Document:

<PAGE>   1
                                                                    EXHIBIT 10.2

                                 EMPLOYMENT AGREEMENT, dated as of
                                 September 20, 2000, by and between SOURCE
                                 MEDIA, INC., a Delaware corporation (the
                                 "Company"), and PHILIP HOWORT (the "Employee").

         The Company desires to engage Employee to perform services for the
Company, and Employee desires to perform such services, on the terms and
conditions set forth below:

         NOW, THEREFORE, the parties agree as follows:

         1. EMPLOYMENT. The Company hereby employs Employee as its Senior Vice
President, and Employee hereby accepts such employment, upon the terms and
conditions hereinafter set forth.

         2. TERM. The term (the "Term") of employment of Employee pursuant to
this Agreement shall commence on October 6, 2000 and shall terminate on October
6, 2002. The Term shall automatically be renewed for successive one year periods
unless either party gives the other written notice to the contrary at least 120
days prior to the end of the Term or any such renewal thereof.

         3. DUTIES AND SERVICES. Employee shall devote his full time and best
efforts to the business and affairs of the Company, and perform, in a competent
manner, such executive and managerial functions and duties commensurate with his
position as Senior Vice President of the Company, as the President of the
Company may reasonably prescribe from time to time. Employee shall report
directly to the President of the Company. The parties acknowledge that Employee
will spend such time at the Company's offices in Dallas, Texas as is reasonably
required to perform his functions and duties. The Company will not require
Employee to relocate his home from the New York metropolitan area.

         4. COMPENSATION.

            A. SALARY. For all services to be rendered by Employee hereunder,
the Company shall pay Employee an annual base salary of $200,000. The Company
shall pay Employee's salary in accordance with the Company's standard payroll
practices as in effect from time to time, with appropriate deductions required
by applicable laws, rules and regulations.

            B. DISCRETIONARY BONUS. On an annual basis, the Board of Directors
of the Company shall consider a bonus payment to Employee based on his
performance, and the Company's results of operations. The timing and amount of
any such bonus payment shall be in the sole and absolute discretion of the Board
of Directors.

<PAGE>   2

            C. STOCK OPTION PARTICIPATION. Employee shall receive a ten-year
option to purchase 150,000 shares of the common stock, par value $.001 per
share, of the Company, pursuant to the Stock Option Agreement in the form
attached hereto as Exhibit A.

         5. EXPENSES. The Company shall reimburse Employee for all reasonable,
ordinary and necessary expenses incurred on behalf of the Company by Employee.
Employee shall submit to the Company an expense report and receipts or other
verification of expenses to be reimbursed in accordance with the Company's
standard policies.

         6. BENEFITS. Employee shall be entitled to such insurance and
retirement plan benefits as are generally available to other senior management
employees of the Company, pursuant to Company policy in effect from time to
time, such as health insurance, disability and life insurance, and the right to
participate in any retirement plans maintained by the Company.

         7. VACATION AND SICK DAYS. Employee shall be entitled to fifteen (15)
business days of paid vacation during each calendar year (pro-rated for periods
shorter than a calendar year). Vacation and sick days shall be taken in
accordance with the Company's published guidelines.

         8. TERMINATION PROVISIONS.

            A. TERMINATION FOR CAUSE. Notwithstanding the provisions of Section
2 above, the Company, on two days' prior written notice, may terminate the
employment of Employee for any of the following reasons (for "cause"), without
the payment of any compensation to Employee, except accrued salary and vacation
pay due for the period prior to the date of termination of employment:

               (i) Employee shall be convicted of a felony or any crime
involving an act of dishonesty, such as embezzlement, theft or larceny;

               (ii) Commission of theft from or fraud against the Company or any
willful misconduct by Employee that is materially injurious to the financial
condition or business reputation of the Company, including by reason of material
breach by Employee of the provisions of this Agreement; and

               (iii) Willful and continued failure by the Employee to
substantially perform his duties hereunder.

            B. TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE, DEATH OR
DISABILITY.

               (i) If the employment of Employee is terminated by the Company
other than for cause, death or disability, the Company shall pay to Employee as
severance, in equal monthly installments, the remaining base salary payments
that Employee would have earned if he had continued his employment throughout
the Term, and an amount equal to any accrued vacation

                                      -2-
<PAGE>   3

pay on the date of termination of employment. Such payments shall cease in the
event Employee obtains other employment following termination of employment by
the Company; provided, however, that in the event the base salary payable to
Employee by the Company on the date of termination exceeds the base salary
payable to Employee by such new employer, the Company shall pay such excess, in
equal monthly installments, through the expiration of the Term.

               (ii) The Company will continue life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Company for Employee and his dependents prior to termination of his employment,
except to the extent such coverage may be changed in its application to all
Company employees on a nondiscriminatory basis. Such coverage shall cease when
Employee obtains other employment.

            C. TERMINATION ON ACCOUNT OF DISABILITY OR DEATH.

               (i) In the event Employee shall, during the term of this
Agreement, become physically or mentally disabled so that he is unable, or can
reasonably be expected to be unable, to perform his duties hereunder for a
period of seventy five (75) consecutive days, or ninety (90) non-consecutive
days within any twelve (12) month period, the Company shall have the right to
terminate Employee's employment, provided that (a) the Company provides Employee
with not less than five (5) days' prior written notice of the termination of his
employment and (b) the Company makes the payments to Employee referred to in
clause (ii) below. Any determination of disability shall be made by a physician
selected by the Company and reasonably acceptable to Employee.

               (ii) In the event the Company terminates Employee's employment
for disability as set forth in clause (i) above ("Disability Termination"),
Employee shall be entitled to receive, in monthly installments, the base salary
Employee would have received in the following three months. All payments made
pursuant to this paragraph shall be made in accordance with the Company's
standard payroll practices as in effect from time to time, with appropriate
deductions required by applicable laws, rules and regulations. In addition, the
Company, at its expense, for a period of three months following the date of
Disability Termination, will continue medical and dental insurance coverage
substantially identical to the coverage maintained by the Company for Employee
and his dependents prior to termination of employment, except to the extent such
coverage may be changed in its application to all Company employees on a
non-discriminatory basis.

               (iii) In the event of the death of Employee, the Company shall
pay the estate of the Employee or his legal representative the accrued salary
and vacation pay due for the period prior to the date of Employee's death.

            D. TERMINATION BY EMPLOYEE.

               (i) Notwithstanding the provisions of Section 2 above, Employee
will be considered to have resigned his employment for "good reason" if the
Company, without the express written consent of Employee, materially breaches
this Agreement.

                                      -3-
<PAGE>   4

               (ii) In the event that Employee resigns from his employment for
good reason, the Company shall be obligated to provide Employee with the
severance payments, insurance coverage as required if the Company had terminated
Employee other than for cause pursuant to Section 8B above.

               (iii) In the event that Employee resigns from his employment
without good reason, the Company shall be obligated to provide Employee with the
payments as required if the Company had terminated Employee for cause pursuant
to Section 8A above.

         9. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants
that Employee is not subject to or a party to any agreement, contract, covenant,
order or other restriction which in any way prohibits, restricts or impairs
Employee's ability to enter into this Agreement and carry out his duties and
obligations hereunder. Each party hereto represents and warrants to the other
that (i) it has the full legal right and power and all authority and approvals
required to enter into, execute and deliver this Agreement and to perform fully
all of its obligations hereunder; and (ii) this Agreement has been duly executed
and delivered by it and constitutes a valid and binding obligation of such
party, enforceable in accordance with its terms.

         10. NON-COMPETITION AND SECRECY.

            10.1 NO INTERFERENCE. For the period ending twelve (12) months after
the later of (i) the termination of Employee's employment and (ii) the
expiration of the Term, Employee shall not, whether for his own account or for
the account of any other individual, partnership, firm, corporation or other
business organization (other than the Company and its affiliates), intentionally
solicit, endeavor to entice away from the Company or its affiliates, or
otherwise interfere with the relationship of the Company or any of its
affiliates with, any person who is employed by the Company or its affiliates at
the time of the termination of Employee's employment and Employee will not
interfere with relationship of the Company or any of its affiliates with any
individual, partnership, firm, corporation or other business organization with
which the Company or its affiliates had any relationship while the Employee was
employed by the Company.

            10.2 SECRECY. Employee recognizes that the services to be performed
by him hereunder are special, unique and extraordinary in that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of the Company or any affiliate thereof, the use or
disclosure of which could cause the Company substantial loss and damages which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, Employee covenants and agrees with the Company that he
will not at any time, except in performance of Employee's obligations to the
Company hereunder or with the prior written consent of the Company, directly or
indirectly, disclose any secret or confidential information that he may learn or
has learned by reason of his association with the Company. The term
"confidential information" includes, without limitation, information not
previously disclosed to the public or to the trade with respect to the products,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product price
lists, customer lists, technical information, financial information (including
the revenues, costs or profits associated with any of its products), business
plans, prospects or opportunities but shall exclude any

                                      -4-
<PAGE>   5

information already in the public domain. Notwithstanding anything to the
contrary herein contained, Employee's obligation to maintain the secrecy and
confidentiality of the confidential information under this Section 10 shall not
apply to any such confidential information which is disclosed through any means
other than as a result of any act by Employee constituting a breach of this
Agreement or which is required to be disclosed under applicable law.

            10.3 EXCLUSIVE PROPERTY. Employee hereby agrees to keep all such
records in connection with Employee's employment as the Company may from time to
time reasonably direct, and all such records shall be the sole and exclusive
property of the Company. Upon termination of Employee's employment, Employee
shall return to the Company all confidential and/or proprietary information that
exists in written or other physical form (and all copies thereof) under
Employee's control.

            10.4 INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company, Employee acknowledges that a breach of any of the
covenants contained in this Section 10 may result in material irreparable injury
to the Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to seek to
obtain a temporary restraining order and/or a preliminary injunction restraining
Employee from engaging in activities prohibited by this Section 10 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 10.

         11. SECTION HEADINGS. The titles to the Sections of this Agreement are
solely for the convenience of the parties and shall not be used to explain,
modify, simplify, or aid in the interpretations of the provisions of this
Agreement.

         12. NOTICES. All notices, demands and requests provided or permitted to
be given pursuant to this Agreement, shall be given in writing, sent by
certified mail, return receipt requested, and addressed as follows or to such
other address so designated in the appropriate manner by the parties. All
notices shall be deemed effective when mailed.

                  Company:          Source Media, Inc.
                                    5400 LBJ Parkway
                                    Suite 680
                                    Dallas, Texas 75240
                                    Attention: Stephen W. Palley

                                    With a copy to:

                                    Robert L. Winikoff, Esq.
                                    Sonnenschein Nath & Rosenthal
                                    1221 Avenue of the Americas
                                    New York, New York   10020

                                      -5-
<PAGE>   6

                  Employee:         Philip Howort
                                    131 Castle Heights Avenue
                                    Nyack, New York 10960

                                    With a copy to:

                                    Jonathan Pillot, Esq.
                                    62 Greene Street, 2nd Floor
                                    New York, New York 10012

         13. ASSIGNMENT AND ASSUMPTION. The rights of each party under this
Agreement are personal to that party and may not be assigned, delegated or
transferred to any other person, firm, corporation, or other entity without the
prior written consent of the other party, except that the Company may transfer
its rights under this Agreement to any affiliate or other entity which succeeds,
by contract or operation of law, to all or substantially all of the business of
the Company and agrees in writing to assume the Company's obligations under this
Agreement.

         14. GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York without giving
effect to the conflicts of law principles of the laws of said state.

         15. ENTIRE AGREEMENT. This Agreement, and the stock option agreement
evidencing the stock option referred to in paragraph 4C, shall constitute the
entire agreement between the parties and any prior written or oral understanding
or representation of any kind, or any oral communications shall not be binding
upon either party except to the extent incorporated in this Agreement. This
Agreement supercedes any and all prior agreements between the parties.

         16. MODIFICATION OF AGREEMENT. This Agreement can be modified only in
writing and shall be binding only if executed with and under the same formality
by the parties hereto or their duly authorized representatives.

         17. NO WAIVER. The failure of either party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement, or
the waiver of any breach of any of the terms and conditions of this Agreement,
shall not be construed as thereafter waiving any such terms and conditions, but
each same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred.

         18. EFFECT OF PARTIAL INVALIDITY. The invalidity or unenforceability of
any provision or covenant of this Agreement shall not be deemed to affect the
validity or enforceability of any other provision or covenant. In the event that
any provision or covenant of this Agreement is held invalid or unenforceable,
the same shall be deemed automatically modified to the minimum extent necessary
to make such provision or covenant enforceable and the parties agree that the
remaining provisions shall be deemed to be and to remain in full force and
effect.

                                      -6-
<PAGE>   7
         19. COUNTERPARTS. This Agreement may be executed in counterparts and
all counterparts so executed shall constitute one and the same agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                     SOURCE MEDIA, INC.

                                     By:  /s/ Stephen W. Palley
                                          -------------------------------------
                                          Stephen W. Palley,
                                          President and Chief Executive Officer

                                          /s/ Philip Howort
                                     ------------------------------------------
                                          PHILIP HOWORT

                                      -7-
<PAGE>   8
                                                                       EXHIBIT A

GRANT NO.  _________

                               SOURCE MEDIA, INC.
                             1999 STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         AGREEMENT, dated as of _____________, 2000, between Source Media, Inc.,
a Delaware corporation (the "Company"), and Philip Howort (the "Optionee").

                              W I T N E S S E T H:

         WHEREAS, on August 25, 1999, the Board of Directors of the Company (the
"Board") adopted the Source Media, Inc. 1999 Stock Option Plan (the "Plan"),
which Plan authorizes the grant of options to purchase shares of the common
stock, $0.001 par value ("Common Stock"), of the Company to directors, officers,
employees and consultants of the Company and its subsidiaries and to other
individuals; and

         WHEREAS, the Plan was adopted by the stockholders of the Company at the
annual meeting of the Company on November 17, 1999; and

         WHEREAS, the Board has determined that it would be in the best
interests of the Company to grant the option documented herein.

         NOW, THEREFORE, the parties hereto hereby agree as follows:

         1. Definitions. The following terms, as used herein, shall have the
meanings set forth below:

            (1) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.

            (2) "Committee" shall mean the Stock Option Committee established by
the Board or any other committee of the Board, which the Board may designate to
administer the Plan or any portion thereof. If no committee is so designated,
then all references in this Agreement to "Committee" shall mean the Board.

         2. Grant of Option. Subject to the terms and conditions of the Plan and
as set forth herein, the Company hereby grants to the Optionee, as of the date
hereof, an option (the "option") to purchase from the Company all or any part of
an aggregate number of 150,000 shares of Common Stock (the "Option Shares") with
vesting dates as set forth in paragraph 3(a) below.

                                      A-1
<PAGE>   9
         3. Installment Exercise.

            (1) Subject to such further limitations as are provided in the Plan
and as set forth herein and any required approval of the Company's stockholders,
the Option shall become exercisable on the dates and at the per share prices
("Option Price") set forth below, the Optionee having the right hereunder to
purchase from the Company the indicated number of Option Shares upon exercise of
the Option, on and after such dates, in cumulative fashion:

<TABLE>
<CAPTION>
                                  Incentive        Non-Qualified
        Exercise Date           Option Shares      Option Shares     Option Price
        -------------           -------------      -------------     ------------
<S>                             <C>                <C>               <C>
     September ___, 2001             [ ]                [ ]                $
     September ___, 2002             [ ]                [ ]                $
     September ___, 2003             [ ]                [ ]                $
     September ___, 2004             [ ]                [ ]                $
</TABLE>

            (2) Only those Option Shares indicated above as "Incentive Option
Shares" are intended by the parties hereto to be, and be treated as, "incentive
stock options" (as such term is defined under Section 422 of the Code).

            (3) The Option may not be exercised with respect to less than 100
Option Shares (or the Option Shares then subject to purchase under the Option,
if less than 100 shares) or for any fractional shares.

         4. Termination of Option.

            (1) The Option, to the extent not previously exercised, shall
terminate and become null and void upon the expiration of ten years after the
date hereof (the "Option Term").

            (2) Subject to the provisions of Section 5 hereof, and except as
otherwise provided in this Section 4, upon the Optionee's ceasing for any reason
to be employed by the Company (such occurrence being a "termination of the
Optionee's employment"), the Option, to the extent not previously exercised,
shall terminate and become null and void three months after such termination of
the Optionee's employment, or upon the expiration of the Option Term, whichever
occurs first.

            (3) If the Optionee's employment is terminated for cause or because
the Optionee is in breach of any employment agreement, the Option, to the extent
not previously exercised, shall terminate and become null and void immediately
upon such termination of the Optionee's employment.

            (4) Upon a termination of the Optionee's employment by reason of
permanent disability (within the meaning of Section 22(e)(3) of the Code) or by
reason of the death of the Optionee, the Option, to the extent not previously
exercised, shall terminate and become null and void twelve months after such
termination of the Optionee's employment, or upon the expiration of the Option
Term, whichever occurs first.

                                      A-2
<PAGE>   10

         5. Exerciseability.

            (1) Except as otherwise provided in this Section 5, upon a
termination of the Optionee's employment, the Option shall be exercisable only
to the extent that the Option has accrued and is in effect on the date of such
termination of the Optionee's employment.

            (2) Upon a termination of the Optionee's employment by reason of
permanent disability (as defined above) or by reason of the death of the
Optionee, the Option shall be exercisable with respect to the full number of the
Option Shares, whether or not the Optionee was entitled to do so at the date he
or she became permanently disabled or at the date of his or her death. To the
extent exercisable, the Option may be exercised by a legal representative on
behalf of the Optionee in the event of such permanent disability, or, in the
case of the death of the Optionee, by the estate of the Optionee or by any
person or persons who acquired the right to exercise the Option by bequest or
inheritance or by reason of the death of the Optionee.

         6. Manner of Exercise.

            (1) The Option may be exercised in full at one time or in part from
time to time for the number of Option Shares then exercisable by giving written
notice, signed by the person exercising the Option, to the Company, stating the
number of Option Shares with respect to which the Option is being exercised and
the date of exercise thereof.

            (2) Full payment by the Optionee of the Option Price for the Option
Shares purchased shall be made on or before the exercise date specified in the
notice of exercise by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to such Option Price, (ii) shares of Common Stock
owned by the Optionee having a fair market value equal in amount to such Option
Price, or (iii) any combination of the preceding clauses (i) and (ii).

            (3) The Company shall be under no obligation to issue any Option
Shares unless the person exercising the Option, in whole or in part, shall give
a written representation and undertaking to the Company which is satisfactory in
form and substance to counsel for the Company and upon which, in the opinion of
such counsel, the Company may reasonably rely, that he or she is acquiring such
Option Shares for his or her own account as an investment and not with a view
to, or for sale in connection with, the distribution of any such Option Shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law.

            (4) Upon exercise of the Option in the manner prescribed by this
Section 6, delivery of a certificate for the Option Shares then being purchased
shall be made at the principal office of the Company to the person exercising
the Option within a reasonable time after the date of exercise specified in the
notice of exercise.

         7. Non-Transferability of Option. The Option shall not be assignable or
transferable by the Optionee other than by will or the laws of descent, and
shall be exercisable during the lifetime of the Optionee only by the Optionee.
The Option shall terminate and become null and void

                                      A-3
<PAGE>   11

immediately upon the bankruptcy of the Optionee, or upon any attempted
assignment or transfer except as herein provided, including without limitation,
any purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, trustee process or similar
process, whether legal or equitable, upon the Option.

         8. No Special Employment Rights. Neither the granting of the Option nor
its exercise shall be construed to confer upon the Optionee any right with
respect to the continuation of his or her employment by the Company (or any
subsidiary of the Company) or interfere in any way with the right of the Company
(or any subsidiary of the Company), subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Optionee from the rate in
existence as of the date hereof.

         9. No Rights of Stockholder. The Optionee shall not be deemed for any
purpose to be a stockholder of the Company with respect to the Option except to
the extent that the Option shall have been exercised with respect thereto and,
in addition, a stock certificate shall have been issued theretofore and
delivered to the Optionee.

         10. Amendment. Subject to the terms and conditions of the Plan, the
Board or the Committee, whichever shall then have authority to administer the
Plan, may amend this Agreement with the consent of the Optionee when and subject
to such conditions as are deemed to be in the best interests of the Company and
in accordance with the purposes of the Plan.

         11. Notices. Any communication or notice required or permitted to be
given hereunder shall be in writing, and, if to the Company, to its principal
place of business, attention: Secretary, and, if to the Optionee, to the address
as appearing on the records of the Company. Such communication or notice shall
be deemed given if and when (a) properly addressed and posted by registered or
certified mail, postage prepaid, or (b) delivered by hand.

         12. Incorporation of Plan by Reference. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Board or the Committee, whichever shall then have authority
to administer the Plan, shall interpret and construe the Plan and this
Agreement, and their interpretations and determinations shall be conclusive and
binding upon the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder.

                                      A-4
<PAGE>   12

         13. Governing Law. The validity, construction and interpretation of
this Agreement shall be governed by and determined in accordance with the laws
of the State of New York.

         IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Agreement as of the date above written.

                                       SOURCE MEDIA, INC.

                                       By:
                                          ---------------------------------
                                            Name:  Stephen W. Palley
                                            Title: Chief Executive Officer

                                       OPTIONEE:

                                       ------------------------------------
                                                PHILIP HOWORT

                                      A-5<PAGE>   1
                                                                    EXHIBIT 10.3

                                        EMPLOYMENT AGREEMENT, dated as of
                                        October 17, 2000, by and between SOURCE
                                        MEDIA, INC., a Delaware corporation (the
                                        "Company"), and DERRICK L. HORNER
                                        ("Employee").

         The Company desires to engage Employee to perform services for the
Company, and Employee desires to perform such services, on the terms and
conditions set forth below:

         NOW, THEREFORE, the parties agree as follows:

         1. EMPLOYMENT. The Company hereby employs Employee as its Vice
President and General Counsel, and Employee hereby accepts such employment, upon
the terms and conditions hereinafter set forth.

         2. TERM. The term (the "Term") of employment of Employee pursuant to
this Agreement shall commence on November 6, 2000 (the "Commencement Date") and
shall terminate on the second anniversary of the Commencement Date. The Term
shall automatically be renewed for successive one year periods unless either
party gives the other written notice to the contrary at least 90 days prior to
the end of the Term or any such renewal thereof.

         3. DUTIES AND SERVICES. Employee shall devote his full business time
and best efforts to the business and affairs of the Company, and perform, in a
competent manner, such executive and legal functions and duties commensurate
with his position as Vice President and General Counsel of the Company as the
President of the Company may reasonably prescribe from time to time; provided,
however, that nothing shall preclude Employee from engaging in appropriate
civic, charitable, educational (including adjunct teaching positions), pro bono
or religious activities or from devoting a reasonable amount of time to private
investments or, subject to the approval of the President of the Company, from
serving on the boards of directors of other entities, as long as none of such
activities, investments and service interferes or conflicts with Employee's
responsibilities to the Company or competes, directly or indirectly, with the
Company. Employee shall report directly to the President of the Company. The
parties acknowledge that Employee will spend such time at the Company's offices
in Dallas, Texas as is reasonably required to perform his functions and duties.
The Company will not require Employee to relocate his home from the New York
metropolitan area.

         4. COMPENSATION.

            A. SALARY. For all services to be rendered by Employee hereunder,
the Company shall pay Employee an initial annual base salary of $200,000,
subject to any increase approved by the Board of Directors or the President of
the Company. Employee's annual base salary shall at no time be less than
$200,000. The Company shall pay Employee's salary in accordance with the
Company's standard payroll practices as in effect from time to time, with
appropriate deductions required by applicable laws, rules and regulations.

<PAGE>   2
                  B. DISCRETIONARY BONUS. On an annual basis, the Board of
Directors of the Company shall consider a bonus payment to Employee based on his
performance, and the Company's results of operations. Employee's target annual
bonus shall equal 40% of Employee's annual base salary then in effect; provided,
however, that the timing and amount of any such bonus payment shall be in the
sole and absolute discretion of the Board of Directors.

                  C. STOCK OPTION PARTICIPATION. As of the Commencement Date,
Employee shall receive a ten-year option to purchase 150,000 shares of the
common stock, par value $.001 per share, of the Company, pursuant to the Stock
Option Agreement in the form attached hereto as Exhibit A. Upon (i) an
assignment of this Agreement or (ii) a change of control of the Company (as
defined in the Stock Option Agreement), all of the stock options then owned by
Employee shall vest and be immediately exercisable by Employee.

         5. EXPENSES. The Company shall reimburse Employee for all reasonable,
ordinary and necessary expenses incurred on behalf of the Company by Employee,
including costs associated with (i) travel, lodging and meals (up to $75 per day
in the case of meals) incurred on behalf of the Company, (ii) legal textbooks,
publications and other materials, (iii) access to on-line legal research
services, (iv) legal seminars and continuing legal education programs and
courses, (v) bar membership and association fees, (vi) office relocation
expenses (not to exceed $500) and (vii) the purchase of a laptop computer.
Employee shall submit to the Company an expense report and receipts or other
verification of expenses to be reimbursed in accordance with the Company's
standard policies.

         5A. INDEMNIFICATION. The Company shall indemnify Employee and hold
Employee harmless from and against any claim, loss, damages, expense, liability
or cause of action (whether now pending or subsequently commenced), including,
without limitation, liability in connection with suits by shareholders,
debtholders, prospective joint venturers or strategic partners, or current or
former employees, arising from or out of Employee's performance as an officer or
employee of, or consultant to, the Company or in any other capacity, including
serving as a fiduciary, in which Employee serves or has served at the request of
the Company, to the maximum extent permitted by applicable law and the Company's
charter or By-laws. If for any reason the foregoing indemnification is
unavailable or insufficient to hold Employee harmless, then the Company shall
contribute to the amount paid or payable by Employee as a result of such claim,
loss, damages, expense, liability or cause of action in such proportion as is
equitable.

         6. BENEFITS. Employee shall be entitled to such insurance and
retirement plan benefits as are generally available to other senior management
employees of the Company, pursuant to Company policy in effect from time to
time, such as health insurance, disability and life insurance, the right to
participate in any retirement plans maintained by the Company and the right to
participate in any stock purchase program (to the extent eligible).

         7. VACATION AND SICK DAYS. Employee shall be entitled to twenty (20)
business days of paid vacation during and five (5) sick days each calendar year
(pro-rated for periods shorter than a calendar year). Vacation and sick days
shall be taken in accordance with the Company's published guidelines.

                                       2
<PAGE>   3
         8. TERMINATION PROVISIONS.

                  A. TERMINATION FOR CAUSE. Notwithstanding the provisions of
Section 2 above, the Company, on two days' prior written notice, may terminate
the employment of Employee for any of the following reasons (for "cause"),
without the payment of any compensation to Employee, except accrued salary and
vacation pay due for the period prior to the date of termination of employment:

                     (i) Employee shall be convicted of a felony;

                     (ii) Commission of theft from or fraud against the Company
or any willful misconduct by Employee that is materially injurious to the
financial condition or business reputation of the Company, including by reason
of material breach by Employee of the provisions of this Agreement; and

                     (iii) Willful and continued refusal by Employee to
substantially perform his duties hereunder after a written demand for such
performance is delivered to Employee by the President of the Company.

                  B. TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE, DEATH OR
DISABILITY.

                     (i) If the employment of Employee is terminated by the
Company other than for cause, death or disability, the Company shall pay to
Employee as severance, in equal bi-monthly installments without set-off, the
remaining base salary payments that Employee would have earned if he had
continued his employment throughout the Term, and an amount equal to any accrued
vacation pay on the date of termination of employment. Such payments shall cease
in the event Employee obtains other employment following termination of
employment by the Company; provided, however, that in the event the base salary
payable to Employee by the Company on the date of termination exceeds the base
salary payable to Employee by such new employer, the Company shall pay such
excess, in equal bi-monthly installments, through the expiration of the Term.

                     (ii) The Company will continue life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Company for Employee and his dependents prior to termination of his employment,
except to the extent such coverage may be changed in its application to all
Company employees on a nondiscriminatory basis. Such coverage shall cease at the
end of the Term or, if earlier, when Employee becomes eligible for substantially
similar insurance through other employment prior to the end of the Term.

                  C. TERMINATION ON ACCOUNT OF DISABILITY OR DEATH.

                     (i) In the event Employee shall, during the term of this
Agreement, become physically or mentally disabled so that he is unable, or can
reasonably be expected to be unable, to perform his duties hereunder for a
period of seventy five (75) consecutive days, or ninety (90) non-consecutive
days within any twelve (12) month period, the Company shall have the right to
terminate Employee's employment, provided that (a) the Company provides Employee
with not less than five (5) days' prior written notice of the termination of his

                                       3
<PAGE>   4

employment and (b) the Company makes the payments to Employee referred to in
clause (ii) below. Any determination of disability shall be made by a physician
selected by the Company and reasonably acceptable to Employee.

                     (ii) In the event the Company terminates Employee's
employment for disability as set forth in clause (i) above ("Disability
Termination"), Employee shall be entitled to receive, in equal bi-monthly
installments without set-off, the base salary Employee would have received in
the following three months. Such payments shall cease in the event Employee
obtains other employment following termination of employment by the Company;
provided, however, that in the event the base salary payable to Employee by the
Company on the date of termination exceeds the base salary payable to Employee
by such new employer, the Company shall pay such excess, in equal bi-monthly
installments, through the expiration of such three-month period. All payments
made pursuant to this paragraph shall be made in accordance with the Company's
standard payroll practices as in effect from time to time, with appropriate
deductions required by applicable laws, rules and regulations. In addition, the
Company, at its expense, for a period of three months following the date of
Disability Termination, will continue medical and dental insurance coverage
substantially identical to the coverage maintained by the Company for Employee
and his dependents prior to termination of employment, except to the extent such
coverage may be changed in its application to all Company employees on a
non-discriminatory basis. Such coverage shall cease at the end of such
three-month period, or, if earlier, when Employee becomes eligible for
substantially similar insurance through other employment prior to the end of
such three-month period.

                     (iii) In the event of the death of Employee, the Company
shall pay the estate of the Employee or his legal representative the accrued
salary and vacation pay due for the period prior to the date of Employee's
death.

                  D. TERMINATION BY EMPLOYEE.

                     (i) Notwithstanding the provisions of Section 2 above,
Employee will be considered to have resigned his employment for "good reason" in
the event of any of the following during the Term:

                         (a) Employee is not elected or retained as Vice
President and General Counsel of the Company, or chief legal officer of any
successor employer;

                         (b) There is a material diminution in the nature or
scope of Employee's authority, powers, functions, duties or responsibilities;

                         (c) There is a substantial and continued reduction in
support service, staff, secretarial assistance or office space to a level at
which Employee is unable to perform his duties;

                         (d) The Company shall fail to grant the stock options
contemplated by Section 4C of this Agreement or the Company shall fail to make
any payments (including expense reimbursements) due under this Agreement; or

                                       4
<PAGE>   5

                         (e) any assignee of the Company fails expressly to
assume all of the Company's obligations hereunder.

                    (ii) In the event that Employee resigns from his employment
for good reason, the Company shall be obligated to provide Employee with the
same severance payments, and insurance coverage as required if the Company had
terminated Employee other than for cause pursuant to Section 8B above.

                    (iii) In the event that Employee resigns from his employment
without good reason, the Company shall be obligated to provide Employee with the
payments as required if the Company had terminated Employee for cause pursuant
to Section 8A above.

         9. REPRESENTATIONS AND WARRANTIES. Each party represents and warrants
that such party is not subject to or a party to any agreement, contract,
covenant, order or other restriction which in any way prohibits, restricts or
impairs such party's ability to enter into this Agreement and carry out such
party's duties and obligations hereunder. Each party hereto represents and
warrants to the other that (i) such party has the full legal right and power and
all authority and approvals required to enter into, execute and deliver this
Agreement and to perform fully all of its obligations hereunder (other than
approval of the Company's Board of Directors with respect to the grant of stock
options); and (ii) this Agreement has been duly executed and delivered by such
party and constitutes a valid and binding obligation of such party, enforceable
in accordance with its terms.

         10. NON-COMPETITION AND SECRECY.

             10.1 NO INTERFERENCE. For the period ending twelve (12) months
after the later of (i) the termination of Employee's employment and (ii) the
expiration of the Term, Employee shall not, whether for his own account or for
the account of any other individual, partnership, firm, corporation or other
business organization (other than the Company and its affiliates), intentionally
solicit, endeavor to entice away from the Company or its affiliates, or
otherwise interfere with the relationship of the Company or any of its
affiliates with, any person who (to Employee's actual knowledge) is employed by
the Company or its affiliates at the time of the termination of Employee's
employment and Employee will not intentionally interfere with relationship of
the Company or any of its affiliates with any individual, partnership, firm,
corporation or other business organization with which the Company or its
affiliates had any relationship (of which Employee has actual knowledge) while
the Employee was employed by the Company. For purposes of this Section 10.1, an
"affiliate" of the Company shall mean any entity directly or indirectly owned at
least 50% by the Company.

             10.2 SECRECY. Employee recognizes that the services to be performed
by him hereunder are special, unique and extraordinary in that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of the Company or any affiliate thereof, the use or
disclosure of which could cause the Company substantial loss and damages which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, Employee covenants and agrees with the Company that he
will not at any time, except in performance of Employee's obligations to the
Company hereunder or with the prior written consent of the Company, directly or
indirectly, disclose any secret or confidential information that he may learn or
has learned by reason of his association with the

                                       5
<PAGE>   6

Company. The term "confidential information" includes, without limitation,
information not previously disclosed to the public or to the trade with respect
to the products, facilities, applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, technical information, financial
information (including the revenues, costs or profits associated with any of its
products), business plans, prospects or opportunities but shall exclude any
information already in the public domain. Notwithstanding anything to the
contrary herein contained, Employee's obligation to maintain the secrecy and
confidentiality of the confidential information under this Section 10.2 shall
not apply to any such confidential information disclosed with the prior written
consent of the Company duly authorized by its Board of Directors, (ii) disclosed
in the course of the proper performance of Employee's duties hereunder, (iii)
(x) that becomes generally available to the public other than as a result of
unauthorized disclosure by the Employee or his affiliates or (y) that becomes
available to Employee subsequent to the termination of his employment hereunder
and on a non-confidential basis from a source other than the Company or its
subsidiaries who is not bound by a duty of confidentiality, or other
contractual, legal or fiduciary obligations to the Company or customers, clients
or others having a business relationship with the Company, or (iv) disclosed as
required by applicable law or legal process.

             10.3 EXCLUSIVE PROPERTY. Employee hereby agrees to keep all such
records in connection with Employee's employment as the Company may from time to
time direct, and all such records shall be the sole and exclusive property of
the Company. Upon termination of Employee's employment, Employee shall return to
the Company all confidential and/or proprietary information that exists in
written or other physical form (and all copies thereof) under Employee's
control, other than Employee's rolodex and personal phone books.

             10.4 INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company, Employee acknowledges that a breach of any of the
covenants contained in this Section 10 may result in material irreparable injury
to the Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to seek to
obtain a temporary restraining order and/or a preliminary injunction restraining
Employee from engaging in activities prohibited by this Section 10 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 10.

         11. SECTION HEADINGS. The titles to the Sections of this Agreement are
solely for the convenience of the parties and shall not be used to explain,
modify, simplify, or aid in the interpretations of the provisions of this
Agreement.

         12. NOTICES. All notices, demands and requests provided or permitted to
be given pursuant to this Agreement, shall be given in writing, sent by
certified mail, return receipt requested, and addressed as follows or to such
other address so designated in the appropriate manner by the parties. All
notices shall be deemed effective when mailed.

                                       6
<PAGE>   7
                  Company:          Source Media, Inc.
                                    5400 LBJ Parkway
                                    Suite 680
                                    Dallas, Texas 75240
                                    Attention: Stephen W. Palley

                                    With a copy to:

                                    Robert L. Winikoff, Esq.
                                    Sonnenschein Nath & Rosenthal
                                    1221 Avenue of the Americas
                                    New York, New York   10020

                  Employee:         Derrick L. Horner
                                    7002 Boulevard East, Apt. 225C
                                    Guttenberg, New Jersey  07093

         13. ASSIGNMENT AND ASSUMPTION. The rights of each party under this
Agreement are personal to that party and may not be assigned, delegated or
transferred to any other person, firm, corporation, or other entity without the
prior written consent of the other party, except that the Company may transfer
its rights under this Agreement to any affiliate or other entity which succeeds,
by contract or operation of law, to all or substantially all of the business of
the Company and agrees in writing to assume the Company's obligations under this
Agreement.

         14. GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York without giving
effect to the conflicts of law principles of the laws of said state.

         15. ENTIRE AGREEMENT. This Agreement, and the stock option agreement
evidencing the stock option referred to in paragraph 4C, shall constitute the
entire agreement between the parties and any prior written or oral understanding
or representation of any kind, or any oral communications shall not be binding
upon either party except to the extent incorporated in this Agreement. This
Agreement supercedes any and all prior agreements between the parties.

         16. MODIFICATION OF AGREEMENT. This Agreement can be modified only in
writing and shall be binding only if executed with and under the same formality
by the parties hereto or their duly authorized representatives.

         17. NO WAIVER. The failure of either party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement, or
the waiver of any breach of any of the terms and conditions of this Agreement,
shall not be construed as thereafter waiving any such terms and conditions, but
each same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred.

         18. EFFECT OF PARTIAL INVALIDITY. The invalidity or unenforceability of
any provision or covenant of this Agreement shall not be deemed to affect the
validity or enforceability of any other provision or covenant. In the event that
any provision or covenant of

                                       7
<PAGE>   8

this Agreement is held invalid or unenforceable, the same shall be deemed
automatically modified to the minimum extent necessary to make such provision or
covenant enforceable and the parties agree that the remaining provisions shall
be deemed to be and to remain in full force and effect.

         19. COUNTERPARTS. This Agreement may be executed in counterparts and
all counterparts so executed shall constitute one and the same agreement.

         20. EXCISE TAX. In the event that any amounts Employee receives or is
deemed to receive under this Agreement (whether in respect of stock options,
severance or otherwise) would give rise to any excise tax under Section 4999 of
the Internal Revenue Code or any similar state or local law, the Company shall
make payment to Employee of such amounts as are necessary for Employee to be
wholly protected from the costs of any such excise tax (and any attendant income
taxes, penalties and/or interest charges).

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                      SOURCE MEDIA, INC.

                                      By: /s/ Stephen W. Palley
                                          -------------------------------------
                                          Stephen W. Palley,
                                          President and Chief Executive Officer

                                          /s/ Derrick L. Horner
                                      -----------------------------------------
                                          DERRICK L. HORNER

                                       8
<PAGE>   9
                                                                       EXHIBIT A

GRANT NO.  _________
                               SOURCE MEDIA, INC.
                             1999 STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         AGREEMENT, dated as of November 6, 2000, between Source Media, Inc.,
a Delaware corporation (the "Company"), and Derrick L. Horner (the "Optionee").

                                  WITNESSETH:

         WHEREAS, on August 25, 1999, the Board of Directors of the Company (the
"Board") adopted the Source Media, Inc. 1999 Stock Option Plan (the "Plan"),
which Plan authorizes the grant of options to purchase shares of the common
stock, $0.001 par value ("Common Stock"), of the Company to directors, officers,
employees and consultants of the Company and its subsidiaries and to other
individuals; and

         WHEREAS, the Plan was adopted by the stockholders of the Company at the
annual meeting of the Company on November 17, 1999; and

         WHEREAS, the Board has determined that it would be in the best
interests of the Company to grant the option documented herein.

         NOW, THEREFORE, the parties hereto hereby agree as follows:

         1. Definitions. The following terms, as used herein, shall have the
meanings set forth below:

            (1) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.

            (2) "Committee" shall mean the Stock Option Committee established by
the Board or any other committee of the Board, which the Board may designate to
administer the Plan or any portion thereof. If no committee is so designated,
then all references in this Agreement to "Committee" shall mean the Board.

         2. Grant of Option. Subject to the terms and conditions of the Plan and
as set forth herein, the Company hereby grants to the Optionee, as of the date
hereof, an option (the "option") to purchase from the Company all or any part of
an aggregate number of 150,000 shares of Common Stock (the "Option Shares") with
vesting dates as set forth in paragraph 3(a) below.

                                      A-1
<PAGE>   10

         3. Installment Exercise.

            (1) Subject to such further limitations as are provided in the Plan
and as set forth herein and any required approval of the Company's stockholders,
the Option shall become exercisable on the dates and at the per share prices
("Option Price") set forth below, the Optionee having the right hereunder to
purchase from the Company the indicated number of Option Shares upon exercise of
the Option, on and after such dates, in cumulative fashion:

<TABLE>
<CAPTION>
                                 Incentive        Non-Qualified
        Exercise Date          Option Shares      Option Shares      Option Price
        -------------          -------------      -------------      ------------
<S>                            <C>                <C>                <C>
       November 6, 2001             [ ]                [ ]                 $
       November 6, 2002             [ ]                [ ]                 $
       November 6, 2003             [ ]                [ ]                 $
       November 6, 2004             [ ]                [ ]                 $
</TABLE>

            (2) Only those Option Shares indicated above as "Incentive Option
Shares" are intended by the parties hereto to be, and be treated as, "incentive
stock options" (as such term is defined under Section 422 of the Code).

            (3) The Option may not be exercised with respect to less than 100
Option Shares (or the Option Shares then subject to purchase under the Option,
if less than 100 shares) or for any fractional shares.

         4. Termination of Option.

            (1) The Option, to the extent not previously exercised, shall
terminate and become null and void upon the expiration of ten years after the
date hereof (the "Option Term").

            (2) Subject to the provisions of Section 5 hereof, and except as
otherwise provided in this Section 4, upon the Optionee's ceasing for any reason
to be employed by the Company (such occurrence being a "termination of the
Optionee's employment"), the Option, to the extent not previously exercised,
shall terminate and become null and void three months after such termination of
the Optionee's employment, or upon the expiration of the Option Term, whichever
occurs first.

            (3) If the Optionee's employment is terminated for cause or because
the Optionee is in breach of any employment agreement, the Option, to the extent
not previously exercised, shall terminate and become null and void immediately
upon such termination of the Optionee's employment.

            (4) Upon a termination of the Optionee's employment by reason of
permanent disability (within the meaning of Section 22(e)(3) of the Code) or by
reason of the death of the Optionee, the Option, to the extent not previously
exercised, shall terminate and become null and void twelve months after such
termination of the Optionee's employment, or upon the expiration of the Option
Term, whichever occurs first.

                                      A-2
<PAGE>   11
         5. Exerciseability.

            (1) Except as otherwise provided in this Section 5, upon a
termination of the Optionee's employment, the Option shall be exercisable only
to the extent that the Option has accrued and is in effect on the date of such
termination of the Optionee's employment.

            (2) Upon a termination of the Optionee's employment by reason of
permanent disability (as defined above) or by reason of the death of the
Optionee, the Option shall be exercisable with respect to the full number of the
Option Shares, whether or not the Optionee was entitled to do so at the date he
or she became permanently disabled or at the date of his or her death. To the
extent exercisable, the Option may be exercised by a legal representative on
behalf of the Optionee in the event of such permanent disability, or, in the
case of the death of the Optionee, by the estate of the Optionee or by any
person or persons who acquired the right to exercise the Option by bequest or
inheritance or by reason of the death of the Optionee.

            (3) In the event of a change of control, the Option shall become
exercisable with respect to the full number of the Option Shares, whether or not
the Optionee was entitled to do so at the date of such change of control.

            (4) For purposes of this Section 5, "change of control" means the
happening of any of the following:

                (A) When any "person," as such term is used in Sections 13(d)
                    and 14(d) of the Securities Exchange Act of 1934 (the
                    "Exchange Act") (other than the Company, a subsidiary of the
                    Company, or a Company employee benefit plan, including any
                    trustee of such plan acting as trustee) that is not a
                    "beneficial owner" (as defined in Rule 13d-3 under the
                    Exchange Act, without regard to clause (d)(1) of such Rule)
                    of 5% or more of the Company's capital stock on the date
                    hereof becomes the beneficial owner, directly or indirectly,
                    of securities of the Company representing twenty-five
                    percent (25%) or more of the combined voting power of the
                    Company's then outstanding securities entitled to vote
                    generally in the election of directors; or

                (B) The stockholders of the Company approve a merger or
                    consolidation of the Company with any other corporation,
                    other than a merger or consolidation which would result in
                    the voting securities of the Company outstanding immediately
                    prior thereto continuing to represent (either by remaining
                    outstanding or by being converted into voting securities of
                    the surviving entity) at least fifty percent (50%) of the
                    total voting power represented by the voting securities of
                    the Company or such surviving entity outstanding immediately
                    after such merger or consolidation, or the stockholders of
                    the Company approve an agreement for the sale or disposition
                    by the Company of all or substantially all the Company's
                    assets; or

                                      A-3
<PAGE>   12

                (C) A proxy contest for the election of directors of the Company
                    results in the persons constituting the Board immediately
                    prior to the initiation of such proxy contest ceasing to
                    constitute a majority of the Board upon the conclusion of
                    such proxy contest.

         6. Manner of Exercise.

            (1) The Option may be exercised in full at one time or in part from
time to time for the number of Option Shares then exercisable by giving written
notice, signed by the person exercising the Option, to the Company, stating the
number of Option Shares with respect to which the Option is being exercised and
the date of exercise thereof.

            (2) Full payment by the Optionee of the Option Price for the Option
Shares purchased shall be made on or before the exercise date specified in the
notice of exercise by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to such Option Price, (ii) shares of Common Stock
owned by the Optionee having a fair market value equal in amount to such Option
Price, or (iii) any combination of the preceding clauses (i) and (ii).

            (3) The Company shall be under no obligation to issue any Option
Shares unless the person exercising the Option, in whole or in part, shall give
a written representation and undertaking to the Company which is satisfactory in
form and substance to counsel for the Company and upon which, in the opinion of
such counsel, the Company may reasonably rely, that he or she is acquiring such
Option Shares for his or her own account as an investment and not with a view
to, or for sale in connection with, the distribution of any such Option Shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law.

            (4) Upon exercise of the Option in the manner prescribed by this
Section 6, delivery of a certificate for the Option Shares then being purchased
shall be made at the principal office of the Company to the person exercising
the Option within a reasonable time after the date of exercise specified in the
notice of exercise.

         7. Non-Transferability of Option. The Option shall not be assignable or
transferable by the Optionee other than by will or the laws of descent, and
shall be exercisable during the lifetime of the Optionee only by the Optionee.
The Option shall terminate and become null and void immediately upon the
bankruptcy of the Optionee, or upon any attempted assignment or transfer except
as herein provided, including without limitation, any purported assignment,
whether voluntary or by operation of law, pledge, hypothecation or other
disposition, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.

         8. No Special Employment Rights. Neither the granting of the Option nor
its exercise shall be construed to confer upon the Optionee any right with
respect to the continuation of his or her employment by the Company (or any
subsidiary of the Company) or interfere in any way with the right of the Company
(or any subsidiary of the Company), subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Optionee from the rate in
existence as of the date hereof.

                                      A-4
<PAGE>   13
         9. No Rights of Stockholder. The Optionee shall not be deemed for any
purpose to be a stockholder of the Company with respect to the Option except to
the extent that the Option shall have been exercised with respect thereto and,
in addition, a stock certificate shall have been issued theretofore and
delivered to the Optionee.

         10. Amendment. Subject to the terms and conditions of the Plan, the
Board or the Committee, whichever shall then have authority to administer the
Plan, may amend this Agreement with the consent of the Optionee when and subject
to such conditions as are deemed to be in the best interests of the Company and
in accordance with the purposes of the Plan.

         11. Notices. Any communication or notice required or permitted to be
given hereunder shall be in writing, and, if to the Company, to its principal
place of business, attention: Secretary, and, if to the Optionee, to the address
as appearing on the records of the Company. Such communication or notice shall
be deemed given if and when (a) properly addressed and posted by registered or
certified mail, postage prepaid, or (b) delivered by hand.

         12. Incorporation of Plan by Reference. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Board or the Committee, whichever shall then have authority
to administer the Plan, shall interpret and construe the Plan and this
Agreement, and their interpretations and determinations shall be conclusive and
binding upon the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder.

         13. Governing Law. The validity, construction and interpretation of
this Agreement shall be governed by and determined in accordance with the laws
of the State of New York.

         IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Agreement as of the date above written.

                                           SOURCE MEDIA, INC.

                                           By:
                                              -----------------------------
                                           Name:  Stephen W. Palley
                                           Title: Chief Executive Officer

                                           OPTIONEE:

                                           --------------------------------
                                                    DERRICK L. HORNER

                                      A-5

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