Document:

Form of Loan and Stock Pledge Agreements

EXHIBIT 10.5

 

E*TRADE GROUP, INC. 

NOTE SECURED BY STOCK PLEDGE AGREEMENT

$12,500,000

June 19, 2001

Menlo Park, California

           FOR VALUE RECEIVED, Christos M. Cotsakos ("Maker") promises to pay to the order of E*TRADE Group, Inc., a Delaware corporation (the "Corporation"), at
its corporate offices at 4500 Bohannon Drive, Menlo Park, California 94025, the principal sum of Twelve Million Five Hundred Thousand Dollars ($12,500,000), together with all accrued interest thereon, upon the terms and conditions specified
below.

          1.      Purchase Money Indebtedness.   The proceeds of this Note shall be applied solely and exclusively to the payment of the purchase
price of Two Million Five Hundred Ten Thousand, Three Hundred Twenty-three (2,510,323) shares of the Corporation's common stock acquired this day by Maker (the "Purchased Shares"), together with all associated taxes, and those Purchased
Shares shall be held in pledge by the Corporation as collateral for the payment of this Note.

          2.     Interest.   Interest shall accrue on the unpaid balance outstanding from time to time under this Note at the rate of 7.5% per
annum, compounded semi-annually. Accrued and unpaid interest as of June 19, 2002 shall become due and payable on June 19, 2002. 

          3.     Principal Due Date.   Subject to the accelerated payment provisions of Paragraph 5 and 6 of this Note, the principal balance of
this Note shall become due and payable in one lump sum on July 19, 2002.

          4.     Payment.   Payment shall be made in lawful tender of the United States and shall be applied first to the payment of all accrued
and unpaid interest and then to the payment of principal. Prepayment of the principal balance of this Note, together with all accrued and unpaid interest on the portion of principal so prepaid, may be made in whole or in part at any time without
penalty.

          5.     Events of Acceleration.   The entire unpaid principal balance of this Note, together with all accrued and unpaid interest, shall
become immediately due and payable prior to the specified due date of this Note upon the occurrence of one or more of the following events:

                  A.     the failure of the Maker to pay any installment of principal or accrued interest under this Note when due
and the continuation of such default for more than thirty (30) days; or

                  B.     the expiration of the thirty (30)-day period following the date the Maker ceases for any reason to remain
in the employ of the Corporation; or

                  C.     the insolvency of the Maker, the commission of any act of bankruptcy by the Maker, the execution by the
Maker of a general assignment for the benefit of creditors, the filing by or against the Maker of any petition in bankruptcy or any petition for relief under the provisions of the Federal bankruptcy act or any other state or Federal law for the
relief of debtors and the continuation of such petition without dismissal for a period of thirty (30) days or more, the appointment of a receiver or trustee to take possession of any property or assets of the Maker or the attachment of or execution
against any property or assets of the Maker; or

                  D.     an acquisition of the Company (whether by merger, sale of all or substantially all of the Company's assets
or sale of more than fifty percent (50%) of the Company's outstanding voting securities) for consideration payable in cash or freely-tradable securities; provided, however, that if the Pooling of Interest Method, as described in Accounting
Principles Board Opinion No. 16, is used to account for the acquisition for financial accounting purposes, then acceleration of this Note shall not occur until the end of the sixty (60)-day period immediately following the close of the applicable
transfer restriction period required under Accounting Series Release Numbers 130 and 135 and further provided that any contrary provision in any employment agreement or action by the Company's compensation committee shall supercede this provision;
or

                  E.     the occurrence of any event of default under the Stock Pledge Agreement securing this Note or any
obligation secured thereby.

          6.     Special Acceleration Event. In the event the Maker sells or otherwise transfers for value one or more shares of the Corporation's
common stock purchased with the proceeds of this Note, then any unpaid portion of the principal balance of this Note attributable to the purchase price of those shares shall become immediately due and payable, together with all accrued and unpaid
interest on that principal portion.

          7.     Employment. The Maker shall be deemed to continue in employment with the Corporation for so long as he or she renders services
as an employee of the Corporation or one or more of the Corporation's fifty percent (50%) or more owned (directly or indirectly) subsidiaries.

          8.     Security. Payment of this Note shall be secured by a pledge of the Purchased Shares with the Corporation pursuant to the Stock Pledge
Agreement to be executed this date by the Maker. The Maker, however, shall remain personally liable for payment of this Note, and assets of the Maker, in addition to the collateral under the Stock Pledge Agreement, may be applied to the satisfaction
of the Maker's obligations hereunder.

          9.     Collection. If action is instituted to collect this Note, the Maker promises to pay all costs and expenses (including reasonable
attorney fees) incurred in connection with such action.

           10.     Waiver. A waiver of any term of this Note, the Stock Pledge Agreement or of any of the obligations secured thereby must be
made in writing and signed by a duly-authorized officer of the Corporation and any such waiver shall be limited to its express terms. 

           No delay by the Corporation in acting with respect to the terms of this Note or the Stock Pledge Agreement shall constitute a waiver of any breach, default, or failure of a
condition under this Note, the Stock Pledge Agreement or the obligations secured thereby.

           The Maker waives presentment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or
losses and interest thereon, notice of interest on interest and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note.
       

           11.     Conflicting Agreements. In the event of any inconsistencies between the terms of this Note and the terms of any other
document related to the loan evidenced by the Note, the terms of this Note shall prevail.

           12.     Governing Law. This Note shall be construed in accordance with the laws of the State of California without resort to that
State's conflict-of-laws rules.

	 	/s/ Christos M. Cotsakos
	 	 
 
	 	Christos M. Cotsakos, MAKER

 

E*TRADE GROUP, INC.

STOCK PLEDGE AGREEMENT 

                AGREEMENT made as of this 19th
day of June, 2001 by and between E*TRADE Group, Inc., a Delaware corporation (the “Corporation”), and Christos M. Cotsakos (“Pledgor”). 

 RECITALS 

           A. In connection with the purchase this day of Two Million Five Hundred Ten Thousand, Three Hundred Twenty-Three (2,510,323) shares of the Corporation’s Common Stock (the
“Purchased Shares”) from the Corporation, Pledgor has issued that certain promissory note (the “Note”) dated June 19, 2001 payable to the order of the Corporation in the principal amount of Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00). 

           B. Such Note is secured by the Purchased Shares and other collateral upon the terms set forth in this Agreement. 

                NOW, THEREFORE, it is hereby agreed as follows: 

                1. Grant of Security Interest. Pledgor hereby grants the Corporation a security interest in, and assigns, transfers to and pledges
with the Corporation, the following securities and other property (collectively, the “Collateral”): 

                (i) the Purchased Shares delivered to and deposited with the Corporation as collateral for the Note; 

                (ii) any and all new, additional or different securities or other property subsequently distributed with respect to the Purchased Shares which are to be
delivered to and deposited with the Corporation pursuant to the requirements of Paragraph 3 of this Agreement; 

                (iii) any and all other property and money which is delivered to or comes into the possession of the Corporation pursuant to the terms of this Agreement;
and 

                (iv) the proceeds of any sale, exchange or disposition of the property and securities described in subparagraphs (i), (ii) or (iii) above. 

                2. Warranties. Pledgor hereby warrants that Pledgor is the owner of the Collateral and has the right to pledge the Collateral and
that the Collateral is free from all liens, adverse claims and other security interests (other than those created hereby).

               3. Duty to Deliver. Any new, additional or different securities or other property (other than regular cash dividends) which may now or
hereafter become distributable with respect to the Collateral by reason of (i) any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Common Stock as a class without the
Corporation’s receipt of consideration or (ii) any merger, consolidation or other reorganization affecting the capital structure of the Corporation shall, upon receipt by Pledgor, be promptly delivered to and deposited with the Corporation as
part of the Collateral hereunder. Any such securities shall be accompanied by one or more properly-endorsed stock power assignments. 

                4. Payment of Taxes and Other Charges. Pledgor shall pay, prior to the delinquency date, all taxes, liens, assessments and other
charges against the Collateral, and in the event of Pledgor’s failure to do so, the Corporation may at its election pay any or all of such taxes and other charges without contesting the validity or legality thereof. The payments so made shall
become part of the indebtedness secured hereunder and until paid shall bear interest at the minimum per annum rate, compounded semi-annually, required to avoid the imputation of interest income to the Corporation and compensation income to Pledgor
under the Federal tax laws. 

                5. Stockholder Rights. So long as there exists no event of default under Paragraph 10 of this Agreement, Pledgor may exercise all
stockholder voting rights and be entitled to receive any and all regular cash dividends paid on the Collateral and all proxy statements and other stockholder materials pertaining to the Collateral. 

                6. Rights and Powers of Corporation. The Corporation may, without obligation to do so, exercise at any time and from time to time one
or more of the following rights and powers with respect to any or all of the Collateral: 

                (i) subject to the applicable limitations of Paragraph 9, accept in its discretion other property of Pledgor in exchange for all or part of the Collateral
and release Collateral to Pledgor to the extent necessary to effect such exchange, and in such event the other property received in the exchange shall become part of the Collateral hereunder; 

                (ii) perform such acts as are necessary to preserve and protect the Collateral and the rights, powers and remedies granted with respect to such Collateral
by this Agreement; and 

                (iii) transfer record ownership of the Collateral to the Corporation or its nominee and receive, endorse and give receipt for, or collect by legal
proceedings or otherwise, dividends or other distributions made or paid with respect to the Collateral, provided and only if there exists at the time an outstanding event of default under Paragraph 10 of this Agreement. Any cash
sums which the Corporation may so receive shall be applied to the payment of the Note and any other indebtedness secured hereunder, in such order of application as the Corporation deems appropriate. Any remaining cash shall be paid over to Pledgor.

                     Any action by the Corporation pursuant to the provisions of this Paragraph 6 may be taken without notice to Pledgor. Expenses
reasonably incurred in connection with such action shall be payable by Pledgor and form part of the indebtedness secured hereunder as provided in Paragraph 12. 

                     7. Care of Collateral. The Corporation shall exercise reasonable care in the custody and preservation of
the Collateral. However, the Corporation shall have no obligation to (i) initiate any action with respect to, or otherwise inform Pledgor of, any conversion, call, exchange right, preemptive right, subscription right, purchase offer or other right
or privilege relating to or affecting the Collateral, (ii) preserve the rights of Pledgor against adverse claims or protect the Collateral against the possibility of a decline in market value or (iii) take any action with respect to the Collateral
requested by Pledgor unless the request is made in writing and the Corporation determines that the requested action will not unreasonably jeopardize the value of the Collateral as security for the Note and other indebtedness secured hereunder. 

                     Subject to the limitations of Paragraph 9, the Corporation may at any time release and deliver all or part of the Collateral
to Pledgor, and the receipt thereof by Pledgor shall constitute a complete and full acquittance for the Collateral so released and delivered. The Corporation shall accordingly be discharged from any further liability or responsibility for the
Collateral, and the released Collateral shall no longer be subject to the provisions of this Agreement. 

                     8. Transfer of Collateral. In connection with the transfer or assignment of the Note (whether by
negotiation, discount or otherwise), the Corporation may transfer all or any part of the Collateral, and the transferee shall thereupon succeed to all the rights, powers and remedies granted the Corporation hereunder with respect to the Collateral
so transferred. Upon such transfer, the Corporation shall be fully discharged from all liability and responsibility for the transferred Collateral. 

                     9. Release of Collateral. Provided all indebtedness secured hereunder (other than payments not yet
due and payable under the Note) shall at the time have been paid in full and there does not otherwise exist any event of default under Paragraph 10, the Purchased Shares, together with any additional Collateral which may hereafter be pledged and
deposited hereunder, shall be released from pledge and returned to Pledgor in accordance with the following provisions: 

                     (i) Upon payment or prepayment of principal under the Note, together with payment of all accrued interest to date on the
principal amount so paid or prepaid, one or more of the Purchased Shares held as Collateral hereunder shall (subject to the applicable limitations of Paragraphs 9(iii) and 9(v) below) be released at the time of such payment or prepayment. The number
of
the shares to be so released shall be equal to the number obtained by multiplying (i) the total number of Purchased Shares held under this Agreement at the time of the payment or prepayment, by (ii) a fraction, the numerator of which shall be the
amount of the principal paid or prepaid and the denominator of which shall be the unpaid principal balance of the Note immediately prior to such payment or prepayment. In no event, however, shall any fractional shares be released.

                     (ii) Any additional Collateral which may hereafter be pledged and deposited with the Corporation (pursuant to the
requirements of Paragraph 3) with respect to the Purchased Shares shall be released at the same time the particular shares of Common Stock to which the additional Collateral relates are to be released in accordance with the applicable provisions of
Paragraph 9(i) or 9(vi). 

                     (iii) Under no circumstances, however, shall any Purchased Shares or any other Collateral be released if previously applied
to the payment of any indebtedness secured hereunder. In addition, in no event shall any Purchased Shares or other Collateral be released pursuant to the provisions of Paragraph 9(i), 9(ii) or 9(vi) if, and to the extent, the fair market value of
the Common Stock and all other Collateral which would otherwise remain in pledge hereunder after such release were effected would be less than the unpaid principal and accrued interest under the Note. 

                     (iv) For all valuation purposes under this Agreement, the fair market value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions: 

                          (A) If the Common Stock is at the time traded on the Nasdaq National Market, the fair market
value shall be the average of the high and low selling prices per share of Common Stock on the date in question, as such prices are reported by the National Association of Securities Dealers on the Nasdaq National Market. If there is no average of
the high and low selling prices for the Common Stock on the date in question, then the average of the high and low selling prices on the last preceding date for which such quotation exists shall be determinative of fair market value. 

                          (B) If the Common Stock is at the time listed on the American Stock Exchange or the New York
Stock Exchange, then the fair market value shall be the average of the high and low selling prices selling prices per share of Common Stock on the date in question on the securities exchange serving as the primary market for the Common Stock, as
such prices are officially quoted in the composite tape of transactions on such exchange. If there is no average of the high and low selling prices of Common Stock on such exchange on the date in question, then the fair market value shall be the
average of the high and low selling prices on the exchange on the last preceding date for which such quotation exists.

                          (C) If the Common Stock is at the time neither listed on any securities exchange nor traded on
the Nasdaq National Market, the fair market value shall be determined by the Corporation’s Board of Directors after taking into Account such factors as the Board shall deem appropriate.

                     (v) So long as the Collateral is in whole or in part comprised of “margin stock” within the meaning of Section
221.2 of Regulation U of the Federal Reserve Board, then no Collateral shall be substituted for any Collateral under the provisions of Paragraph 6(i) or be released under Paragraph 9(i), 9(ii) or 9(vi), unless there is compliance with each of the
following additional requirements: 

                          (A) The substitution or release must not increase the amount by which the indebtedness secured
hereunder at the time of such substitution or release exceeds the maximum loan value (as defined below) of the Collateral immediately prior to such substitution or release. 

                          (B) The substitution or release must not cause the amount of indebtedness secured hereunder at
the time of such substitution or release to exceed the maximum loan value of the Collateral remaining after such substitution or release is effected.

                          (C) For purposes of this Paragraph 9(v), the maximum loan value of each item of Collateral
shall be determined on the day the substitution or release is to be effected and shall, in the case of the shares of Common Stock and any additional Collateral (other than margin stock), equal the good faith loan value thereof (as defined in Section
221.2 of Regulation U) and shall, in the case of all margin stock (other than the Common Stock), equal fifty percent (50%) of the current market value of such margin stock. 

                     (vi) The Compensation Committee of the Corporation’s Board of Directors shall have the discretion, exercisable upon such
terms and conditions as the Compensation Committee deems advisable, to authorize the release of one or more shares of Common Stock from pledge hereunder in the event the maximum loan value of the Collateral pledged hereunder (as such value is
determined pursuant to subparagraph 9(v)(C)) should substantially exceed the outstanding indebtedness at the time secured hereunder. Any such release of the pledged shares of Common Stock shall, however, be effected in compliance with the
requirements of subparaphs (iii) and (v) of this Paragraph 9. 

                     10. Events of Default. The occurrence of one or more of the following events shall constitute an event
of default under this Agreement: 

                     (i) the failure of Pledgor to pay, when due under the Note, any installment of principal or accrued interest; or 

                     (ii) the occurrence of any other acceleration event specified in the Note; or 

                     (iii) the failure of Pledgor to perform any obligation imposed upon Pledgor by reason of this Agreement; or 

                     (iv) the breach of any warranty of Pledgor contained in this Agreement.

                Upon the occurrence of any such event of default, the Corporation may, at its election, declare the Note and all other indebtedness secured hereunder to
become immediately due and payable and may exercise any or all of the rights and remedies granted to a secured party under the provisions of the California Uniform Commercial Code (as now or hereafter in effect), including (without limitation) the
power to dispose of the Collateral by public or private sale or to accept the Collateral in full payment of the Note and all other indebtedness secured hereunder. 

                Any proceeds realized from the disposition of the Collateral pursuant to the foregoing power of sale shall be applied first to the payment of expenses
incurred by the Corporation in connection with the disposition, then to the payment of the Note and finally to any other indebtedness secured hereunder. Any surplus proceeds shall be paid over to Pledgor. However, in the event such proceeds prove
insufficient to satisfy all obligations of Pledgor under the Note, then Pledgor shall remain personally liable for the resulting deficiency. 

           11. Other Remedies.  The rights, powers and remedies granted to the Corporation pursuant to the provisions of this Agreement shall be in addition to all rights,
powers and remedies granted to the Corporation under any statute or rule of law. Any forbearance, failure or delay by the Corporation in exercising any right, power or remedy under this Agreement shall not be deemed to be a waiver of such right,
power or remedy. Any single or partial exercise of any right, power or remedy under this Agreement shall not preclude the further exercise thereof, and every right, power and remedy of the Corporation under this Agreement shall continue in full
force and effect unless such right, power or remedy is specifically waived by an instrument executed by the Corporation. 

           12. Costs and Expenses. All costs and expenses (including reasonable attorneys fees) incurred by the Corporation in the exercise or enforcement of any right, power
or remedy granted it under this Agreement shall become part of the indebtedness secured hereunder and shall constitute a personal liability of Pledgor payable immediately upon demand and bearing interest until paid at the minimum per annum rate,
compounded semiannually, required to avoid the imputation of interest income to the Corporation and compensation income to Pledgor under the Federal tax laws. 

           13. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without resort to that State’s
conflict-of-laws rules. 

           14. Successors.  This Agreement shall be binding upon the Corporation and its successors and assigns and upon Pledgor and the executors, heirs and legatees of
Pledgor’s estate. 

           15. Severability. If any provision of this Agreement is held to be invalid under applicable law, then such provision shall be ineffective only to the extent of such
invalidity, and neither the remainder of such provision nor any other provisions of this Agreement shall be affected thereby. 

           IN WITNESS WHEREOF, this Agreement has been executed by Pledgor and the Corporation on this 19th
day of June, 2001.

	 	 	 	/s/ CHRISTOS M. COTSAKOS
	 	 	 	

	 	 	 	PLEDGOR 
	 	 	        	Address:	                                       
	 	 	  	 	

	 	 	 	

	 	 		
	 	 	 	 	 
	 	 	 	 	 
	AGREED TO AND ACCEPTED BY:	 	 	 
	E*TRADE GROUP, INC.	 	 	 
	By:	/s/ RUSSELL S. ELMER	 	 	 
	 	
	 	 	 
	Title:	Chief People and Culture Officer	 	 	 
	 	
	 	 	 
	Dated:  June 19, 2001	 	 	 

 ASSIGNMENT SEPARATE FROM CERTIFICATE 

           FOR VALUE RECEIVED, ______________ hereby sells, assigns and transfers unto E*TRADE Group, Inc. (the “Corporation”), __________ (____) shares of the Common Stock of the
Corporation standing in his name on the books of the Corporation represented by Certificate No.___herewith and does hereby irrevocably constitute and appoint________ Attorney to transfer the said stock on the books of the Corporation with full power
of substitution in the premises. 

	Dated:	   	   	   
	 	
	 	 
	 	 	 	 
	 	 	Signature:	 
	 	 	 	

 Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate.<PAGE>

                                                                   Exhibit 10.19

                              EMPLOYMENT AGREEMENT

Employment Agreement dated as of June 20, 2001, (the "effective date") between
Time Warner Telecom, Inc., (the "Company"), and the employee whose name appears
on the last page hereof (the "Employee"). The Company shall employ the Employee
on the following terms and conditions:

     1.   Term. The Company hereby employs Employee and Employee hereby accepts
          ----
such employment upon the terms and conditions hereof for an initial term
commencing on the "Effective Date" and ending, subject to renewal or termination
as provided herein, on the third anniversary of the Effective Date (the "Initial
Term"); provided, however, that this Agreement shall automatically continue for
successive one month periods thereafter (each such period being an "Additional
Term") unless either party has delivered written notice of termination to the
other party no later than six months prior to the end of the Initial Term or 60
days prior to the end of any Additional Term. Sections 8, 10 through 22 and 24
through 28 shall survive any termination of Employee's employment under this
Agreement. The Employee hereby covenants that as of the Effective Date any
agreement between Employee and the Company, or any of it's affiliates, entered
into prior to the date hereof, relating to Employee's employment with such
entity, shall terminate as of, or have been terminated prior to, the Effective
Date.

     2.   Duties. Employee shall serve as Senior Vice President, Chief
          ------
Information Officer or subject to Section 5, in such other senior management
position as the Company shall determine. Subject to the foregoing, Employee
shall perform such duties as may be assigned by the Company to Employee from
time to time, and shall travel for business purposes to the extent reasonably
necessary or appropriate in the performance of such duties.

     Employee shall perform such duties on a full time basis (subject to the
Company's written policies on vacations, illness, government service, etc.
applicable to employees at Employee's level in effect from time to time),
provided, however, that Employee shall not be precluded from devoting such time
--------
to personal affairs as shall not interfere with the performance of his or her
duties hereunder. In performing his or her duties hereunder, Employee shall
comply with the Company's policies and procedures in effect from time to time.
Unless Employee otherwise consents, the headquarters for the performance of
Employee's services shall be the principal executive offices of the Company and
/or the Denver area, subject to such reasonable travel as may be appropriate or
required in the performance of Employee's duties in the business of the Company.

     3.   Compensation. The Company shall pay or cause to be paid to Employee,
          ------------
during the term of employment, an annual salary in respect of each calendar year
at the rate of not less than $215,000 per annum. The Company may increase, but
not decrease, such annual salary at any time and from time to time during the
term of employment. In addition to annual salary, Employee may be entitled to
receive an annual bonus in respect of each calendar year based on a target
percentage of the salary paid to Employee during such calendar year of 75%.
Subject to Section 5, and the second paragraph of this

                                                                               1
<PAGE>

Section 3, Employee acknowledges that his or her actual annual bonus may vary
and range from 0% to 150% of the target amount, depending on actual performance
of the Company and Employee.

     Subject to Section 5 and the second sentence of this Section 3, the Company
shall determine, in its sole discretion, the amount of any salary increase, the
amount of any annual bonus and whether to increase the target percentage of
Employee's annual bonus. The payment of any bonus compensation shall be made in
accordance with the Company's then current practices and policies, including
without limitation, less the usual required payroll deductions and withholding.

     The Company shall pay or reimburse Employee, in accordance with Company
policies applicable to employees at Employee's level, for all travel,
entertainment and other business expenses actually incurred or paid by Employee
in the performance of his or her duties hereunder, if properly substantiated and
submitted.

     4.   Benefits. Employee shall be eligible to participate in any pension,
          --------
profit-sharing, employee stock ownership, vacation, insurance, hospitalization,
medical, health, disability and other employee benefit or welfare plan, program
or policy whether now existing or established hereafter (collectively, the
"Benefit Plans"), to the extent that employees at Employee's level are generally
deemed eligible under the general provisions thereof. The Company reserves the
right to amend or cancel any such Benefit Plan in its sole discretion.

     5.   Termination by Employee Following a Change in Control.
          -----------------------------------------------------

          (a)  Provided that notice of termination has not previously been given
under any other Section hereof, Employee shall have the right to terminate his
or her employment with the Company under this Agreement for cause upon 30 days
prior written notice delivered to the Company at any time within 180 days after
Employee has actual knowledge of the occurrence of any of the following events
following a Change in Control, indicating in such notice which event has
occurred:

                    A.   A change in the location of Employee's office or of the
Company's principal executive offices to a place which is more than 50 miles
from the location of Employee's office or the location of the Company's
principal executive offices immediately prior to the occurrence of a Change in
Control;

                    B.   A material reduction in Employee's decision-making,
budgetary, operating, staff and other responsibilities, taken as a whole, from
such responsibilities immediately prior to the occurrence of a Change in
Control, or a change in the person or persons to whom Employee reported
immediately prior to the occurrence of a Change in Control, to a person or
persons of lesser rank, title or responsibility; or

                                                                               2
<PAGE>

                    C.   Any material breach of this Agreement by the Company.

          (b)  Upon the expiration of the 30-day notice period provided in
Section 5(a), Employee shall be relieved of his or her management position with
the Company and his or her duties hereunder. In the notice delivered by Employee
to the Company pursuant to Section 5(a), Employee shall elect either (A) to
terminate his or her employment with the Company, in which case Employee shall
receive: (x) subject to the terms thereof, all benefits which may be due to
Employee under the provisions of any Benefit Plan; and (y) in a lump sum
severance payment, within 30 days following the effective date of such
termination, the present value (using the discount rate described below) of an
amount equal to the sum of the annual salary at the rate in effect on the date
of termination of employment or immediately prior to the Change in Control,
whichever is greater, plus an annual bonus in a minimum amount equal to
Employee's then applicable target bonus amount or the Employee's applicable
target bonus amount in effect immediately prior to the Change in Control,
whichever is greater, for the remainder of the existing term of this Agreement,
without any further renewal or continuation, provided that such amount shall be
not less than the sum of such salary and bonus pro rated for a 18-month period,
or (B) to remain an employee of the Company for a period (as determined by
Employee) of up to 18 months following the date notice of termination is given
by Employee pursuant to Section 5(a), in which case Employee shall be relieved
of his or her management position with the Company and his or her duties
hereunder, and shall (i) continue to receive both salary, based on a rate equal
to his or her annual rate in effect on the date of termination of employment or
immediately prior to the Change in Control, whichever is greater, and annual
bonus in respect of such period (in each case payable within 30 days after the
end of the respective calendar year and prorated for any portion of a year),
each such bonus to be based on an amount equal to Employee's then applicable
target bonus amount or the Employee's applicable target bonus amount in effect
immediately prior to the Change in Control, whichever is greater, and (ii)
receive a discounted lump sum payment pursuant to Section 5(b)(A)(y) for any
portion of the term of employment remaining after such period; provided,
                                                               --------
however, that if Employee accepts full-time employment with any other
corporation, partnership, trust, government or other entity ("Entity") during
such period or notifies the Company in writing of his or her intention to
terminate his or her employment during such period, Employee shall cease to be
an employee of the Company effective upon the commencement of such employment or
the effective date of such termination as specified by Employee in such notice,
and shall be entitled to receive, subject to the terms thereof, all benefits due
to Employee under the provisions of any Benefit Plan and a discounted lump sum
cash payment for the balance of the salary and bonus Employee would have been
entitled to receive pursuant to this Section 5(b)(B) had Employee remained on
the Company's payroll until the end of the Initial Term or such 18 month period
whichever is greater, provided, further, however, that Employee shall not be
                      --------  -------  -------
entitled to receive any such lump sum cash payment if he or she accepts
full-time employment with any subsidiary or Affiliate of the Company. For
purposes of this Agreement, the term "Affiliate" shall mean an Entity which,
directly or indirectly, controls, is controlled by or is under common control
with, the Company or Time Warner Inc ("TWI").

                                                                               3
<PAGE>

               In addition, whether Employee elects 5(b)(A) or 5(b)(B), for a
period of the earlier of one year from the date of termination of employment or
the date Employee is eligible to receive health benefits by virtue of other
employment, Employee shall receive continued eligibility and enrollment
(including family coverage, if any), without a premium charge therefor, in
hospital, medical and dental insurance plans providing substantially equivalent
benefit coverage to those plans in which Employee was enrolled immediately prior
to the Change in Control unless waived in writing by Employee (or, in the event
such coverage cannot be provided, substantially similar benefits).

               Any lump sum payments required to be made pursuant to this
Section 5(b) shall be discounted to present value from the times at which such
amounts would have been paid absent any such termination at an annual discount
rate for the relevant period equal to the "applicable Federal rate" (within the
meaning of Section 1274(d) of the Internal Revenue Code of 1986 (the "Code")),
compounded semi-annually, in effect on the date of such termination, the use of
which rate is hereby elected by the Company and Employee pursuant to Treas. Reg.
Section 1.28OG-1 Q/A32 (provided that in the event such election is not
permitted, such other rate determined as of such other date as is applicable for
determining present value under Section 28OG of the Code shall be used).

     6.   Termination by Company.
          ----------------------

          (a)  For Cause. Provided that notice of termination has not previously
been given under any other Section hereof, the Company shall have the right to
terminate Employee's employment for cause upon written notice to Employee at any
time. In such event, Employee's employment with the Company shall terminate
immediately and Employee shall be entitled to receive (i) any earned and unpaid
salary accrued through the date of such termination, and (ii) subject to the
terms thereof, any benefits which may be due to Employee under the provisions of
any Benefit Plan. Employee hereby disclaims any right to receive a pro rata
portion of his or her annual bonus with respect to the year in which such
termination occurs. For purposes hereof, "cause" shall mean termination by
action of the Company's Board of Directors or any committee thereof because of
Employee's conviction (treating a nolo & contendere plea as a conviction) of a
felony (whether or not any right to appeal has been exercised) or willful
refusal without proper cause to perform his or her obligations under this
Agreement or because of Employee's material breach of the covenants provided for
in Sections 10, 11 and 12 of this Agreement. In the event (i) such termination
is because of the Employee's willful refusal without proper cause to perform any
one or more of his obligations under this Agreement (ii) such notice is the
first such notice of termination for any reason delivered by the Company to the
Employee under this Section 6(a), and (iii) within 10 days following the date of
such notice the Employee shall cease his or her refusal and shall use his or her
best efforts to perform such obligations, the termination shall not be
effective.

          (b)  Other. Provided that notice of termination has not previously
been given under any other Section hereof, the Company shall have the right at
any time to terminate Employee's employment under this Agreement without cause,
by giving written notice thereof to Employee.

                                                                               4
<PAGE>

               (i)  If such notice is so given to Employee, Employee shall be
entitled to receive subject to the terms thereof, all benefits which may be due
to Employee under the provisions of any Benefit Plan and to elect, within 30
days after receiving such notice, to receive either a lump sum severance payment
in the amount, and upon the terms and conditions, provided in Section 5(b)(A)
and calculated as set forth in the last paragraph of Section 5(b), or to remain
an employee of the Company upon the terms and conditions provided in Section
5(b)(B); provided, however, that (i) any reference therein to Section 5(a) shall
         -----------------
be deemed for purposes of this Section 6(b) to be a reference to this Section
6(b)(i), and (ii) if a Change in Control has not occurred, then (x) Employee's
salary shall be determined with reference to his or her then current annual
salary and (y) Employee's annual bonus shall equal at least the Employee's
target amount immediately prior to Employee's termination under this Section
6(b)(i).

               (ii) For the period beginning when Employee receives notice of
termination from the Company pursuant to this Section 6(b), and ending six
months thereafter, Employee will, without charge to Employee, have use of
reasonable office space and reasonable office Facilities at Employee's principal
job location immediately prior to his or her termination of employment, or other
location reasonably close to such location, together with reasonable secretarial
services in each case appropriate to an employee of Employee's position and
responsibilities prior to such termination of employment but taking into account
Employee's reduced need for such office space and secretarial services. Employee
will continue to be eligible to participate in the Company's Benefit Plans and
to receive, subject to the terms thereof, all benefits, which are received by
other employees at Employee's level thereunder other than options or similar
equity-based or incentive awards.

               (iii) In the event that Employee's employment is terminated prior
to the occurrence of a Change in Control, or more than three years following a
Change in Control, then, in partial consideration for the Company's obligation
to make the payments described in this Section 6(b), Employee shall execute and
deliver to the Company a release in the form as set forth in Exhibit A. The
Company shall deliver such release to Employee at the time the Company delivers
notice of termination pursuant to this Section 6(b). Employee shall execute and
deliver such release to the General Counsel of the Company within 21 days of
receipt of notice of termination. If Employee shall fail to execute and deliver
to the Company such release within 30 days of Employee's receipt thereof from
the Company, Employee's employment with the Company shall terminate effective at
the end of such 30-day period and Employee shall receive, in lieu of the
severance arrangements described in Section 6(b), a lump sum cash payment in an
amount determined in accordance with the personnel policies of the Company then
applicable.

     7.   Death; Disability.
          -----------------

          (a)  Death. If Employee shall die while employed by the Company,
               -----
Employee's employment under this Agreement shall thereupon terminate and
Employee's estate or beneficiaries, as the case may be, shall be entitled to
receive as promptly as

                                                                               5
<PAGE>

practicable but in any event within 30 days after reasonably satisfactory
evidence of Employee's death is received by the Company (i) any earned and
unpaid salary accrued to Employee through the period ending 30 days following
the date of Employee's death and a pro rata portion of the target annual bonus
amount in effect immediately prior to Employee's death; and (ii) subject to the
terms thereof, any benefits which may be due to Employee's estate or
beneficiaries under the provisions of any Benefit Plan.

          (b)  Disability. Provided that notice of termination has not
               ----------
previously been given under any Section hereof, if employee becomes ill or is
injured or disabled during the term of this Agreement such that Employee fails
to perform all or substantially all the duties to be rendered hereunder and such
failure continues for a period in excess of 26 consecutive weeks (a
"Disability"), the Company may terminate the employment of Employee under this
Agreement upon written notice to Employee at any time and thereupon Employee
shall be entitled to receive (i) any earned and unpaid salary accrued through
the date of such termination; (ii) subject to the terms thereof, any benefits
which may be due to Employee under the provisions of any Benefit Plan; and (iii)
a lump sum cash payment equal to the sum of 75% of Employee's then current
annual salary and then applicable target annual bonus amount prorated for an
18-month period, less the amount of any disability insurance proceeds payable to
Employee under any disability insurance policy or program covering Employee.
                              ---------

     8.   Stock Options and Other Incentive Awards. Upon Employee's termination
          ----------------------------------------
of employment with the Company for any reason, Employee's rights to benefits and
payments under any stock options, restricted shares or other incentive plans
shall be determined in accordance with the terms and provisions of such plans
and any agreements under which such stock options, restricted shares or other
awards were granted.

     9.   Change in Control. For purposes of this Agreement, a "Change in
          -----------------
Control" of the Company shall be deemed to have occurred at such time as the
Founding Stockholders (and their respective affiliates) as a group cease to have
the ability to elect a majority of the directors on the Board of Directors of
the Company (other than the chief executive officer of the Company and
independent directors; provided that independent directors shall be included in
calculating whether the foregoing majority requirement is satisfied if the
directors nominated by the Founding Stockholders (and their respective
affiliates) do not constitute a majority of the committee that selects the Board
of Director's nominees for independent directors) and a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act) (other than the Founding
Stockholders and their respective affiliates) has become the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 35% of the total voting power of the voting interests of the Company on a
fully diluted basis and such ownership represents a greater percentage of the
total voting power of the voting interests of the Company, on a fully diluted
basis, than is held by the Founding Stockholders (and their respective
affiliates) as a group on such date.

                                                                               6
<PAGE>

     10.  TradeSecrets; WorkProducts, Etc. Except in connection with the
          -------------------------------
performance of his or her duties hereunder, Employee hereby expressly covenants
and agrees that Employee will not at any time while employed by the Company or
thereafter, exploit, use, sell, publish, disclose, communicate or divulge to any
person or Entity, other than the Company and its subsidiaries, either directly
or indirectly, any trade secrets or confidential information, knowledge or data
regarding the Company or any of its subsidiaries or Affiliates or any of their
respective officers, directors or employees including, without limitation, the
existence and terms of this Agreement, other than such information, knowledge or
data which has been released by the Company or such subsidiaries, Affiliates or
others to the Public (except that with respect to the terms of this Agreement
Employee may communicate such terms to Employee's spouse and Employee's
attorneys and financial advisors). Notwithstanding the foregoing, Employee may
disclose such trade secrets or confidential information, knowledge, data or
terms when required to do so by a court or government agency or legislative body
of competent jurisdiction, provided Employee first notifies the Company orally
and in writing as promptly as possible of such requirement so that the Company
may either seek an appropriate protective order or waive compliance with the
provisions of this Section, and provided further that if, in the absence of such
protective order or waiver, Employee is nevertheless, in the written opinion of
his or her counsel, reasonably acceptable to the Company addressed to and
delivered to the Company, otherwise required to disclose such information to any
such court, government agency or legislative body or else stand liable for
contempt or suffer other material penalty, Employee may disclose such
information in such case without liability hereunder so long as such disclosure
does not exceed that required by such court government agency or legislative
body.

     Employee hereby grants and assigns to the Company all rights (including,
without limitation, any copyright or patent) in the results and proceeds of all
services provided by Employee hereunder and all such services shall be subject
in all respects to the supervision, control and direction of the Company. Any
work in connection with such services shall be considered "work made for hire"
under the Copyright Law of 1976 or any successor thereof, and the Company shall
be the owner of such work as if the Company were the author of such work.

     11.  Non-Compete; Solicitation. Employee hereby expressly covenants and
          -------------------------
agrees that:

          (a) Employee will not at any time during the Term of employment and
for a period of one year following the date a notice of termination of
Employee's employment is effective as provided herein, be or become an officer,
director, partner or employee of or consultant to or act in any managerial
capacity with or own any equity interest in any Entity (an "Affiliated Person")
which is a "Competitive Business Entity" (as such term is defined on Exhibit B
hereto); provided, however, that (i) ownership of less than 1% of the
         -----------------
outstanding equity securities of any Entity listed on any national securities
exchange or traded on the National Association of Securities Dealers Automated
Quotation System shall not be prohibited hereby, and (ii) in the event Employee
is terminated pursuant to Section 6(b) and notice of termination is so given to
Employee following the occurrence of a Change in Control, Employee is hereby
permitted to accept employment with any
                                                                               7
<PAGE>

Founding Stockholder and such employment shall not violate the provisions of
this Section 11.

          (b) Employee will not at any time during the Term of employment and
for a period of one year after the date a notice of termination of Employee's
employment is effective as provided herein, solicit (or assist or encourage the
solicitation of) any employee of the Company or any of its subsidiaries or
Affiliates to work for Employee or for any Entity in which Employee owns or
expects to own more than a 1% equity interest or for which Employee serves or
expects to serve as an Affiliated Person.

          For the purposes of this Section II (b), the term "solicit any
employee" shall mean Employee's contacting, or providing information to others
who may be expected to contact any employee of the Company or any of its
subsidiaries or Affiliates regarding their employment status, job satisfaction,
interest in seeking employment with Employee or any Affiliated Person or any
related matter, but shall not include general print advertising for personnel or
responding to an unsolicited request for a personal recommendation for or
evaluation of an employee of the Company or any of its subsidiaries or
Affiliates.

     12.  Documents; Conduct. Employee hereby expressly covenants and agrees
          ------------------
that:

               (a) Following termination of Employee's employment with the
Company for any, reason or at any time upon the Company's request Employee will
promptly return to the Company all property of the Company and its subsidiaries
and Affiliates in his or her possession or control (whether maintained at his or
her office, home or elsewhere), including, without limitation, all copies of all
management studies, business or strategic plans, budgets, notebooks and other
printed, typed or written materials, documents, diaries, calendars and data of
or relating to the Company or its subsidiaries or Affiliates or their respective
personnel or affairs; and

          (b) Employee will not at any time denigrate, ridicule or intentionally
criticize the Company or any of its subsidiaries or Affiliates or any of their
respective products, properties, employees, officers or directors, including,
without limitation, by way of news interviews, or the expression of personal
views, opinions or judgments to the news media.

     13.  Breach by Employee. Employee hereby expressly covenants and agrees
          ------------------
that the Company will suffer irreparable damage in the event any provisions of
Sections 10, 11 and 12 are not performed or are otherwise breached and that the
Company shall be entitled as a matter of right to an injunction or injunctions
and other relief to prevent a breach or violation by Employee and to secure its
enforcement of Section 10, 11 and 12 resort to such equitable relief, however,
shall not constitute a waiver of any other rights or remedies which the Company
may have.

     14.  Representations.
          ---------------

          (a)  Employee represents and warrants to the Company that this
Agreement is legal, valid and binding upon Employee and Employee is not a party
to any

                                                                               8
<PAGE>

agreement or understanding which would prevent the fulfillment by Employee of
the terms of this Agreement. Employee has consulted with his or her legal, tax,
financial and other advisors, to the extent desired, prior to execution and
delivery of this Agreement.

          (b)  The Company represents and warrants to Employee that this
Agreement is legal, valid and binding upon the Company and the Company is not a
party to any agreement or understanding which would prevent the fulfillment by
the Company of the terms of this Agreement.

     15.  Notice. Any notice required or permitted to be given hereunder shall
          ------
be in writing (except where required to be given orally) and shall be
sufficiently given or sent by registered or certified mail or delivered, in
person, if to Employee at the address set forth on the last paragraph hereof, or
at such other address as Employee shall designate by written notice to the
Company, and if to the Company at 5700 South Quebec Street, Greenwood Village,
CO 80111 attention of the General Counsel or at such other address as the
Company shall designate by written notice to Employee.

     16.  Successors and Assigns. This Agreement is personal in its nature and
          ----------------------
neither of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any right or obligations hereunder; provided however,
                                                               --------
that the provisions hereof shall inure to the benefit of, and be binding upon,
any successor of the Company, whether by merger, consolidation, transfer of all
or substantially all of the assets of the Company, or otherwise.

     17.  Governing Law. This Agreement shall be governed by and construed and
          -------------
enforced in accordance with the laws of the State Colorado irrespective of its
conflicts of law rules, except for the By-laws referred to in Section 26, which
shall be governed by and construed and enforced in accordance with the laws of
the State of Colorado. To the extent that any applicable state or Federal law,
rule or regulation confers upon Employee any greater benefit or right than that
set forth in this Agreement, such law, rule or regulation shall control in lieu
of the provisions hereof relating to such benefit or right.

     18.  Mitigation. Employee shall have no obligation to mitigate damages in
          ----------
the event of termination of Employee's employment under this Agreement under
Section 5(a), 6(b) or 7, other than as necessary to prevent the Company from
losing any tax deductions to which it otherwise would have been entitled for any
payments deemed to be "contingent on a change" under the Code and any payments
received by Employee hereunder shall not be offset or reduced in any way by any
other earnings or payments which may be received by Employee from any source,
except as provided by this Section 18. It is acknowledged and agreed that any
payment which may be made by the Company to Employee under Section 5(b), 6(b) or
7 is in the nature of severance and is not a penalty payment.

     19.  Withholding. All payments required to be paid by the Company to
          -----------
Employee under this Agreement will be paid in accordance with the payroll
practices of the Company or the terms of the Benefit Plans, as the case may be,
and will be subject to

                                                                               9
<PAGE>

withholding taxes, social security and other payroll deductions in accordance
with the Company's policies applicable to employees at Employee's level and the
terms of the Benefit Plan.

     20.  Complete Understanding. This Agreement supersedes any prior contracts,
          ----------------------
understandings, discussions and agreements relating to employment between
Employee, on the one hand, and the Company and its subsidiaries and Affiliates,
on the other, and constitutes the complete understanding between the parties
with respect to the subject matter hereof. No statement, representation,
warranty or covenant has' been made by either party with respect thereto except
as expressly set forth herein.

     21.  Modification; Waiver. This Agreement cannot be changed, modified or
          --------------------
amended and no provision or requirement hereof may be waived without the consent
in writing of both the parties hereto. No waiver by either party at any time of
any breach by the other party of any condition or provision of this Agreement
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. Subject to Section 28, no policy,
procedure or practice of the Company whether now or hereafter in effect shall be
deemed to modify, mend or supersede any provision of this Agreement except as
contemplated or provided otherwise in this Agreement.

     22.  Headings. The headings in this Agreement are for convenience of
          --------
reference only and shall not control or affect the meaning or construction of
this Agreement.

     23.  Use of Likeness. The Company shall have the right to use Employee's
          ---------------
name, biography and likeness in connection with their respective businesses and
that of their subsidiaries and Affiliates, but not for use as a direct
endorsement.

     24.  Validity. The invalidity or unenforceability of any provision of this
          --------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall remain in full force and effect.

     25.  Set-off. The Company and its subsidiaries and Affiliates shall have no
          -------
right to set-off payments owed to Employee hereunder against amounts owed or
claimed to be owed by Employee to the Company or its subsidiaries or Affiliates
under this Agreement or otherwise.

     26.  Indemnification. The Company shall indemnify Employee to no lesser
          ---------------
extent than provided in the Company's By-laws on the date hereof (the provisions
of which are hereby incorporated by reference herein), notwithstanding any
changes or amendments to such By-laws after the date hereof adversely affecting,
limiting or reducing such indemnification.

     27.  Counterparts. This Agreement may be executed in one or more
          ------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

                                                                              10
<PAGE>

     28.  Changes. Subject to Section 5, the Company and its subsidiaries and
          -------
Affiliates are entitled to amend, modify, terminate or otherwise change at any
time or from time to time any and all Benefit Plans and policies, practices or
procedures referred to in this Agreement and all references herein to such
Benefit Plans and policies, practices and procedures shall be to such as from
time to time in effect prior to a Change in Control except as otherwise
specifically herein provided.

     29.  Beneficiaries. Whenever this Agreement provides for any payment to the
          -------------
Employee's estate, such payment may be made instead to such beneficiary or
beneficiaries as the Employee may designate in writing (using the form of
Beneficiary Designation attached hereto as Exhibit C) and file with the Company.
                                           ---------
The Employee shall have the right to revoke such Beneficiary Designation and
redesignate a beneficiary by filing with the Company (and any applicable
insurance company) a later dated Beneficiary Designation to such effect.

                                                                              11
<PAGE>

          IN WITNESS WHEREOF, Employee and the Company have caused this
     Agreement to be executed as of the date first above written.

                                    By: /s/ Larissa Herda
                                        ----------------------------------------
                                    Title: President and Chief Executive Officer

Agreed to and accepted as of
the date first above written

/s/ Mark Hernandez
----------------------------
Name

    SVP, CIO
------------------------------
Title

Address for Notices:

------------------------------

------------------------------

------------------------------

                                                                              12

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