Document:

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                                                                   EXHIBIT 10.26

                              AMENDED AND RESTATED
                            DEFERRED COMPENSATION AND
                       STOCK APPRECIATION RIGHT AGREEMENT

     This AMENDED AND RESTATED DEFERRED COMPENSATION AND STOCK APPRECIATION
RIGHT AGREEMENT (this "Agreement") is made as of August 12, 1999 (the "Effective
Date"), among Liberty Digital, Inc., a Delaware corporation (the "Company"),
Liberty Media Corporation, a Delaware corporation ("Liberty"), and Jarl Mohn,
also known as Lee Masters ("Executive").

                                    RECITALS

     The parties make this Agreement with reference to the following facts:

     A. In connection with a Contribution Agreement dated as of April 23, 1999
by and among the Company, Liberty and certain affiliates of Liberty, as amended
(the "Contribution Agreement"), the Company adopted a Deferred Compensation and
Stock Appreciation Rights Plan (the "Plan").

     B. The Plan provides for awards to be granted to Executive in exchange for
the cancellation of awards made to Executive by Liberty prior to the date of the
Contribution Agreement.

     C. Pursuant to the Plan, the parties entered into a Deferred Compensation
and Stock Appreciation Right Agreement, dated as of August 12, 1999 (the
"Deferred Compensation Agreement"), pursuant to which the Company granted
Executive a deferred compensation appreciation right and a SAR with respect to
an aggregate of 15,230,942 shares of the Company's Series A common stock
("Common Stock").

     D. On December 15, 1999, Executive's SAR with respect to 3,046,188 shares
of Series A common stock vested.

     E. On January 5, 2000, Executive notified the Company of his exercise of
vested SARs with respect to 3,046,188 shares (the "Exercised SAR") at a price
equal to the Per Share Fair Market Value of a share of Common Stock on the date
of exercise (or $63.014 per share). The aggregate payment required to be made by
the Company with respect to the Exercised SARs at that time was $133,694,145
(the "SAR Value").

     F. The payment payable to Executive upon exercise of the SAR was due
February 4, 2000. On February 2, 2000, the Company and Liberty requested that
and Executive agreed (i) to enter into negotiations with respect to the payment
of the SAR Value, because immediate payment would cause significant financial
harm to the Company and Liberty and (ii) to postpone payment of the SAR Value
until such negotiations were completed.

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     G. The Company, Liberty and Executive have concluded their negotiations and
wish to modify the terms and conditions of the Deferred Compensation Agreement
as provided below.

                                    AGREEMENT

     In consideration of services rendered or to be rendered to the Company and
its Affiliates by Executive, and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:

     1. DEFINITIONS. For purposes of this Agreement, any word or phrase with
initial capital letters not otherwise defined in this Agreement will have the
meaning set forth below:

          a. ACT: the Securities Act of 1933, as amended.

          b. AFFILIATE: any Person directly or indirectly Controlling,
Controlled by or under common Control with a Person.

          c. AGREEMENT: this Agreement, as it may from time to time be amended
in accordance with its terms.

          d. CHANGE IN CONTROL: with respect to the Company, the occurrence of
any transaction as the result of which (i) Liberty ceases to be a beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of Voting Securities of
the Company representing at least 25% of the total voting power of all Voting
Securities of the Company and (ii) any other person (within the meaning of
Section 13(d)(3) of the Exchange Act) beneficially owns Voting Securities of the
Company representing more voting power than the Voting Securities of the Company
of which Liberty is a beneficial owner. For purposes of this definition, "Voting
Securities" means, with respect to the Company, the capital stock or other
ownership interests in the Company having general voting power under ordinary
circumstances to elect directors (or similar officials), of the Company, but
will not include any capital stock that has or would have such voting power
solely by reason of the happening of any contingency.

          e. COMMON EQUITY: if there is a Per Share Public Market Value, Common
Equity means the Series A Common Stock; if there is no Per Share Public Market
Value, Common Equity means the Series A Common Stock, the Series B Common Stock
and any other class or Series of common stock of the Company then outstanding.

          f. COMMON STOCK: the Series A Common Stock.

          g. COMPANY: Liberty Digital, Inc. and its successors and assigns.

          h. COMPANY FAIR MARKET VALUE: as of any date of determination, the
Fair Market Value of all shares of Common Equity then outstanding, which Fair
Market Value will be (i) if there is a Per Share Public Market Value, the
product of the number of the Shares Outstanding

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and the Per Share Public Market Value or (ii) if there is no Per Share Public
Market Value, the amount determined pursuant to Section 8 or Section 11.b., as
applicable.

          i. CONTRIBUTION AGREEMENT: as defined in Recital A.

          j. CONTROL: the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

          k. CURRENT SAR PAYMENT: as defined in Section 7.c(i).

          l. DEFERRED COMPENSATION CAP: the difference between the SAR Per Share
Base Value and the Deferred Compensation Per Share Base Value.

          m. DEFERRED COMPENSATION PER SHARE APPRECIATION: the amount, expressed
in U.S. currency rounded to the nearest cent, equal to (i) any excess in the
lesser of (A) the SAR Per Share Base Value and (B) the Per Share Fair Market
Value over (ii) the Deferred Compensation Per Share Base Value.

          n. DEFERRED COMPENSATION PER SHARE BASE VALUE: as of any date of
determination, $2.46, subject to adjustment from time to time pursuant to
Section 11.

          o. DERIVATIVE SECURITY: any option, warrant or other right to acquire,
or any security convertible into or exchangeable for, one or more shares of
Common Stock.

          p. EFFECTIVE DATE: as defined in the preamble to this Agreement.

          q. EMPLOYMENT AGREEMENT: the Employment Agreement dated effective as
of September 9, 1999 between the Company and Executive and as it may from time
to time be amended in accordance with its terms.

          r. EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.

          s. EXECUTIVE: the individual identified as "Executive" in the preamble
to this Agreement, and his permitted assigns.

          t. EXERCISE DATE: the date that a notice of exercise is received by
the Company, with respect to an exercise of all or a portion of the SAR by
Executive, other than a deemed exercise on the Valuation Date.

          u. EXERCISED SAR: as defined in Recital E.

          v. FAIR MARKET VALUE: with respect to any asset, the cash price at
which a willing seller would sell and a willing buyer would buy such asset
having full knowledge of the

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relevant facts, in an arm's-length transaction without time constraints, and
without being under any compulsion to buy or sell.

          w. GROSS SHARES: as defined in Section 7.c(i).

          x. LIBERTY: Liberty Media Corporation, a Delaware corporation, and its
successors and assigns, including for purposes of this definition any Person to
which all or substantially all of Liberty's assets are transferred, whether by
merger or otherwise.

          y. LIBERTY POLICY: the policy set forth in Schedule 4.8 to the
Contribution Agreement.

          z. LIBERTY STOCK: the Series A Liberty Media Group Common Stock, $1.00

par value per share, of AT&T or any successor class or series of capital stock.

          aa. PER SHARE FAIR MARKET VALUE: as of any date of determination: (i)
if the Common Stock is registered pursuant to Section 12(b) or Section 12(g) of
the Exchange Act, the Per Share Public Market Value or (ii) if the Common Stock
is not then so registered, the Company Fair Market Value divided by the number
of Shares Outstanding.

          bb. PER SHARE PUBLIC MARKET VALUE: as of any date of determination,
the average of the reported closing market prices of the Common Stock for the 20
consecutive trading days ending on the trading day prior to such date; provided
that in the case of a Voluntary Termination or if either party to the Employment
Agreement has given notice pursuant to Section 11 of the Plan of his or its
intention not to renew the Employment Agreement the Per Share Public Market
Value will be the average of the reported closing market prices of the Common
Stock for the 60 calendar days beginning 120 days after the public announcement
by the Company of such Voluntary Termination or that one of the parties has
given notice pursuant to the Employment Agreement of his or its intention not to
renew the Employment Agreement. The closing market price for each day in
question will be the last sale price, regular way or, if no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system of the principal national securities exchange on which the Common Stock
is listed or admitted to trading or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the last quoted sale
price or, if no such sale price is quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the NASDAQ Stock
Market or such other system then in use or, if on any such trading day such
capital stock is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by the professional market maker who has been
most active in making a market in such capital stock during the preceding 12
months. The Per Share Public Market Value will be appropriately adjusted to
reflect the effects of any stock dividend, stock split, reclassification,
recapitalization or combination affecting the Common Stock, the record date,
ex-dividend date or similar date of which occurs during the period of trading
days preceding the date of determination.

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          cc. PERSON: a human being or a corporation, partnership, trust,
limited liability company, unincorporated organization, association or other
entity.

          dd. PLAN: as defined in Recital A.

          ee. PRIME RATE: at any time, the rate of interest adopted by Bank of
America National Trust and Savings Association or any successor thereto, as its
reference rate for the determination of interest rates for loans of varying
maturities in United States dollars to United States residents of varying
degrees of creditworthiness and being quoted at such time by such bank as its
"prime rate."

          ff. REGISTRABLE SHARES: shares of Common Stock or Liberty Stock owned
by Executive at any time, either of record or beneficially, including, without
limitation, shares issued pursuant to this Agreement in satisfaction of payments
in respect of SARs and Deferred Compensation payable to Executive.

          gg. SAR: as defined in Section 2.b.

          hh. SAR PER SHARE APPRECIATION: as of any date of determination, the
amount, expressed in U.S. currency rounded to the nearest cent, equal to any
excess in Per Share Fair Market Value over the SAR Per Share Base Value.

          ii. SAR PER SHARE BASE VALUE: as of any date of determination,
$19.125, subject to adjustment from time to time pursuant to Section 11.

          jj. SAR VALUE: as defined in Recital E.

          kk. SALE OF THE COMPANY: (i) the sale, exchange or other disposition
of all or substantially all of the Company's assets (other than cash, cash
equivalents and marketable securities) to or with one or more Persons other than
any Affiliate of the Company; (ii) the sale, exchange or other disposition of
all or substantially all of the outstanding shares of Common Equity to or with
one or more Persons other than any Affiliate of the Company; or (iii) the merger
or consolidation of the Company with or into another Person other than an
Affiliate of the Company, as a result of which merger or consolidation the
holders of shares of outstanding Common Equity receive or become irrevocably
entitled to receive cash, securities or other assets in exchange for those
shares. Notwithstanding the foregoing, no transaction described in clause (ii)
or clause (iii) of the foregoing sentence will be a Sale of the Company unless
such transaction results in a Change in Control of the Company.

          ll. SEC: the Securities and Exchange Commission.

          mm. SERIES A COMMON STOCK: the Series A common stock, $.01 par value
per share, of the Company or any successor class or series of capital stock.

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          nn. SERIES B COMMON STOCK: the Series B common stock, $.01 par value
per share, of the Company or any successor class or series of capital stock

          oo. SHARES OUTSTANDING: as of any date of determination, the number of
all issued and outstanding shares of Common Equity on a fully diluted basis.

          pp. TARGET PER SHARE VALUE: as of any date of determination, $2.46
plus notional interest on that amount from January 1, 1999 at the rate of 10%
per annum, compounded annually.

          qq. TERMINATION DATE: the date of the public announcement made
pursuant to Section 14.

          rr. TERMINATION FOR CAUSE: as defined in the Employment Agreement.

          ss. VALUATION DATE: as defined in Section 4.

          tt. VOLUNTARY TERMINATION: as defined in the Employment Agreement.

          The term "Strike Price" in the Plan means "Deferred Compensation Per
Share Base Price" in this Agreement and the term "Valuation Price Per Share" in
the Plan means "Per Share Fair Market Value" in this Agreement.

     2. GRANTS.

          a. Subject to the terms and conditions of this Agreement, the Company
has granted and issued to Executive, as of the Effective Date, a right to
deferred compensation equal to the Deferred Compensation Per Share Appreciation
with respect to an aggregate of 15,230,942 shares of Common Stock. Subject to
the requirement that the Per Share Fair Market Value as of the Valuation Date
equals or exceeds the Target Per Share Value, the Company will pay Executive an
amount determined on the Valuation Date equal to the Deferred Compensation Per
Share Appreciation multiplied by the number of Executive's vested shares
provided that in no event will the amount of Deferred Compensation Per Share
Appreciation for each vested share exceed the amount of the Deferred
Compensation Cap. The foregoing payment is payable only upon termination of
Executive's employment with the Company and in the manner provided in Section 7.

          b. Subject to the terms and conditions of this Agreement, the Company
has granted and issued to Executive, as of the Effective Date, a right (a "SAR")
to the SAR Per Share Appreciation with respect to an aggregate of l5,230,942
shares of Common Stock. Upon exercise of a SAR, the Company will pay Executive
an amount determined on the Valuation Date or on an Exercise Date, whichever is
applicable, equal to the SAR Per Share Appreciation multiplied by the number of
shares of Common Stock with respect to which the SAR is exercised. The amount
payable upon exercise of a SAR is payable at indeterminate dates and in the
manner provided in Section 7.

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          c. Each of the foregoing grants are restricted as to transferability
(as provided in Section 9), and are represented by the Company's unsecured
promise (as provided in Section 10).

     3. VESTING; FORFEITURE; MANNER OF EXERCISE.

          a. The grants made in Section 2.a and 2.b will vest in the amounts and
on the dates set forth below if Executive is employed by the Company on such
dates:

                   20%              December 15, 1999
                   20%              December 15, 2000
                   30%              December 15, 2001
                   30%              December 15, 2002

In addition, Executive will become fully vested in his rights to each of the
Deferred Compensation Per Share Appreciation and the SAR Per Share Appreciation
upon the occurrence of any of the following events: (i) a Sale of the Company;
(ii) a Change in Control; (iii) termination of Executive's employment pursuant
to any of clauses (i), (ii) or (iii) of Section 1(C) of the Employment
Agreement; or (iv) Termination for Good Reason as defined in Section 1(d) of the
Employment Agreement. Upon vesting, a SAR may be exercised from time to time and
will be exercisable, in whole or in part.

          b. If Executive ceases to be employed by the Company pursuant to a
Termination for Cause, Executive will forfeit any and all rights to any unvested
Deferred Compensation Per Share Appreciation and unvested SAR Per Share
Appreciation.

          c. All unexercised rights with respect to each of the Deferred
Compensation Per Share Appreciation and SAR Per Share Appreciation will be
deemed exercised at 4:59 p.m. on the Valuation Date and these rights will become
null and void thereafter; provided however, that the parties' obligations
pursuant to this Agreement will remain in full force and effect until fully
performed.

     4. VALUATION DATE: The Valuation Date will be the day on which the first of
the following events occurs:

          a. SALE OF COMPANY. If Executive is employed by the Company on such
date, the day on which a Sale of the Company is completed.

          b. CHANGE IN CONTROL. If Executive is employed by the Company on such
date, the day on which a Change in Control of the Company occurs.

          c. TERMINATION OF EMPLOYMENT. The last day of the Company's fiscal
quarter preceding the date on which Executive ceases to be employed by the
Company for any reason other than a Termination for Cause or Voluntary
Termination. In the case of a Voluntary Termination or a termination as a result
of Executive's or the Company's not renewing the Employment Agreement, the date
that is 120 days after the Termination Date.

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          d. END OF AWARD TERM. If Executive is employed by the Company on such
date, December 15, 2002.

     5. FAIR MARKET VALUE.

          a. If the Valuation Date is the date of a Sale of the Company, the
determination of Company Fair Market Value, Deferred Compensation Per Share
Appreciation and SAR Per Share Appreciation will reflect the Fair Market Value
of the Company's assets with reference to the consideration (which may include
consideration in the form of the direct or indirect assumption of liabilities)
received by the Company (or, if applicable, by its stockholders, in exchange for
their stock in the Company) in such transaction, as set forth in the notice by
the Company to Executive. Such notice will include a description of the
consideration and, as to any consideration so received other than cash or
cash-equivalents, a statement of the Fair Market Value of such consideration, as
determined in good faith on a reasonable basis by the Board. In establishing the
Fair Market Value of such consideration, the Board, as it reasonably deems
appropriate, may take into account (and any determination of the Fair Market
Value of such consideration pursuant to Section 8 will take into account) the
effect of terms or conditions of the transaction constituting a Sale of the
Company that (i) impose liabilities, contingent or otherwise, on the Company or
its stockholders or (ii) condition the receipt of all or a portion of the
consideration on the occurrence of one or more events, including, for example,
the lapse of time or the attainment of earnings or other indicia of performance.
If Executive disagrees with the determination of Company Fair Market Value or of
the Fair Market Value of consideration set forth in the notice given to
Executive, Executive must give notice to the Company of his disagreement within
30 days after receipt of notice from the Company and if he fails timely to give
such notice, the determination of value(s) seta. forth in the Company's notice
will be conclusive and binding on the parties. If Executive gives notice of his
disagreement within the required 30-day period, such disagreement will be
resolved as provided in Section 8, provided that, as to a determination of
Company Fair Market Value, each appraiser selected pursuant to Section 8 will be
instructed to treat the consideration received in such transaction as the
primary factor to be considered in establishing Company Fair Market Value.

          b. If the Valuation Date is a date prescribed by Section 4.b. (unless
the event constituting a Change in Control is also a Sale of the Company, in
which case Section 5.a. will apply), Section 4.c. or Section 4.d., and if there
is a Per Share Public Market Value for the Common Stock, within 5 business days
after the Valuation Date, the Company will give notice to Executive of Company
Fair Market Value, Per Share Market Value, Deferred Compensation Per Share
Appreciation and SAR Per Share Appreciation, as of the Valuation Date. If there
is no Per Share Public Market Value for the Common Stock, the Per Share Fair
Market Value as of the Valuation Date will be used to calculate Deferred
Compensation Per Share Appreciation and SAR Per Share Appreciation as soon as
reasonably possible after financial statements (including at least a balance
sheet and a statement of operations) of the Company as of the Valuation Date and
for the period from the end of the Company's most recent fiscal year through the
Valuation Date are completed, the Company will give notice to Executive of
Company Fair Market Value, Per Share Market Value, and Deferred Compensation Per
Share Appreciation and SAR Per Share Appreciation, as of the Valuation Date, as
determined by the Board in good faith on a reasonable basis, including a
reasonably detailed description of the bases for such determinations.

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          If Executive disagrees with the determination of Company Fair Market
Value, Per Share Fair Market Value or Per Share Appreciation set forth in the
Company's notice, Executive must give notice to the Company of his disagreement
within 30 days after receipt of the Company's notice and if he fails timely to
give such notice, the determination of those amounts set forth in the Company's
notice will be conclusive and binding on the parties. If Executive gives notice
of disagreement within the 30-day period, such disagreement will be resolved in
accordance with Section 8.

     6. MANNER OF EXERCISE SARS.

          The SARs may be exercised in whole or in part, upon vesting only by
written notice signed by Executive and mailed or delivered to the President or
Secretary of the Company at its principal office which notice will specify the
number of SARs which are being exercised. Once exercised, a particular SAR may
not be further exercised.

     7. PAYMENT; REGISTRATION RIGHTS.

          a. Any payments made by the Company pursuant to this Agreement, may,
at the Company's election, subject to Section 13, be either in (i) cash or other
immediately available funds, (ii) shares of Common Stock or (iii) a combination
thereof; provided however, that the Company may elect to make such payments in
Common Stock only to the extent that the Common Stock is registered pursuant to
Section 12(b) or Section 12(g) of the Exchange Act. To the extent that the
Company elects to make any or all payments in the form of Common Stock, such
shares of Common Stock will be valued for purposes of this Agreement, at the Per
Share Fair Market Value of the Common Stock on the Exercise Date or the
Valuation Date, whichever is applicable; provided however that the total number
of shares to be issued to Executive shall be increased by 2%, rounded down to
the nearest whole share.

          b. Payments of Deferred Compensation Per Share Appreciation required
to be made pursuant to this Agreement will be made within 30 days after the
later of the Termination Date or the date that Executive is no longer employed
by the Company. Payments of SAR Per Share Appreciation required to be made upon
exercise of a SAR, other than a deemed exercise with respect to a Valuation
Date, will be made by the Company within 30 days after the Exercise Date.
Payments of SAR Per Share Appreciation or Deferred Compensation Per Share
Appreciation (but only if Executive's employment is terminated as of the
Valuation Date) required to be made as of a Valuation Date will be made within
30 days after the Valuation Date if that date is the date of a Sale of the
Company or Change in Control, or 120 days after the Valuation Date if that date
is the date specified in Section 4.d. Notwithstanding the foregoing, if on any
required payment date the determination of Deferred Compensation Per Share
Appreciation or SAR Per Share Appreciation has not been made, the required
payment will be made within five days after such determination is completed. At
the Company's option, the payment date may be accelerated in whole or in part.
Any payment made will be subject to any applicable required income and other
payroll tax withholding.

          c. Notwithstanding the terms of Sections 7.a. and 7.b., the following
provisions will apply to the payment with respect to the Exercised SAR:

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               (i) Concurrently with the execution of this Agreement, Liberty
shall pay to Executive $50,000,000 in cash and as soon as practicable, but in
any event no later than 45 days after the date of the execution of this
Agreement by Liberty, shall cause its parent, AT&T Corp., to issue to Executive
5,779,982 shares of AT&T Corp. Class A Liberty Media Group Common Stock (the
"Liberty Stock") (determined by dividing $83,694,145 of the SAR Value by $14.48
(the average trading price of one share of Liberty Stock for the 20 trading days
prior to January 23, 2001) (rounded down to the nearest whole share), and less
the sum of $50,000,000 (to be applied to federal and state withholding taxes due
with respect to such payment) (it being understood that Executive may have
additional obligations for such taxes in addition to the amount so withheld
which shall be Executive's sole obligation) and Liberty will use its reasonable
efforts to cause the certificate representing Liberty Stock to be dated as of
the date this agreement is executed by the parties. Liberty acknowledges that it
deems the full purchase price of the Liberty Stock to have been paid or given as
of the date this agreement is executed by the parties.

               (ii) The Company or Liberty Media, as the case may be, will remit
to the applicable taxing authority on behalf of Executive, $50,000,000 to
satisfy the Executive's income and other payroll tax withholding obligations
with respect to the payments made pursuant to this Section when such obligations
are due.

          d. Notwithstanding that (i) the terms or conditions of a Sale of the
Company may provide for the deferral of the payment or delivery of all or a
portion of the consideration to be paid or delivered to the Company or to
holders of outstanding shares of Common Equity or (ii) the payment or delivery
of such consideration may be conditioned on the occurrence of one or more
events, the Company may not defer the payment of a portion of the cash otherwise
payable to Executive in respect of his rights to receive Deferred Compensation
Per Share Appreciation and SAR Per Share Appreciation, but any such deferral or
condition will be taken into account in any determination of the Fair Market
Value of such consideration pursuant to Section 8.

          e. If shares of Common Stock are to be delivered pursuant to this
Section 7, then the Company may file a registration statement on Form S-8 to
register the issuance of shares of Common Stock to Executive pursuant to this
Section 7 under the Act, if such Form S-8 is available. The Company, Liberty and
AT&T will cooperate with Executive in implementing various puts, calls, swaps,
straddles, collars and other hedging transactions designed to protect Executive
from fluctuations in the value of shares of Common Stock or Liberty Stock, as
the case may be ("Hedging Transactions") if permitted by applicable law. In
addition, Executive shall also be entitled to the registration rights set forth
on EXHIBIT A, which is incorporated herein by reference.

          f. Contemporaneously with the payment of Deferred Compensation Per
Share Appreciation to Executive, the Company will pay to Executive an additional
amount equal to the product of (i) the Deferred Compensation Per Share
Appreciation and (ii) the amount (expressed as a percentage) of the increase, if
any, in the Standard & Poor's 500 Index from a Valuation Date that occurs other
than as a result of a termination of employment until the day prior to the
payment date, which amount will be included in any payment made under this
Agreement.

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          g. To the extent that Executive is required to pay income tax on the
payment of Deferred Compensation Per Share Appreciation or SAR Per Share
Appreciation made in shares of Common Stock prior to the time Executive has
received proceeds from the sale by Executive of such Common Stock pursuant to a
registration statement sufficient to make such income tax payments, then prior
to the date such tax payment is required to be made, the Company will loan
Executive an amount equal to the difference between the amount of such income
taxes required to be paid and the amount of sale proceeds, if any, received by
Executive. The principal amount of the loan will bear interest at a rate equal
to the Prime Rate and all principal and interest will be payable in full five
days after the end of the period the registration statement is required to
remain effective.

          h. Unless the Company is notified in writing of a change of address,
any payment will be made to Executive at the address for notices to Executive
set forth in Section 19.a.

          i. The Withholding Rate will in each instance be subject to the
approval of Executive, not to be unreasonably withheld; provided that in no
instance shall such Withholding Rate be below the percentages prescribed by
applicable law or taxing authority guidelines.

          8. DETERMINATION OF FAIR MARKET VALUE. Except as otherwise expressly
provided in this Agreement, wherever this Agreement refers to, or calls for a
determination of, Fair Market Value (including, for example, a determination of
the Company Fair Market Value pursuant to Section 1.i. when there is no Per
Share Public Market Value or a determination of the Fair Market Value of
consideration received in a Sale of the Company pursuant to Section 5.a.), the
Fair Market Value of the item in question will be determined in accordance with
the following provisions:

          a. The Company and Executive may agree on the Fair Market Value of the
item in question.

          b. If the Company and Executive are unable to agree on a Fair Market
Value, within 15 days after the date notice of a dispute as to that issue is
given by either party to the other, or if they otherwise determine that an
appraisal should be used to determine Fair Market Value, then they will cause
the Fair Market Value as of the required date of determination to be determined
by a qualified appraiser acceptable to both of them. If they are unable to agree
on a single appraiser within 15 days after the date of notice of the dispute,
each of them will have an additional 10 days to select one appraiser nationally
recognized in valuing items of the kind required to be valued. If either fail to
appoint an appraiser, then the determination of Fair Market Value by the one
appraiser will be binding.

          c. Each appraiser will determine the Fair Market Value of the item in
question, taking into account such matters as may be prescribed by this
Agreement and such other matters as the appraiser may deem relevant. The Company
and Executive will use their reasonable best efforts to cause each appraiser to
submit to them a written report indicating that appraiser's determination of
Fair Market Value within 30 days after the date such appraiser is selected.

          d. If the higher of the two appraisals is 110% or less of the lower
appraisal, the average of the two will be the Fair Market Value.

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          e. If the higher of the two appraisals is more than 110% of the lower
appraisal, the Company will immediately notify the two appraisers and cause them
to appoint a third similarly qualified appraiser within 10 days after such
notice. The Company and Executive will use their reasonable best efforts to
cause such third appraiser (who will not be apprised of the determination of the
other appraisers) to submit a written report to each of them indicating such
appraiser's determination of Fair Market Value within 30 days after the date
such third appraiser is selected. If three appraisals are necessary then the
average of the two appraisals in which the determinations of Fair Market Value
are closest together will be the Fair Market Value or, if the highest and lowest
are equidistant from the middle determination, then the middle determination
will be the Fair Market Value.

          f. Each party will use reasonable best efforts to provide each
appraiser with such information as such appraiser may reasonably request for the
purpose of preparing an appraisal pursuant to this Section 8.

          g. A determination of Fair Market Value made pursuant to this Section
8 will be final, binding and nonappealable. Each party will be responsible for
one-half of all fees and expenses of all appraisers.

          h. If the determination of Fair Market Value pursuant to this Section
8 is a determination of the Company Fair Market Value for the purpose of
determining Per Share Appreciation or SAR Per Share Appreciation or an
adjustment to Deferred Compensation Per Share Base Value or SAR Per Share Base
Value, the Company will make the required determination of such amounts using
the Company Fair Market Value determined pursuant to this Section 8 and will
give notice of such determination to Executive within two business days after
receiving notice of the determination of Company Fair Market Value pursuant to
this Section 8.

     9. RESTRICTION ON TRANSFER. Executive may not transfer or grant any
security interest in any of his rights under this Agreement except (i) pursuant
to a qualified domestic relations order as defined by the Internal Revenue Code
of 1986, as amended, or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder, (ii) to a living trust in which
the beneficiaries are the Executives or members of Executive's immediate family,
(iii) transfers by will or the laws of interstate succession or (iv) such other
transferees as are specifically permitted under a Registration Statement on Form
S-8. Any attempted transfer in violation of this restriction will be null and
void. The foregoing restrictions will not apply to the transfer of any shares of
Common Stock issued to Executive pursuant to this Agreement, except as provided
in Section 7.

     Executive may designate a beneficiary or beneficiaries to whom the rights
under this Agreement will pass upon Executive's death and may change such
designation from time to time by filing a written designation of beneficiary or
beneficiaries with the Company on the form annexed hereto as EXHIBIT B or such
other form as may be prescribed by the Company; provided that no such
designation will be effective unless so filed prior to the death of Executive.
If no such designation is made or if the designated beneficiary does not survive
Executive's death, the rights under this Agreement will pass by will or the laws
of descent and distribution. Following Executive's death, the rights under this
Agreement, if otherwise exercisable, may be exercised by the person to whom

                                       12
<PAGE>   13

the rights under this Agreement pass according to the foregoing, and such person
will be deemed to be Executive for purposes of any applicable provisions of this
Agreement.

     10. ACKNOWLEDGMENTS AND REPRESENTATIONS.

          a. Executive acknowledges and agrees that the obligations of the
Company and Liberty under this Agreement are not funded in any way, and that he
will have rights only of a creditor based solely on the Company's and Liberty's
unsecured promise to pay. Because Executive has not made an investment in shares
of Common Stock or Liberty Stock, Executive acknowledges and agrees that the he
has a right to benefit from further appreciation in such Common Stock or Liberty
Stock without risking any capital and without the risk of a beneficial owner
that the value of property may decline substantially. Executive further
acknowledges and agrees that the grants of Deferred Compensation Per Share
Appreciation and SAR Per Share Appreciation under this Agreement are not an
assurance of continued employment by the Company or any of its Affiliates, and
nothing in this Agreement will affect in any way the rights and obligations of
either party under the Employment Agreement.

          b. Executive represents and warrants that (i) by virtue of his
position with the Company or based on information furnished by the Company he is
familiar with the business, earnings, condition, properties and business
prospects of the Company, (ii) he has had the opportunity to ask questions and
request additional information concerning the business, earnings, condition,
properties and business prospects of the Company and Liberty and that his
questions have been answered and that he has received the additional information
requested, (iii) he has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of entering into
this Agreement, (iv) he is an "accredited investor" (as such term is defined in
Regulation D promulgated under the Act) and (v) he understands that the Company
and Liberty are entering into this Agreement in reliance on the acknowledgments,
agreements, representations and warranties of Executive set forth in this
Agreement. To the extent the issuance of the shares of Common Stock is not then
registered pursuant to the Act, Executive acknowledges and agrees that he will
make such additional representations and warranties that the Company may
reasonably request to support an exemption pursuant to Section 4(2) of such Act,
including with respect to Executive's investment intent, investor status and
restrictions on transfer.

          c. Executive represents and warrants that Executive's total assets (as
determined in accordance with 16 C.F.R. ss.ss. 801.1(a) through (c) and 801.11)
are less than $10,000,000 and his annual net sales (as determined in accordance
with 16 C.F.R. ss.ss. 801.1(a) through (c) and 801.11) are less than
$10,000,000. Executive agrees that upon issuance of Common Stock pursuant to
this Agreement he will make the foregoing representation and warranty upon
request by the Company prior to the date the Common Stock is issued, to the
extent he is able to do so.

                                       13
<PAGE>   14

     11. ADJUSTMENT.

          a. Appropriate and equitable adjustment will be made to the Deferred
Compensation Per Share Base Value and the SAR Per Share Base Value in the event
of any stock dividend, stock split, reverse stocks split, reclassification,
recapitalization or other analogous change affecting the outstanding shares of
Common Stock. This Agreement will not affect the right of the Company or any
Affiliate to take any action affecting its capital stock whether described in
the preceding sentence or otherwise.

          b. If after the Effective Date the Company issues Common Stock for a
consideration per share less than the Per Share Fair Market Value as of the date
such Common Stock is issued or if the Company issues a Derivative Security
having a per share exercise, conversion or exchange price less than the Per
Share Fair Market Value as of the date such Derivative Security is issued (any
such issuance of Common Stock or a Derivative Security being referred to as a
"Subject Issuance"), then each of the Deferred Compensation Per Share Base Value
and the SAR Per Share Base Value in effect immediately before such issuance will
be adjusted in accordance with the following formula:

                              BV(2) = BV(1)x      O + A
                                                 ----------
                                                  O + A x M
                                                      -----
                                                        P
               Where:

                    BV2 =  the new Deferred Compensation Per Share Base Value or
                           SAR Per Share Base Value, as applicable.

                    BV1 =  the Deferred Compensation Per Share Base Value or
                           SAR Per Share Base Value, as applicable, immediately
                           prior to the Subject Issuance.

                    O   =  the total number of Shares Outstanding.

                    A   =  the number of additional shares of Common Stock
                           issued (or issuable upon exercise, conversion or
                           exchange of a Derivative Security issued) in the
                           Subject Issuance.

                    P   =  the price per share of the Common Stock issued (or
                           issuable upon exercise, conversion or exchange of a
                           Derivative Security issued) in the Subject Issuance.

                    M   =  the Per Share Fair Market Value of Common Stock on
                           the date of the Subject Issuance.

                                       14
<PAGE>   15

If an adjustment pursuant to this Section 1l.b. is made on account of the
issuance of a Derivative Security, (i) no further adjustment will be made upon
exercise, conversion or exchange of such Derivative Security and (ii) such
adjustment will be reversed to the extent such Derivative Security shall not
have been exercised, converted or exchanged at the time it ceases to be
outstanding or to be exercisable, convertible or exchangeable. Within 30 days
after each issuance of shares of Common Stock or a Derivative Security by the
Company, the Company will give notice of such issuance to Executive, including a
reasonably detailed description of the terms of such issuance, the Per Share
Fair Market Value as of the date of such issuance and the amount of
consideration per share received by the Company in such transaction (or the
exercise, conversion or exchange price of any Derivative Security issued in such
issuance), as determined by the Board in accordance with the following
paragraph.

     Notwithstanding anything to the contrary in this Agreement: (i) any
determination of value contemplated by this Section 11.b., including, for
example, any determination Per Share Fair Market Value or of the Fair Market
Value of any consideration received by the Company for Common Stock or a
Derivative Security, will be made by the Board in the exercise of its good faith
judgment, and such determination will be final, binding and nonappealable so
long as the Board determination is in good faith, and if such determination is
made in connection with the issuance of Common Stock or a Derivative Security to
any Person other than Liberty or an Affiliate of Liberty such determination will
be deemed to have been made in good faith if neither Liberty nor any Affiliate
of Liberty (other than the Company) shall have received any material
consideration on account of such issuance; (ii) shares of Common Stock and
Derivative Securities issued by the Company to any Person other than Liberty or
any Affiliate of Liberty will be deemed for all purposes under this Agreement to
have been sold for a per share price, or a per share exercise, conversion or
exchange price in the case of a Derivative Security, at least equal to the Per
Share Fair Market Value on the date of issue, unless Liberty or any Affiliate of
Liberty (other than the Company) shall have received any material consideration
on account of such issuance; and (iii) shares of Common Stock issued by the
Company to any Person before December 31, 1999 for a per share price at least
equal to the initial Per Share Base Value or that are issuable upon exercise,
conversion or exchange of a Derivative Security issued by the Company to any
Person before December 31, 1999 (which Derivative Security has a per share
exercise, conversion or exchange price at least equal to the initial Per Share
Base Value), will be deemed to have been sold for a per share price at least
equal to the Per Share Fair Market Value on the date of issue.

     12. ARBITRATION. If any controversy or claim arising out of this Agreement
cannot be settled by the parties (other than any disagreement that is subject to
resolution pursuant to Section 8, as to which the provisions of such Section 8
will be exclusive), the dispute will be settled by arbitration before a single
arbitrator in Los Angeles, California, which arbitrator will be a natural person
having experience in financial and business matters appointed by, and which
arbitration will be conducted in accordance with the then applicable provisions
of the Commercial Arbitration Rules of, the American Arbitration Association.
Each party will bear its or his own costs of such arbitration, including
attorneys' fees and expenses, except that the fees and expenses of the
arbitrator and the American Arbitration Association will be paid by the Company
and Executive in equal amounts. Judgment on any award resulting from such
arbitration may be entered in any court

                                       15
<PAGE>   16

having jurisdiction. In consideration of the anticipated expedition of dispute
resolution and minimization of expenses, each party agrees that arbitration will
be the exclusive remedy to resolve disputes under this Agreement, and each party
expressly waives any right such party might have to seek redress in any other
forum. The parties further agree that an arbitrator will be empowered to assess
no remedy other than the payments provided under this Agreement.

     13. LIBERTY'S RIGHTS.

          1. At any time a payment is to be made to Executive pursuant to this
Agreement, Liberty will have the right to purchase from the Company a number of
shares of Series B Common Stock equal to the number of shares of Common Stock
that would have been issued to Executive if the Company had elected to make the
required payment in Common Stock at a price per share equal to (i) the Deferred
Compensation Per Share Appreciation on the Valuation Date, with respect to the
payment of Deferred Compensation Per Share Appreciation or (ii) the SAR Per
Share Appreciation on the Valuation Date or an Exercise Date, whichever is
applicable, with respect to the payment of SAR Per Share Appreciation.
Notwithstanding the foregoing, in the case of an exercise of a SAR other than on
a Valuation Date, Liberty may elect to purchase the number of shares as to which
the SAR is exercised at a price per share equal to the Per Share Fair Market
Value on the Exercise Date.

          2. If Liberty exercises its right to purchase shares of Series B
Common Stock pursuant to Section 13.a., the Company will be required to pay the
Deferred Compensation Per Share Appreciation or the SAR Per Share Appreciation
in cash.

          3. The maximum number of shares of Series B Common Stock that Liberty
may purchase pursuant to this Agreement is 19,296,193 shares. In connection with
any such purchase of Series B Common Stock, the Company and Liberty will enter
into a stock purchase agreement having customary terms which are reasonably
acceptable to the Company and Liberty. Any such stock purchase agreement will
contain customary representations and warranties of the parties, including
representations of the Company with respect to the due authorization and valid
issuance of the shares being purchased and that such shares are fully paid and
not accessible.

     14. ANNOUNCEMENT. The Company will publicly announce a Voluntary
Termination of Executive or notice by the Company or Executive of its or his
intention not to renew the Employment Agreement within five business days after
notice thereof.

     15. LOAN OBLIGATIONS. At any time after a determination of the amount of
Deferred Compensation after a Valuation Date, if Executive is still employed by
the Company, the Company, upon request of Executive, will pay to Executive (i)
his out of pocket expenses (including loan fees, points, legal or accounting
fees and expenses) with respect to a loan Executive may obtain from a third
party relating to such Deferred Compensation Share Appreciation in an amount up
to the total amount of Deferred Compensation Share Appreciation and (ii) an
amount equal to the difference, if any, between the interest rate on such loan
and the Prime Rate; provided, however, that Executive may not pledge his right
to such Deferred Compensation Share Appreciation as the only collateral in
connection with such loan.

                                       16
<PAGE>   17

     16. INDEMNIFICATION. The Company will indemnify Executive on a fully
grossed-up basis, for any amount of penalty and interest owed by Executive to
the Internal Revenue Service or any other U.S. taxing authority relating solely
to any claims by such taxing authorities that the amount of the Current SAR
Payment or Deferred SAR Payment are taxable to Executive in any taxable period
other than when such payments are actually made.

     17. SUBSCRIPTION AGREEMENT. Concurrently with the execution and delivery of
this Agreement, Executive will execute and deliver the Subscription Agreement
attached hereto as EXHIBIT C.

     18. FUTURE SAR PAYMENTS. With respect to future exercises of the SARs, if
the Company elects to pay such SARs in Common Stock, the Company and Executive
agree to consult and cooperate with each other to determine a valuation of the
shares of Common Stock to be issued to Executive for tax reporting purposes,
which in no event shall exceed the public trading price of the Common Stock on
the date of issuance. Each of the Company and Executive will make filings with
the Internal Revenue Service and other applicable tax authorities consistent
with such valuation.

     19. MISCELLANEOUS PROVISIONS.

          1. NOTICES. All notices to be given hereunder will be in writing and
will be deemed duly given when delivered personally or mailed, certified mail,
return receipt requested, postage prepaid and addressed as follows:

                    If to be given to Liberty:

                    Liberty Media Corporation 9197 South Peoria Street
                    Englewood, Colorado 80112 Attn: President with a copy
                    to its General Counsel.

                    If to be given to the Company:

                    Liberty Digital, Inc.
                    9197 South Peoria Street
                    Englewood, Colorado 80112
                    If to be given to Executive:

                    Lee Masters
                    c/o Jarl Mohn
                    12875 Chalon Road
                    Los Angeles, California 90049

                    with a copy to:

                                       17
<PAGE>   18

                    Kenneth M. Doran, Esq.
                    Gibson, Dunn & Crutcher LLP
                    333 South Grand Avenue
                    Los Angeles, California 90071

or to such other address as a party may furnish to the other in writing in
accordance with this Section 19.a.

     2. BINDING EFFECT. This Agreement is binding upon, and inures to the
benefit of, the Company, Liberty and their respective successors and assigns,
and upon Executive and his personal representatives and other permitted
successors and assigns.

     3. AMENDMENT. This Agreement may not be changed orally, but only by a
writing signed by the party against whom enforcement of any change is sought.

     4. ENTIRE AGREEMENT. This Agreement represents the entire agreement of the
Company and Executive with respect to its subject matter, and it supersedes all
prior and contemporaneous understandings and agreements, both oral and written.

     5. ORIGINALS. This Agreement will be signed in three originals, one to be
delivered to the Company, one to Liberty and one to Executive.

     6. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the internal laws of the State of California without regard to
the choice-of-law principles thereof.

     7. CONSTRUCTION. This Agreement is entered into pursuant to the Plan.
Unless otherwise expressly stated in the Deferred Compensation Agreement or this
Agreement, in the event of any inconsistency between the terms of the Plan and
this Agreement, the terms of the Plan will control.

     20. ATTORNEYS' FEES; HSR EXPENSES. Contemporaneously with execution and
delivery of this Agreement, Liberty will pay (or promptly reimburse Executive to
the extent he has paid) the fees and expenses incurred by Executive in
connection with the negotiation of this Agreement, including without limitation,
the attorneys' fees and expenses incurred by Executive. The Company shall pay
all filing fees and expenses in connection with any notification and report
required to be filed under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended by Executive in connection with the acquisition of Common Stock
pursuant to this Agreement and will reimburse Executive, on a fully grossed-up
basis, for any taxes incurred by Executive by reason of such payments.

                                       18
<PAGE>   19

     IN WITNESS WHEREOF, we have signed this Agreement on the dates indicated,
to be effective as of the Effective Date.

                                     EXECUTIVE:

Date:    February __, 2001
                                     -------------------------------------------
                                     Jarl Mohn, a/k/a Lee Masters

                                     LIBERTY MEDIA CORPORATION

Date:    February __, 2001           By:
                                        ----------------------------------------
                                     Name:    David B. Koff
                                     Title:   Senior Vice President

                                     LIBERTY DIGITAL, INC.

Date:    February __, 2001           By:
                                        ----------------------------------------
                                     Name:    David B. Koff
                                     Title:   Vice President

                                       19
<PAGE>   20

                                      A-1
<PAGE>   21

             EXHIBIT B TO AMENDED AND RESTATED DEFERRED COMPENSATION
                    AND STOCK APPRECIATION RIGHTS AGREEMENT

                           DATED AS OF APRIL 12, 2000

                              LIBERTY DIGITAL, INC.

                            DEFERRED COMPENSATION AND
                            STOCK APPRECIATION RIGHT

                           DESIGNATION OF BENEFICIARY

         I, _________________________________(the "GRANTEE") hereby declare that

upon my death ___________________________________________ (the "BENEFICIARY") of
                           Name

-----------------------------------------------------------------------------,
Street Address                 City                State             Zip Code

who is my _________________________________________ ___, will be entitled to the
                           Relationship to Grantee

stock appreciation rights and all other rights accorded Grantee by the
above-referenced grant agreement (the "Agreement").

     It is understood that this Designation of Beneficiary is made pursuant to
the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of Grantee's death. If any such condition is not
satisfied, such rights will devolve according to Grantee's will or the laws of
descent and distribution.

     All prior designations of beneficiary under this Agreement are hereby
revoked. This Designation of Beneficiary may only be revoked in writing, signed
by Grantee, and filed with Liberty Digital, Inc. prior to Grantee's death.

----------------------------------            ----------------------------------
            Date                                   Grantee

                                      B-1<PAGE>   1
                         FIRST AMENDMENT TO AMENDED AND
                            RESTATED LOAN AGREEMENT

     This FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this
"AMENDMENT") is being entered into as of the 31st day of December, 1997, by and
among PETROLEUM HELICOPTERS, INC., a Louisiana corporation (the "COMPANY"),
NATIONSBANK OF TEXAS, N.A., a national banking association ("NATIONSBANK"),
WHITNEY NATIONAL BANK, a national banking association ("WHITNEY"), FIRST
NATIONAL BANK OF COMMERCE, a national banking association ("FNBC", and together
with NationsBank and Whitney, being hereinafter referred to collectively as the
"Banks", and NationsBank as agent for the Banks (in such capacity, the "AGENT").

                             PRELIMINARY STATEMENTS

     (1)  The Company, the Banks and the Agent have entered into that certain
Loan Agreement, originally dated as of January 31, 1986, as amended and
restated in its entirety as of March 31, 1997 (such Loan Agreement, as so
amended and restated and as the same may be further amended from time to time,
being hereinafter referred to as the "LOAN AGREEMENT"). Terms used herein,
unless otherwise defined herein, shall have the meanings set forth in the Loan
Agreement.

     (2)  The Company, the Banks and the Agent now wish to amend the Loan
Agreement to provide, among other things, (a) for an extension of the
Conversion Date and the Termination Date with respect to Revolving Credit Loans
under the Loan Agreement, (b) for a change in the principal payment dates with
respect to Term Loans under the Loan Agreement, and (c) for various
modifications necessitated by the transactions contemplated by the Loan
Agreement, dated as of the date hereof, by and among the Banks, the Agent and
Air Evac Services, Inc., a Subsidiary of the Company.

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, the Banks and the Agent hereby agree as follows:

     1.   Section 1.01 of the Loan Agreement is amended by adding the following
definitions after the definition of "AIRCRAFT REGISTRY":

          "AIR EVAC" shall mean Air Evac Services, Inc. a Louisiana corporation,
     which is a Subsidiary of the Company.

          "AIR EVAC LOAN AGREEMENT" shall mean that certain Loan Agreement,
     dated as of December 31, 1997, among Air Evac, the

<PAGE>   2
     Banks and NationsBank, as agent for the Banks, as the same may from time
     to time be amended in accordance with the provisions thereof.

     2.   Clause(b) of the definition of "BORROWING BASE" contained in Section
1.01 of the Loan Agreement is hereby amended to read as follows:

          "(b) the sum of (i) the aggregate principal amount of the Term Loans,
     and (ii) the Overadvance Amount (as defined in the Air Evac Loan
     Agreement)."

     3.   The definition of "CONVERSION DATE" in Section 1.01 of the Loan
Agreement is hereby amended in its entirety to read as follows:

          "CONVERSION DATE" shall mean October 31, 1999.

     4.   The definitions of "DEFAULT" and of "EVENT OF DEFAULT" in Section 1.01
of the Loan Agreement is hereby amended to refer to Subsections 10.01(a) through
10.01(n).

     5.   The definition of "SWAP AGREEMENT" in Section 1.01 of the Loan
Agreement is hereby amended in its entirety as follows in order to clarify and
confirm the intention of the parties to the Loan Agreement from the inception
thereof:

          "SWAP AGREEMENT" shall mean any interest rate protection agreement,
     interest rate futures contract, interest rate option, interest rate cap or
     other interest rate hedge agreement, on terms and conditions satisfactory
     to the Majority Banks at the inception of such interest rate protection
     agreement, interest rate futures contract, interest rate option, interest
     rate cap or other interest rate hedge arrangement, to which the Company is
     a party or a beneficiary, together with all schedules and confirmations
     from time to time entered into and executed thereunder (as to which no
     consent or other action by the Majority Banks is required), as the same may
     be further amended, modified, restated or supplemented (including, without
     limitation, amendments, modifications, restatements or supplements which
     have the effect of increasing the notional amount, liabilities or
     obligations thereunder).

     6.   The definition of "TERMINATION DATE" in Section 1.01 of the Loan
Agreement is hereby amended in its entirety to read as follows:

                                      -2-

<PAGE>   3
          "TERMINATION DATE", in the case of the Term Loans, shall have
     the meaning given such term in Subsection 2.01(b) and, in the case of the
     Revolving Credit Loans, shall mean October 31, 2004.

     7.   Section 2.01(b) of the Loan Agreement is hereby amended in its
entirety to read as follows:

          The aggregate principal amount of the Term Loans shall be payable in
     quarterly installments each in an amount equal to (i) for all quarterly
     installments prior to November 10, 2003 (the "TERMINATION DATE"),
     $1,000,000 and (ii) for the quarterly installment due on the Termination
     Date, $14,000,000, which quarterly installments shall be payable on April
     30, 1997, July 31, 1997, October 31, 1997 and on the tenth day of each
     February, May, August and November of each year commencing February 10,
     1998 and ending on the first such date on which the aggregate unpaid
     principal amount of the Term Loans shall be paid in full by reason of
     quarterly installments paid as aforesaid and any prepayments made pursuant
     to ARTICLE 3 or otherwise (but in any event no later than the Termination
     Date).

     8.   Subsection 2.02(b) of the Loan Agreement is amended by deleting
"January 31, 1999" and replacing it with "January 31, 2000".

     9.   Section 5.06 of the Loan Agreement is hereby amended by deleting the
final sentence thereof.

     10.  Section 5.11 of the Loan Agreement is hereby amended in its entirety
to read as follows:

          "5.11     Franchises, Permits, Etc.  The Company and each
     Subsidiary (other than Air Evac and each subsidiary of Air Evac) hold free
     from materially burdensome restrictions all municipal consents,
     franchises, permits, licenses, rights-of-way, easements, consents and
     other rights which, together with their respective corporate and charter
     powers, are sufficient for the proper and efficient operation as a whole
     of their respective businesses as presently conducted and as presently
     proposed to be conducted. Air Evac and each subsidiary of Air Evac hold
     free from materially burdensome restrictions all material municipal
     consents, franchises, permits, licenses, rights-of-way, easements,
     consents and other rights which, together with their respective corporate
     and charter powers and the rights of Air Evac under the Services
     Agreement, effective as

                                       -3-
<PAGE>   4
     of January 1, 1998, between Air Evac and Samaritan Health System, an
     Arizona nonprofit corporation, are sufficient for the proper and efficient
     operation as a whole of their respective businesses as presently conducted
     and as presently proposed to be conducted."

     11.  Section 8.03 of the Loan Agreement is hereby amended by deleting the
figure "$25,000,000" from subclause (b)(ii) thereof and replacing it with the
figure "$27,000,000".

     12.  Section 8.05 of the Loan Agreement is amended by deleting the word
"and" at the end of clause (g) thereof, by deleting the period at the end of
clause (h) thereof and replacing it with a semi-colon and the word "and" and by
inserting thereafter the following:

          "(i) the Security Interest, as defined in the Air Evac Loan
               Agreement; and

          (j)  Liens in favor of Samaritan Health System, an Arizona nonprofit
               corporation, in respect of certain radio equipment and resulting
               from the sale and lease-back thereof by Air Evac."

     13.  Section 8.06 of the Loan Agreement is hereby amended in its entirety
to read as follows:

          "8.06 Limitations on Indebtedness for Money Borrowed. Create, assume,
     incur, guarantee or in any manner become liable, or permit any Subsidiary
     to create, assume, incur, guarantee or in any manner become liable,
     contingently or otherwise, in respect of any Indebtedness for Money
     Borrowed, except for (a) the Notes, (b) Indebtedness for Money Borrowed
     existing on March 31, 1997 and listed on SCHEDULE III, provided that as
     long as this Agreement shall remain in effect, such Indebtedness for Money
     Borrowed shall not increase in amount or in the actual or implicit interest
     rate payable thereon and shall not have the maturity of any principal
     payment due thereunder shortened, (c) to the extent not described in
     SCHEDULE III, Permitted Letters of Credit, (d) the Guaranty Agreement,
     dated as of December 31, 1997, executed by the Company to secure the
     Indebtedness of Air Evac under the Air Evac Loan Agreement and (e) the
     Indebtedness of Air Evac under the Air Evac Loan Agreement."

     14.  Section 8.09 of the Loan Agreement is hereby amended by deleting the
word "and" at the end of clause (a) thereof, by deleting the period at the end
of clause (b) thereof and inserting a comma and the word "and" and by inserting
thereafter the following:

                                      -4-
<PAGE>   5
          "(c) Air Evac may issue to Samaritan Health System, an Arizona
          non-profit corporation, the series of preferred stock described in
          the Articles of Incorporation of Air Evac as such Articles of
          Incorporation are in effect on December 31, 1997."

     15.  Section 10.01 of the Loan Agreement is hereby amended by deleting the
period at the end of clause (m) thereof, replacing such period by a semicolon
and the word "or" and by inserting the following as a new clause "(n)":

          "(n) an Event of Default (as defined in the Air Evac Loan Agreement)
     occurs and is continuing under the Air Evac Loan Agreement."

     16.  Section 12.08 of the Loan Agreement is hereby amended by deleting
from the first sentence the phrase "the 'indicated rate ceiling' described in
Section (a)(i) of Article 1.04 of Chapter 1, Subtitle 1, Title 79, of the
Revised Civil Statutes of Texas, 1925, as amended" and by inserting in its
place "the 'weekly ceiling' described in Section 303.301 of the Texas Finance
Code, as amended".

     17.  Section 12.13 of the Loan Agreement is hereby amended by deleting the
phrase "Chapter 15, Subtitle 3, Title 79, of the Revised Civil Statutes of
Texas, 1925, as amended" and by replacing such phrase with "Chapter 346 of the
Texas Finance Code, as amended".

     18.  EXHIBIT A-1 to the Loan Agreement is hereby deleted and replaced by
EXHIBIT A-1 attached hereto.

     19.  EXHIBIT C to the Loan Agreement is hereby deleted and replaced by
EXHIBIT C attached hereto.

     20.  Each reference in the Loan Agreement to "THIS AGREEMENT",
"HEREUNDER", "HEREIN" or words of like import shall mean and be a reference to
the Loan Agreement as amended hereby. Unless otherwise indicated, terms used in
this Amendment have the same meanings herein as in the Loan Agreement.

     21.  The Loan Agreement, as hereby amended, is in all respects ratified
and confirmed, and all of the rights and powers created thereby or thereunder
shall be and remain in full force and effect.

     22.  The Company hereby represents that (a) after giving effect to the
amendments contemplated herein, the representations and warranties contained in
the Loan Agreement, the Notes, the Security Documents, and any other documents
or instruments executed in connection with the Loan Agreement (collectively,
the "LOAN DOCUMENTS") are true and correct on and as of the date hereof as
though made on and as of such date, (b) upon execution of this Amendment, the
Company

                                      -5-
<PAGE>   6
will not be in default in the due performance of any covenant on its part in
the Loan Documents, and (c) no Default or Event of Default has occurred and is
continuing or is imminent.

     23.  The Company acknowledges, confirms, and warrants that the Security
Documents and any other security instruments executed at any time in
connection with the Loan Agreement continue to secure, inter alia, the payment
of all Indebtedness at any time created pursuant to the Loan Agreement, as
hereby amended, and all obligations of the Company in respect of Swap
Agreements.

     24.  The effectiveness of this Amendment is subject to (i) the Company's
delivery to the Agent, for the account of the Banks, of the following items on
or before the date hereof:

          (a)  an Officers' Certificate of the Company with directors'
               resolutions attached;

          (b)  a counterpart of this Amendment executed by the Company; and

          (c)  a Term Loan Note for each Bank; and

(ii) the delivery to the Agent of counterparts of this Amendment executed by
each of the Banks.

     25.  The Company agrees to do, execute, acknowledge, and deliver, all and
every such further acts and instruments as the Agent may request for the better
assuring and confirming unto the Agent and the Banks all and singular the
rights granted or intended to be granted hereby or hereunder.

     26.  The Company agrees to pay on demand all reasonable costs and expenses
of the Banks in connection with the preparation, reproduction, execution, and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder (including the reasonable fees and out-of-pocket expenses
of counsel for the Agent, and with respect to advising the Agent as to its
rights and responsibilities under the Loan Agreement, as hereby amended). In
addition, the Company shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution and
delivery, filing, or recording of this Amendment and the other instruments and
documents to be delivered hereunder, and agrees to save each Bank harmless from
and against any and all liabilities with respect to and resulting from any
delay in paying or omission to pay such taxes or fees.

     27.  This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.

                                      -6-
<PAGE>   7
     28.  This Amendment shall be governed by and construed in accordance with
the laws of the State of Texas and shall be binding upon the Company, the
Agent, and the Banks and their respective successors and assigns.

                                      -7-
<PAGE>   8
     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Amended and Restated Loan Agreement to be executed by their respective officers
thereunto duly authorized as of the date first above written.

                                   PETROLEUM HELICOPTERS, INC.

                                   By:             /s/ JOHN UNTEREKER
                                      ----------------------------------------
                                   Name:            John Untereker
                                        --------------------------------------
                                   Title:                 VP
                                         -------------------------------------

                                   NATIONSBANK OF TEXAS, N.A.,
                                        individually and as Agent

                                   By:            /s/ THOMAS BLAKE
                                      ----------------------------------------
                                   Name:             Thomas Blake
                                        --------------------------------------
                                   Title:        Senior Vice President
                                         -------------------------------------

                                   WHITNEY NATIONAL BANK

                                   By:          /s/ HARRY C. STAHEL
                                      ----------------------------------------
                                   Name:           Harry C. Stahel
                                        --------------------------------------
                                   Title:        Senior Vice President
                                         -------------------------------------

                                   FIRST NATIONAL BANK OF COMMERCE

                                   By:       /s/ J. CHARLES FREED, JR.
                                      ----------------------------------------
                                   Name:        J. Charles Freed, Jr.
                                        --------------------------------------
                                   Title:        Senior Vice President
                                         -------------------------------------
<PAGE>   9
                                  EXHIBIT A-1

                          PETROLEUM HELICOPTERS, INC.

                                   Term Note

$_________________                                                March 31, 1997

     FOR VALUE RECEIVED, the undersigned, Petroleum Helicopters, Inc., a
Louisiana corporation (successor by merger to Petroleum Helicopters, Inc., a
Delaware corporation) (herein called the "Company"), hereby promises to pay to
the order of ________________________________________________________________
_______________ (herein called the "Bank") in lawful money of the United States
of America on or before the Termination Date unless the maturity is earlier
accelerated, the principal sum of ________________________________________
________________ and ___/100 Dollars ($________). The principal of this note
shall be due and payable in quarterly installments each in an amount equal to
(i) for all quarterly installments prior to the Termination Date, [$________]
and (ii) for the quarterly installment due on the Termination Date, [$______],
which quarterly payments shall be payable April 30, 1997, July 31, 1997, October
31, 1997 and on the tenth day of each February, May, August and November of each
year commencing February 10, 1998 and ending on the first such date on which the
aggregate unpaid principal amount of this note shall be paid in full by reason
of quarterly payments as aforesaid and any prepayments made pursuant to the
Amended and Restated Loan Agreement (as defined below) or otherwise (but in any
event no later than the Termination Date). The Company also agrees to pay
interest on the unpaid principal balance of this note from the date hereof until
maturity, whether by acceleration or otherwise, payable on each Interest Payment
Date during such period and at maturity, at the rate or rates per annum provided
for in that certain Amended and Restated Loan Agreement dated as of March 31,
1997 (as the same heretofore has been amended and as the same hereafter from
time to time may be supplemented, amended, restated, extended or otherwise
modified, the "Amended and Restated Loan Agreement") among the Company, the
Bank, the other Banks and NationsBank of Texas, N.A., as Agent thereunder.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Amended and Restated Loan Agreement.

     If any payment or prepayment of principal or interest on this note shall
become due on a day that is not a Business Day, such payment or prepayment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in computing interest in connection with such payment or
prepayment provided, however, if such extension would cause payment of interest
on or principal of LIBOR Loans to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.

     All past due principal and interest on this note shall bear interest at a
rate equal to the lesser of (i) the Prime Rate plus 3% per annum or (ii) the
Highest Lawful Rate.

                                      A-1
<PAGE>   10
     Payments of both principal and interest are to be made in immediately
available funds at the Office of the Agent or such other place as the Agent
shall designate in writing to the Company.

     This note is one of the Notes provided for in, and is entitled to the
benefits of, the Amended and Restated Loan Agreement which Amended and Restated
Loan Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified and to the effect that no provision of the Amended
and Restated Loan Agreement, the Security Documents or this note shall be
construed to require or permit the payment or collection of interest at a rate
that exceeds the Highest Lawful Rate. This note is secured by and entitled to
the benefits of the Security Documents.

     Furthermore, this note does not effect a novation but is given, to the
fullest extent applicable, in modification, renewal, extension, rearrangement
and replacement of [$_______________] of the aggregate principal amount of that
certain Revolving Credit and Term Note dated August 13, 1996, in the principal
face amount of $________, executed by the Company, payable to the order of the
Bank (the "1996 Note"), which 1996 Note modified, renewed, extended, rearranged
and replaced certain indebtedness evidenced by both (i) that certain Capital
Loan Note dated as of October 31, 1995, in the principal face amount of
$_________, executed by the Company, payable to the order of the Bank (the "1995
Capital Loan Note"), which 1995 Capital Loan Note modified, renewed, extended,
rearranged and replaced certain indebtedness evidenced by that certain Capital
Loan Note of the Company dated as of October 31, 1994 (the "1994 Capital Loan
Note"), which 1994 Capital Loan Note modified, renewed, extended, rearranged and
replaced certain indebtedness evidenced by that certain Capital Loan Note of the
Company dated as of July 9, 1993 (the "1993 Capital Loan Note"), which 1993
Capital Loan Note modified, renewed, extended, rearranged and replaced certain
indebtedness evidenced by that certain Term Note of the Company dated October
29, 1991 (the "1991 Term Note"), which 1991 Term Note modified, renewed,
extended, rearranged and replaced certain indebtedness evidenced by certain Term
Notes of the Company dated as of December 28, 1990 (the "1990 Term Notes"),
which 1990 Term Notes modified, renewed, extended, rearranged and replaced
certain indebtedness originally evidenced by certain Term Notes of the Company
dated as of April 22, 1986 (the "1986 Term Notes"), and (ii) that certain
Revolving Credit Note dated as of October 31, 1995 in the principal face amount
of $__________, executed by the Company, payable to the order of the Bank (the
"October 1995 Note"), which October 1995 Note modified, renewed, extended,
rearranged and replaced certain indebtedness evidenced by that certain
Revolving Credit Note dated as of October 31, 1994 (the "October 1994 Note"),
which October 1994 Note modified, renewed, extended, rearranged and replaced
certain indebtedness evidenced by that certain Revolving Credit Note dated as
of October 31, 1993 (the "October 1993 Note"), which October 1993 Note
modified, renewed, extended, rearranged and replaced certain indebtedness
evidenced by that certain Revolving Credit Note dated as of July 9, 1993 (the
"July 1993 Note"), which July 1993 Note modified, renewed, extended, rearranged
and replaced certain indebtedness originally evidenced by certain Revolving
Credit Notes of the Company dated as of

                                      A-2
<PAGE>   11
April 22, 1986 (the "1986 Notes"), and delivered pursuant to that certain Loan
Agreement originally dated as of January 31, 1986, as amended and restated in
its entirety as of August 1, 1988, amended and restated in its entirety as of
December 28, 1990, amended and restated in its entirety as of July 9, 1993,
amended and restated in its entirety as of August 13, 1996 and amended as of
January 1, 1997, of which said Loan Agreement the Amended and Restated Loan
Agreement is an amendment and restatement in its entirety. All liens and
security interests securing payment of the 1996 Note (including, without
limitation, those securing payment of the 1995 Capital Loan Note, the 1994
Capital Loan Note, the 1993 Capital Loan Note, the 1991 Term Note, the 1990
Term Notes, the 1986 Term Notes, the October 1995 Note, the October 1994 Note,
the October 1993 Note, the July 1993 Note, and the 1986 Notes) are hereby
collectively renewed, extended, rearranged, ratified and brought forward as
security for the payment and performance of this note. The Company hereby
agrees that this modification, renewal, extension, rearrangement, and
replacement shall in no manner affect, release, cancel, terminate, extinguish
or otherwise impair the liens and security interests securing payment of the
1996 Note and that said liens and security interests shall not in any manner be
waived.

     The Company and any and all endorsers, guarantors and sureties severally
waive grace, demand, presentment for payment, notice of dishonor or default,
protest, notice of intent to accelerate, notice of acceleration and notice of
protest and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon, in
whole or in part, with or without notice, before or after maturity.

     THIS NOTE SHALL BE INTERPRETED AND GOVERNED BY, AND THE RIGHTS,
OBLIGATIONS AND LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.

                                        PETROLEUM HELICOPTERS, INC.

                                        By:
                                            -------------------------------
                                        Name:
                                              -----------------------------
                                        Title:
                                               ----------------------------

                                      A-3
<PAGE>   12
                                   EXHIBIT C

                           BORROWING BASE CERTIFICATE

The undersigned [CARROLL W. SUGGS OR JOHN H. UNTEREKER] the [CHAIRMAN OF THE
BOARD OR THE TREASURER, RESPECTIVELY] of Petroleum Helicopters, Inc., a
Louisiana corporation (the "Company"), on my behalf and on behalf of the
Company, hereby certifies as to the matters set forth in the numbered
paragraphs below. The capitalized terms used and not defined herein are used
with the same meaning assigned thereto in that certain Amended and Restated
Loan Agreement among the Company and NationsBank of Texas, N.A., individually
and as agent, Whitney National Bank, and First National Bank of Commerce dated
as of March 31, 1997, as amended (the "Amended and Restated Loan Agreement").

1.   As of the date hereof, the Borrowing Base is [$______], which consists of
     (a)(i) 80% of Eligible Receivables ($______]), as more fully set forth on
     Annex 1 attached hereto and made a part hereof, (ii) 50% of the Appraised
     Value of the Aircraft ([$______]), as more fully set forth on Annex 2
     attached hereto and made a part hereof, (iii) the Value of Pledged
     Securities ([$______]), as more fully set forth on Annex 3 attached hereto
     and made a part hereof, and (iv) 50% of the value of Eligible Parts
     (valued at the lower of cost or market) as more fully set forth on Annex 4
     attached hereto and made a part hereof, in which each of the Creditors has
     a valid, equal and ratable first priority Security Interest, pursuant to
     the Security Documents, minus (b) the aggregate principal amount of the
     Term Loans, at the time of determination ([$______]), minus (c) the
     Overadvance Amount, if any, as set forth in the most recently delivered
     Borrowing Base Certificate of Air Evac Services, Inc.

2.   [AFTER GIVING EFFECT TO THE BORROWING CONTEMPLATED IN THE NOTICE OF
     BORROWING DATED [_______________], THE](1) The aggregate principal amount
     of the Revolving Credit Loans and the aggregate amount of Permitted Letter
     of Credit Amounts does not [WILL NOT](1) exceed the lesser of (i)
     $40,000,000 and (ii) the Borrowing Base.

          IN TESTIMONY WHEREOF, I hereunto set over my hand and affix the
corporate seal of the Company on this _____ day of __________, ____.

                                        ---------------------------------------
                                        [CARROLL W. SUGGS OR JOHN H. UNTEREKER]
                                        [CHAIRMAN OF THE BOARD OR TREASURER,
                                        RESPECTIVELY]

-------------------------
(1)  The bracketed language is to be used in the Borrowing Base Certificate to
     be delivered pursuant to Section 6.02(b) in connection with each Borrowing
     under the Loan Agreement.

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