action commenced against it under any
                   law relating to bankruptcy, insolvency, reorganization or
                   relief of debtors (except that if any of the foregoing
                   actions are filed involuntarily, a Party has 60 days to
                   secure dismissal before the filing is deemed a default). If
                   bankruptcy proceedings are commenced and this Agreement is
                   not otherwise terminated, the non-defaulting Party may
                   suspend all further performance, other than making payments
                   when due, until the defaulting Party assumes or rejects this
                   Agreement pursuant to Section 365 of the United States
                   Bankruptcy Code or any similar or successor provision. A
                   suspension of performance pending the defaulting Party's
                   assumption or rejection is not a breach of this Agreement and
                   does not affect the non-defaulting Party's right to pursue or
                   enforce its rights under this Agreement or otherwise.

      14.2    Remedies. Upon a default the non-defaulting Party may, consistent
              with applicable laws and at its option, do one or more of the

              (a)  Temporary Restraining Order or Injunction. Proceed
                   immediately, when Confidential Information or non-competition
                   requirements are involved, to obtain a temporary restraining
                   order or injunction;

              (b)  Damages for Breach. Institute proceedings to recover damages,
                   including reasonable attorneys' fees, costs and other

              (c)  Other Remedies. Exercise any other right, privilege or remedy
                   available under this Agreement, or in law or equity; and

              (d)  Terminate the Agreement. By written notice to the defaulting
                   Party immediately terminate this Agreement.

      14.3    Consequential Damages.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED

      14.4    Force Majeure Excusing Performance. No Party is liable to the
              other if a failure or delay in performance arises out of any cause
              beyond the reasonable control of the Parties (including loss of
              facilities, breach by suppliers of supply agreements, fires,
              floods, strikes, labor unrest, embargoes, civil commotion,
              rationing or other governmental orders or requirements, acts of
              civil or military authorities, war, acts of God, unavoidable
              accidents, acts or omissions of sovereign states, or serious
              adverse weather conditions). All requirements of notice and other
              performance are extended to accommodate the period when
              performance is impeded, except that the Party claiming to be
              excused must deliver written

<PAGE>   12
              notice to the other Party within 30 days stating the cause, the
              reasonable efforts taken to overcome the cause, and the period of
              time the cause is expected to continue.


      15.1    Claims. "Claims" means any and all claims, liabilities, damages,
              demands, suits, causes of action, proceedings, recoveries,
              judgments, expenses, taxes, fines, penalties or executions
              (including but not limited to litigation costs and expenses and
              reasonable attorneys' fees).

      15.2    SkyMall's Indemnification of Airline. SkyMall indemnifies and
              holds harmless Airline, its directors, officers, employees, and
              agents against all Claims for: (a) SkyMall's negligent acts or
              omissions; (b) SkyMall's offering, providing, or failing to
              provide any Catalog merchandise or services; (c) SkyMall's
              advertising, promotions, or activities; (d) Airline's use of
              patents, copyrights, trademarks, tradenames, logos, slogans,
              imprints, or any copy supplied by SkyMall and used as directed by
              SkyMall; and (e) any claim that merchandise sold in the Catalog
              infringes upon the valid patent or other rights of a third party.
              This indemnification does not apply to Claims arising from (a)
              merchandise, services, advertising, or promotions offered or
              provided by Airline or (b) negligent acts or omissions of Airline,
              its directors, officers, employees, contractors, or agents.

      15.3    Airline's Indemnification of SkyMall. Airline indemnifies and
              holds harmless SkyMall, its directors, officers, employees, and
              agents against all Claims for: (a) Airline's negligent acts or
              omissions; (b) Airline's offering, providing, or failing to
              provide any merchandise or services which are to be provided by
              Airline; (c) Airline's advertising, promotions, or activities; (d)
              SkyMall's use of patents, copyrights, trademarks, tradenames,
              logos, slogans, imprints, or any copy supplied by Airline and used
              as directed by Airline; and (e) any claim that merchandise
              provided by Airline infringes upon the valid patent or other
              rights of a third party. This indemnification does not apply to
              Claims arising from (a) merchandise, services, advertising, or
              promotions offered or provided by SkyMall or (b) negligent acts or
              omissions of SkyMall, its directors, officers, employees,
              contractors, or agents.

      15.4    Notification, Defense of Claims and Settlement. A Party seeking
              indemnification (the "Indemnitee")is subject to the following

              (a)  Notice. Indemnitee must notify the other Party (the
                   "Indemnitor") promptly after learning of a Claim. Failure to
                   notify Indemnitor of a Claim relieves Indemnitor from the
                   obligation to indemnify to the extent the delay materially
                   prejudices defense of the Claim.

              (b)  Defense. Indemnitor is entitled to assume the defense of the
                   Claim, with counsel reasonably acceptable to Indemnitee.
                   Indemnitor is not liable for legal or other expenses incurred
                   by Indemnitee after notice of Indemnitor's election to assume
                   the defense of the Claim, other than the reasonable costs

<PAGE>   13
                   of investigating the matter and cooperating with counsel.
                   Indemnitee may employ its own counsel, but the fees and
                   expenses are at the Indemnitee's expense unless (1)
                   Indemnitor authorizes employment of counsel by Indemnitee,
                   (2) Indemnitee reasonably concludes based on the opinion of
                   counsel that there is a conflict of interest between
                   Indemnitor and Indemnitee in the conduct of the defense, or
                   (3) Indemnitor fails to employ counsel to assume the defense.

              (d)  Settlements. Indemnitor is not obligated for any settlement
                   unless it agrees to the settlement in writing. If Indemnitor
                   agrees to a settlement, but Indemnitee unreasonably fails to
                   enter into the settlement, then Indemnitor's indemnification
                   obligation for the Claim will not exceed the amount of the
                   settlement (plus expenses incurred up to the time the
                   settlement could have been effected).


      16.1    Insurance Amounts and Certificates. Each Party must keep in force
              insurance, and furnish to the other certificates evidencing
              insurance, as follows: (a) comprehensive general liability
              insurance, $4,000,000 combined single limit coverage; (b) products
              liability insurance, $4,000,000 combined single limit coverage;
              (c) advertisers liability insurance, $4,000,000; and (d)
              automobile liability insurance, $1,000,000. Each party must also
              keep in force policies of workers compensation insurance in
              amounts required by law.

      16.2    Endorsements. Each Party will endorse all required policies to:
              (a) provide that the insurance is primary insurance and
              acknowledge that insurance procured by the other Party is
              secondary or excess insurance; (b) name the other Party, its
              directors, officers, agents, and employees as additional insureds;
              (c) contain a waiver of subrogation clause in favor of the
              additional insureds; and (d) require 30 days written notice to the
              other Party of any cancellations or adverse material change in
              such insurance.


      17.1    Entire Agreement. This Agreement is the entire agreement of the
              Parties regarding its subject matter and supersedes all prior oral
              or written agreements.

      17.2    Amendments and Waivers. This Agreement may not be amended except
              in a writing signed by each Party. No waiver is effective unless
              in writing and signed by the Party granting the waiver. Any single
              waiver does not operate as a continuing waiver or waive any other
              provision or breach of this Agreement, whether in the past or in
              the future.

      17.3    Assignments and Successors. Neither Party may assign this
              Agreement without the prior written consent of the other Party,
              which shall not be unreasonably withheld. This Agreement is
              binding on, and inures to the benefit of, the Parties and their
              respective successors and assigns. Nothing in this Agreement

<PAGE>   14
              on any person, other than the Parties or their respective
              successors and assigns, any rights, obligations, remedies or

      17.4    No Joint Venture or Partnership. Nothing in this Agreement
              constitutes, creates, or establishes any agency, joint venture or
              partnership relationship between the Parties. No Party has any
              power or right to represent, act on behalf of, or contractually
              bind the other Party as its agent, partner or otherwise.

      17.5    Severability. The unenforceability, illegality, or invalidity of
              any provision of this Agreement will not alter the remaining
              provisions of this Agreement. Each provision of this Agreement is
              severable from all other provisions of this Agreement.

      17.6    Survival. All agreements, obligations, covenants, terms,
              conditions, representations, and warranties made in this Agreement
              will survive the execution and delivery of this Agreement until
              all obligations of the parties are fully performed. All rights and
              obligations of the Parties with regard to Confidential
              Information, Non-Competition, Indemnification, and Insurance shall
              survive termination of this Agreement.

      17.7    Further Actions and Assurances. Each Party will cooperate in good
              faith to take actions, and to execute and deliver documents, as
              reasonably requested by the other Party.

      17.8    Governing Law. This Agreement is governed by and interpreted in
              accordance with the laws of Arizona.

      17.9    Attorneys' Fees. In any proceeding arising out of or related to
              this Agreement, the prevailing Party is entitled to receive, in
              addition to any other remedy or award, reasonable attorneys' fees,
              costs and other expenses incurred in connection with such

      17.10   Notices. Notices must be in writing and are effective (a) on the
              date of delivery or (b) 72 hours after mailing by United States
              first class mail, registered or certified, return receipt
              requested, postage prepaid and properly addressed. Notices must be
              sent to the address stated on the signature page (or to any other
              address designated by a Party).

      17.11   Counterparts. This Agreement may be executed in counterparts, each
              of which is an original. All counterparts constitute one and the
              same Agreement.

      17.12   Exhibits. The Exhibits to this Agreement are incorporated in and
              made a part of this Agreement.

      17.13   Time. Time is of the essence of this Agreement.

<PAGE>   15
      17.14   Effective Date. This Agreement is executed ______________, 19____,
              to be effective on ___________________________, 19____.

                                    [AIRLINE NAME]

                                    By: ________________________________________
                                    Name: ______________________________________
                                    Title: _____________________________________

                                    [Airline Name]
                                    ____________ (Voice)
                                    ____________ (Fax)

                                    SKYMALL, INC.

                                    By: ______________________________
                                    Name:  Robert M. Worsley
                                    Title:  President

                                    SkyMall, Inc.
                                    1520 East Pima Street
                                    Phoenix, Arizona 85034
                                    Attention: Robert M. Worsley, President
                                    (602) 254-9777 (Voice)
                                    (602) 254-6075 (Fax)

                                    With a copy to:

                                    Lewis and Roca
                                    40 North Central Avenue
                                    Phoenix, Arizona 85004-4429
                                    Attention:  Kevin L. Olson, Esq.

<PAGE>   16
                                    EXHIBIT A

                              NET SALES CALCULATION


                           BETWEEN AIRLINE AND SKYMALL

"Net Sales" are determined as follows:

      A.      Definitions:

              (a)  "Gross Merchandise Sales" is defined as all gross merchandise
                   sales from the Catalog but not sales to Airline's employees.

              (b)  "Concierge Service Fees" is defined as the charge SkyMall
                   collects from Airline customers for each concierge service
                   request and is exclusive of the price of goods or services
                   required to fulfill such request.

              (c)  "Returned Merchandise Revenue" is defined as the sale amounts
                   on all returned merchandise or refunds from Airline customers
                   and applicable restocking charges.

              (d)  "Cancelled Concierge Service Fees" is defined as any
                   Concierge Service Fees charged by SkyMall for services
                   rendered and thereafter cancelled by Airline customers, and
                   the cost to cancel or return the applicable service or

              (e)  "Sales Taxes, Excise Taxes and Duties" is defined as all
                   applicable sales and excise taxes and duties on Catalog
                   merchandise and services paid by SkyMall for Airline

              (f)  "Shipping and Handling Charges" is defined as all shipping,
                   handling and insurance costs for all Catalog merchandise and
                   services sold to Airline customers.

              (g)  "Giftwrapping and Monogramming Charges" is defined as all
                   extra and special services requested and paid by Airline

              (h)  "Advertising Revenues" is defined as the depiction fees and
                   advertising charges paid by Suppliers for having their
                   products or services featured in the Catalog.

              (i)  "Bad Debts" is defined as all bad debts incurred by SkyMall
                   in administering the SkyMall(R) Program for Airline.
<PAGE>   17
      B.      Calculation:

              Net Sales =

                   (a)   Gross Merchandise Sales
              +    (b)   Concierge Service Fees
              +    (c)   Sales Taxes, Excise Taxes and Duties
              +    (d)   Shipping and Handling Charges
              +    (e)   Giftwrapping and Monogramming Charges


              -    (a)   Returned Merchandise Revenue
              -    (b)   Cancelled Concierge Service Fees
              -    (c)   Sales Taxes, Excises Taxes and Duties
              -    (d)   Shipping and Handling Charges
              -    (e)   Giftwrapping and Monogramming Charges
              -    (f)   Bad Debts

              Net Sales excludes Advertising Revenues

      C.      Example:

                  Merchandise Sales              $3,100,000
                  Concierge Fees                    100,000
                  Taxes                             192,000
                  Shipping & Handling               320,000
                  Giftwrapping                       30,000

                           Subtotal              $3,742,000


                  Merchandise Returns            $  160,000
                  Cancelled Fees                      5,000
                  Taxes                             192,000
                  Shipping & Handling               320,000
                  Giftwrapping                       30,000
                  Bad Debts                          32,000

                           Subtotal              $  739,000

                  TOTAL NET SALES                $3,003,000


<PAGE>   1
                                                                EXHIBIT 10.6

                                  SKYMALL, INC.

                             1994 STOCK OPTION PLAN
                        (AS AMENDED SEPTEMBER 30, 1996)

1.       Purpose.

         The SkyMall, Inc. 1994 Stock Option Plan is intended to assist in
attracting and retaining certain key employees to whom options may be granted
under the Plan.

2.       Definitions.  The following terms have the following meanings:

         2.1. "Act" means the Federal Securities Act of 1933, as amended, and 
applicable state securities laws.

         2.2. "Board" means the Board of Directors of SkyMall, Inc.

         2.3. "Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder.

         2.4. "Committee" means the Compensation Committee of the Board of
Directors of Skymall, Inc.

         2.5. "Company" means SkyMall, Inc. and any of its subsidiaries.

         2.6. "Grant Date" means the date on which an Option is granted.

         2.7. "Incentive Option" means an Option eligible for tax treatment as
an incentive option under Section 422 of the Code.

         2.8. "Non-Qualified Option" means an Option that is not eligible for
tax treatment under Section 422 of the Code

         2.9. "Option" means an option to purchase Stock that is granted under
the Plan.

         2.10. "Optionee" means an employee to whom an Option has been granted
under the Plan.

         2.11. "Plan" means the SkyMall, Inc. 1994 Stock Option Plan, as 
amended, the terms and conditions of which are in this instrument.

         2.12. "Stock" means the common stock of SkyMall, Inc.

         2.13. "Stock Option Agreement" means the written agreement entered into
between the Company and the Optionee that provides for the price and terms of an
option granted under the Plan.
<PAGE>   2
         2.14 "Subsidiary" means any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by the

         2.15. "Tax Date" means the date an Optionee is required to pay the
Company an amount to cover tax withholding on the exercise of a Non-Qualified

         2.16. "Ten Percent Shareholder" means an employee who owns more than
10% of the total combined voting power of all classes of stock of the Company.

3.       Administration.

         3.1. The Plan shall be administered by the Board. Without limiting the
powers of the Board, the Board shall have the power to determine the times
during which any option shall be exercisable, the events upon which any Option
shall be terminated, the amounts, if any, payable to beneficiaries of an
Optionee upon the death of such Optionee, the exercisability of any Option upon
the sale of all or substantially all of the assets of the Company, or a merger
pursuant to which the Company is not the surviving corporation, (other than a
merger that is only a change in form), and other terms of exercise. No member of
the Board shall be eligible to vote with respect to Options to be granted to him
or her.

         3.2. The Committee, subject to the provisions of the Plan, shall make
recommendations to the Board regarding:

                  (a) the employees who shall receive Options, the times when
such Options shall be granted and the time limits within which Options may be
exercised, the number of shares to be subject to each Option, and the terms and
provisions of Stock Option Agreements (which need not be identical):

                  (b) Matters of interpretation of plan provisions;

                  (c) rules and regulations relating to the Plan;

                  (d) Stock Option Agreements under the Plan; and

                  (e) other determinations advisable for the proper
administration of the Plan.

All decisions and determinations of the Board in the administration of the Plan
shall be final.

4.       Tax Characteristics of Options.

         Options granted pursuant to the Plan may be designated, but need not be
designated, as Incentive Options. The Stock Option Agreement shall provide
whether an option is an Incentive Option or a Non-Qualified Option. In the case
of options that are Incentive Options the aggregate fair market value
(determined at the time the incentive stock option is granted) of the Stock with
respect to which options are exercisable for the first time by an employee
during any calendar year (under all stock option plans of the Company) shall not
exceed $100,000.

<PAGE>   3
5.       Stock Subject to the Plan.

         5.1 Subject to adjustments pursuant to Section 11 of this Plan, the
aggregate number of shares that may be issued upon the exercise of Options shall
not exceed 650,000 shares of Stock, which may be authorized but unissued shares
or treasury shares, as the Board may determine.

         5.2 If an Option for any reason expires or is terminated, those shares
of Stock allocated for issuance upon the unexercised or terminated portion of
such Option may again be subject to an Option under the Plan.

6.       Eligibility.

         All directors and officers of the Company who are employees of the
Company and other key employees of the Company and any Subsidiary (whether
existing now or a new subsidiary) as selected by the Board shall be eligible to
receive Options under the Plan.

7.       Option Exercise Price and Payment of Withholding Taxes.

         The price at which shares of Stock may be purchased upon the exercise
of any Option shall be such price as determined by the Board, which shall not be
less than 110% of the fair market value of the Stock on the date of the granting
of the Option, but if the Company desires to grant an Incentive Option to a Ten
Percent Shareholder, the price at which shares may be purchased shall not be
less than 110% of the fair market value of the Stock at the date of grant. Also,
if an Employee desires to exercise a Non-Incentive Option, the Employee shall
pay to the Company the federal and state income and withholding taxes the
Company determines are payable on the spread between the fair market value of
the stock at the date of exercise and Option Price.

8.       Term of Options.

         The term of each Option shall be determined by the Board, but unless
otherwise determined the term of each option shall be five years from the date
of grant. In no case shall the term of any option exceed ten years from the date
of grant, or five years in the case of a grant of an Incentive Option to a
person who owns 10% or more of the value of the Employer's outstanding Stock.

9.       Payment on Exercise of Options.

         The price of an exercised Option and any taxes attributable to the
delivery of the Stock to the employee upon exercise of such Option shall be

         (a) in United States dollars in cash or by check, bank draft or money
order payable to the order of the Company;

         (b) at the discretion of the Board, through the delivery of Stock with
a fair market value equal to the exercise price and withholding taxes, if any;

<PAGE>   4
         (c) at the discretion of the Board, through a combination of (a) and

10.      Non-Transferability of Options.

         Options shall not be transferable by the Optionee, except that if an
employee dies, his or her personal representative may exercise the option within
90 days of the date of the employee's death.

11.      Adjustments.

         If the Company:

         (a) declares a dividend or makes a distribution on its Stock payable in
Stock or securities convertible into Stock;

         (b) recapitalizes through a split-up of the outstanding shares of Stock
into a greater number or a combination of the outstanding Stock into a lesser
number: or

         (c) issues, by reclassification of its Stock, any shares of Stock, the
Board shall make appropriate and equitable adjustments in the number and kind of
shares subject to outstanding Options under the Plan. Any other adjustments to
the Options shall be within the sole discretion of the Board. If the adjustment
would produce fractional shares with respect to any unexercised Option, the
Board may adjust appropriately the number of shares covered by the Option to
eliminate the fractional shares. The price of any shares subject to an
outstanding Option shall be adjusted so there will be no change in the aggregate
purchase price payable upon the exercise of such Option.

12.      Additional Restrictions.

         Notwithstanding any other provisions of the Plan, any Option granted
under the Plan may contain such additional or more restrictive provisions as the
Board deems advisable and consistent with the Plan.

13.      Registration.

         The Plan, the Stock to be issued pursuant to the exercise of Options or
the Options granted under the Act, may in the discretion of the Board, be
registered under the Act.

14.      Effective Date of Plan.

         The Plan shall become effective as of January 1, 1994 and shall remain
in effect for ten years from its effective date, unless it is sooner terminated
by the Board. No Incentive Options may be issued under the Plan unless the Plan
is approved by the stockholders of the Company within one year from the date the
Plan is adopted by the Company.

<PAGE>   5
15.      Amendment Termination.

         The Board, in its discretion and at any time, may modify, amend or
terminate the Plan. Neither the termination of the Plan nor any modification or
amendment thereof, shall adversely affect any rights under an Option previously
granted under the Plan without the consent of the Optionee. Notwithstanding the
foregoing, the Board may amend the Plan to the extent necessary to cause Options
granted under the Plan to meet the requirements of the Code and regulations
thereunder and the Act.

16.      Miscellaneous.

         16.1. The Grant Date of any Option under this Plan shall be the date
specified by the Board in the Stock Option Agreement. The grant of any Option
shall be subject to the execution by an Optionee of a Stock Option Agreement in
the form and containing the terms specified by the Board.

         16.2. Nothing in the Plan or any Option granted hereunder shall confer
upon any employee any right to continue in the service of the Company or a

         16.3 The grant of Options under the Plan, the issuance and delivery of
shares upon the exercise of Options, and any other matters relating thereto
shall be subject to all laws, rules and regulations as may from time to time be
applicable thereto, including but not limited to, any and all rules and
regulations of any stock exchange or exchanges upon which the shares of the
Company may be listed and all applicable federal and state securities laws, and
shall be further subject to the approval of counsel for the Company with
respect to compliance with such laws, rules and regulations.

         As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

         In the case of an Incentive Option, any Optionee who disposes of
shares of Stock acquired on the exercise of an Option by sale or exchange (a)
either within two (2) years after the date of the grant of the Option under
which the Stock was acquired or (b) within one (1) year after the acquisition
of such shares of Stock shall notify the Company of such disposition and of the
amount realized upon such disposition.

         16.4 No person shall acquire any rights as an Optionee under this Plan
unless and until a Stock Option Agreement shall have been duly executed on
behalf of the Company by such officer or officers as the Board shall designate
for such purpose, delivered to the person named therein, and executed by such
person. No person shall have any rights as a shareholder with respect to any
shares covered by an Option granted pursuant to the Plan until the date of the
issuance of a share certificate to the Optionee for such shares.

<PAGE>   6
         16.5 The President of the Company has been authorized to execute this
Plan, as amended, and has executed the Plan, as amended, on the date indicated 


                                       Date: September 30, 1996


<PAGE>   1
                                                                EXHIBIT 10.7

                                  SKYMALL, INC.


         1. Purposes Of The Plan. The purposes of this Plan are to enable the
Company to attract and retain the best available individuals to serve as
non-employee members of the Board, to reward such directors for their
contributions to the Company, and to maximize the identity of interest between
such directors and the Company's stockholders generally.

         2. Definitions. As used herein, the following definitions shall apply:

                  (a) "Board" shall mean the Board of Directors of the Company.

                  (b) "Company" shall mean SkyMall, Inc., a Nevada corporation.

                  (c) "Exercise Price" shall mean, with respect to each Share
         granted, the Fair Market Value on the date of grant.

                  (d) "Fair Market Value" shall mean, with respect to the date a
         given Option is granted or exercised, the value determined by the Board
         in good faith using a generally accepted valuation method; provided,
         however, that where there is a public market for the Stock, the Fair
         Market Value per Share shall be the mean of the final bid and asked
         prices of the Stock on the date of grant or exercise, as reported in
         The Wall Street Journal (or, if not so reported, as otherwise reported
         by the Nasdaq Stock Market's National Market or Nasdaq) or, in the
         event the Stock is listed on a stock exchange, the Fair Market Value
         per Share shall be the closing price of the Stock on such exchange on
         the date of grant or exercise of the Option, as reported in The Wall
         Street Journal.

                  (e) "Option" shall mean a right to purchase Stock, granted
         pursuant to the Plan.

                  (f) "Optioned Stock" shall mean the Stock subject to an

                  (g) "Optionee" shall mean a non-employee director of the
         Company who has been granted an Option.

                  (h) "Plan" shall mean this SkyMall, Inc. Non-Employee Director
         Stock Option Plan.

                  (i) "Share" shall mean a share of the Stock.

                  (j) "Stock" shall mean the common stock of the Company
         described in the Company's Articles of Incorporation, as amended or
         restated from time to time.

<PAGE>   2
                  (k) "Trading Day" shall mean a day on which the Fair Market
         Value of the Stock can be determined.

         3.       Stock Subject To The Plan.

                  (a) Subject to increases and adjustments pursuant to Section 9
         hereof, the initial number of Shares reserved and available for
         distribution under the Plan shall be 100,000.

                  (b) If an Option should terminate, or be canceled, rescinded
         or surrendered, the Optioned Stock subject to such Option shall not be
         available for future grants under the Plan.

         4.       Option Grants.

                  (a) An Option to purchase 5,000 Shares shall be granted to
         each non-employee director of the Board on appointment to the Board.

                  (b) In addition, an Option to purchase 3,000 Shares shall be
         granted annually to each non-employee director of the Board on the date
         determined pursuant to Section 10 hereof; provided, however, that such
         Option shall not be granted to any non-employee director of the Company
         who during the fiscal year immediately preceding such grant date (or
         the period that he served as a director of the Company, if less than
         the full fiscal year) attended fewer than 75 percent of the aggregate
         of (i) the total number of the regularly scheduled and special meetings
         of the Board and (ii) the total number of meetings held by all
         committees of the Board on which he served; provided, further, that no
         such Options shall be granted to any of the non-employee directors of
         the Company in the event that, on such grant date, the number of Shares
         remaining available for distribution under the Plan is less than the
         product of the number of then current non-employee directors of the
         Company multiplied by 3,000.

         5. Board Approval And Effective Dates. This Plan shall become effective
as of October 15, 1996, the date as of which the Board and the stockholders of
the Company adopted the Plan. The Plan and all outstanding Options shall remain
in effect until such Options shall have been exercised, shall have expired or
shall otherwise be terminated.

         6.       Term; Exercise; Rights As A Stockholder.

                  (a) The term of each Option shall be ten years from the date
         of grant thereof. An Option shall be exercisable upon grant and may be
         exercised in whole or in part at any time or times during its term;
         provided, however, that an Option may not be exercised for a fraction
         of a Share.


<PAGE>   3
                  (b) An Option shall be deemed to be exercised upon receipt by
         the Company from the Optionee of written notice of such exercise. Such
         notice shall be accompanied by full payment for the Shares subject to
         such exercise.

                  (c) No person shall have any right or privilege as a
         stockholder of the Company, whether to vote or to receive dividends or
         otherwise, by reason of the grant of an Option, but shall obtain such
         right only when Shares are actually issued to such person upon exercise

         7.       Payment.  The Exercise Price shall be paid:

                  (a) In United States dollars in cash or by check payable to
         the order of the Company; or

                  (b) At the election of the Optionee by delivery of Shares with
         an aggregate Fair Market Value equal to the Exercise Price; or

                  (c) By any combination of (a) and (b) above.

         The Board shall determine acceptable methods for tendering Stock as
payment upon exercise of an Option and may impose such limitations and
prohibitions on the use of Stock to exercise an Option as it deems appropriate.

         8. Transferability Of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee or by his guardian or legal

         In the event of the Optionee's death, his Option shall be exercisable,
prior to the expiration of the Option, by the person or entity to whom his
accrued and vested rights pass by will or by the laws of descent and

         9. Adjustments Upon Changes In Capitalization Or Merger. If the
outstanding Stock of the Company shall at any time be changed or exchanged by
declaration of a stock dividend, split-up, combination of shares,
recapitalization, merger, consolidation, or other corporate reorganization in
which the Company is the surviving corporation, the number and kind of Shares
subject to the Plan or subject to any Options theretofore granted, and the
Options' prices, shall be appropriately and equitably adjusted.

         In the event of a liquidation or dissolution of the Company, sale of
all or substantially all of its assets, or a merger, consolidation or other
corporate reorganization in which the Company is not the surviving corporation,
or any merger or other reorganization in which the


<PAGE>   4
Company is the surviving corporation but the holders of its Stock receive
securities of another corporation, any outstanding Options hereunder shall be
appropriately and equitably adjusted.

         10. Time Of Granting Options. The Option grant date shall be the third
Trading Day after the Company publicly announces its year-end financial results
for the immediately preceding fiscal year.

         11. Amendment And Termination Of The Plan. The Board may from time to
time amend the Plan in whole or part in such respects as the Board may deem
advisable or may terminate the Plan, provided, however, that amendments to the
Plan relating to the amount, price, or timing of the option grants shall not be
made more than once in any six month period. Any amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if the Plan had not been amended or terminated. Any
amendment to the Plan shall be submitted as a proposal for approval of the
Company's stockholders if such approval of the amendment is necessary for the
Plan to comply or to continue to comply with the applicable exemption, if any,
under Section 16(b) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

         12. Conditions Upon Issuance Of Shares. The Plan, the grant, the
exercise of Options and the obligations of the Company shall be subject to all
applicable federal and state laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company shall
not be required to issue or deliver any certificate or certificates for Shares
of Stock prior to (i) the admission of such Shares to listing on any stock
exchange on which the Stock may then be listed, and (ii) the completion of any
registration or other qualification of such Shares under any state or federal
law (including, without limitation, the Securities Act of 1933, as amended), or
rulings or regulations of any government body which the Company shall, in its
sole discretion, determine to be necessary or advisable.

         As a condition to the exercise of an Option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is necessary or advisable.

         13. Miscellaneous Provisions.

                  (a) Plan Expense. Any expenses of administering this Plan
         shall be borne by the Company.

                  (b) Taxes. The Company shall be entitled if necessary or
         desirable to pay or withhold the amount of any tax attributable to the
         delivery of Stock under the Plan after giving the person entitled to
         receive such Stock notice as far in advance as practical, and the
         Company may defer making delivery of such Stock if any such tax may be
         pending unless and until indemnified to its satisfaction.


<PAGE>   5
                  (c) Construction Of Plan. The validity, construction,
         interpretation, administration and effect of the Plan and of its rules
         and regulations, and rights relating to the Plan, shall be determined
         by the Board in accordance with the laws of the State of Nevada, and
         such determinations shall be final and conclusive.

                  (d) Gender. For purposes of this Plan, words used in the
         masculine gender shall include the feminine and neuter, and the
         singular shall include the plural and vice versa, as appropriate.

         As approved by the Board of Directors as of October 15, 1996.

                                                          ROBERT M. WORSLEY