As Amended through July 18, 1996

Time Warner 1986 Stock Option Plan

1. ADOPTION AND PURPOSE OF THE PLAN.

Time Incorporated, a Delaware corporation (hereinafter called the Company), hereby adopts this stock option plan (hereinafter called the Plan), providing for the granting of stock options to key employees of the Company and its subsidiaries. The general purpose of the Plan is to promote the interests of the Company and its stockholders by providing to key employees of the Company and its subsidiaries additional incentives to continue and increase their efforts with respect to, and to remain in the employ of, the Company or its subsidiaries.

So that the maximum incentive may be provided to particular employees participating in the Plan, the Plan provides for the granting of "incentive" stock options (hereinafter called incentive stock options), within the meaning of Section 422A(b) of the Internal Revenue Code of 1954, as amended (hereinafter called the Code), and for the granting of "nonqualified" stock options.

2. STOCK SUBJECT TO THE PLAN.

There will be reserved for issuance upon the exercise of options and stock appreciation rights to be granted from time to time under the Plan an aggregate of 2,500,000 shares of the Company's Common Stock, par value $1 per share (hereinafter called Common Stock). Such shares may be, in whole or in part, authorized and unissued shares of Common Stock or issued shares of Common Stock which shall have been reacquired by the Company. If any option granted under the Plan shall expire or terminate for any reason without having been exercised (or without having been considered to have been exercised as provided in paragraphs 8 and 9 hereof) in full, the unpurchased shares subject thereto shall again be available for purposes of the Plan.

3. ADMINISTRATION.

The Plan shall be administered by the Board of Directors of the Company (hereinafter called the Board). Subject to the express provisions of the Plan, the Board shall have plenary authority, in its discretion, to determine the terms of all options granted under the Plan (which need not be identical), including, without limitation, the purchase price of the shares covered by each option, the individuals to whom, and the time or times at which, options shall be granted, the number of shares to be subject to each option (provided that the maximum aggregate number of shares which may be granted to an individual employee under the Plan shall be 100,000), whether an option shall be an incentive stock option or a nonqualified stock option, when an option can be exercised and whether in whole or in installments (which terms may be altered, subject to paragraph 14 hereof). In making such determinations, the Board may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the Company's success and such other factors as the Board in its discretion shall deem relevant. Subject to the express provisions of the Plan, the Board shall have plenary authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The determinations of the Board on the matters referred to in this paragraph 3 shall be conclusive.

Notwithstanding anything to the contrary contained herein, the Board may at any time, or from time to time, appoint a committee (hereinafter called the Committee) of at least three members, who shall be members of the Personnel and Compensation Committee of the Board (or such other members of the Board as the Board may designate), and delegate to such Committee the authority of the Board to administer the Plan. Upon such appointment and delegation, the Committee shall have all the powers, privileges and duties of the Board in the administration of the Plan, except the power to appoint members of the Committee and to terminate, modify or amend the Plan. The Board may from time to time appoint members of any such Committee in substitution for or in addition to members previously appointed, may fill vacancies in the Committee and may discharge the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such

times and places as it shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held.

4. ELIGIBILITY.

Options may be granted only to key salaried employees (which term shall be deemed to include officers) of the Company and of its present and future subsidiary corporations as defined in Section 425 of the Code, as the same shall be amended from time to time (hereinafter called subsidiaries). A director of the Company or of a subsidiary who is not also such an employee of the Company or of one of its subsidiaries will not be eligible to receive any options under the Plan. No option shall be granted to any person who, at the time the option is granted, owns (or is considered as owning within the meaning of Section 425(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any subsidiary, unless at the time the option is granted the option price is at least 110% of the fair market value of the Common Stock subject to the option and the option by its terms is not exercisable after the expiration of five years from the date it is granted. Options may be granted to employees who hold or have held options under previous plans. An employee who has been granted an option may be granted an additional option or options.

Notwithstanding anything to the contrary contained herein, in the case of incentive stock options granted on or prior to December 31, 1986, the maximum aggregate fair market value (determined at the time each incentive stock option is granted) of the shares of Common Stock for which any individual employee may be granted incentive stock options under the Plan in any calendar year (and under all other plans of the Company or any subsidiary which provide for the granting of incentive stock options) shall not exceed $100,000 plus the amount of any unused limit carryover to such year. If $100,000 exceeds the aggregate fair market value (determined at the time each incentive stock option is granted) of the Common Stock for which an employee was granted incentive stock options in any calendar year under the Plan (and under all other plans of the Company or any subsidiary which provide for the granting of incentive stock options), one-half of such excess shall be an

unused limit carryover to each of the three succeeding calendar years, under the rules of Section 422A(c)(4) of the Code. In the case of incentive stock options granted after December 31, 1986, the aggregate fair market value (determined at the time the option is granted) of the shares of Common Stock covered by incentive stock options which first become exercisable in any calendar year under the Plan by any individual employee (and under all other plans of the Company or any subsidiary which provide for the granting of incentive stock options) shall not exceed $100,000. For purposes of this paragraph, fair market value of Common Stock shall be the mean between the high and low sales prices of a share of Common Stock as reported on the New York Stock Exchange Composite Tape on the date of grant of an incentive stock option under the Plan.

5. OPTION PRICES.

Except as otherwise specifically provided in paragraph 4 hereof, the purchase price of the Common Stock under each option shall be determined by the Board, but shall not be less than 100% of the fair market value of the Common Stock at the time of the granting of such option. Such fair market value shall be determined by the Board and shall not be less than the mean between the high and low sales prices of a share of Common Stock as reported on the New York Stock Exchange Composite Tape on the day on which the option is granted.

6. TERM OF OPTIONS.

The term of each option shall be for such period as the Board shall determine, but not more than ten years from the date of grant in the case of each incentive stock option and not more than ten and one-half years from the date of grant in the case of each nonqualified stock option, or such shorter period as is prescribed in paragraphs 4, 11 and 12 hereof.

7. EXERCISE OF OPTIONS.

Unless otherwise provided in the option agreement, an option granted under the Plan shall be exercisable in whole, or in part, at any time during the term of the option. Each incentive stock option granted under the Plan on or prior to December 31, 1986 shall by its terms comply with the requirements of
Section 422A(b)(7) of the Code, as in effect

prior to December 31, 1986.

The Board shall be authorized to establish the procedure for the exercise of an option, provided that the Company shall not be required to deliver certificates for shares with respect to which an option is exercised until the purchase price of such shares shall have been paid in full. Payment shall be made in cash or, unless otherwise provided in the option agreement, in whole shares of Common Stock already owned by the holder of the option or, unless otherwise provided in the option agreement, partly in cash and partly in such Common Stock. An option shall be exercised by written notice to the Company. Such notice shall state that the holder of the option elects to exercise the option, the number of shares in respect of which it is being exercised and the manner of payment for such shares, and shall either (i) be accompanied by payment of the full purchase price of such shares, or (ii) fix a date (not more than 10 business days from the date of exercise) for the payment of the full purchase price of such shares. Cash payments shall be made by certified or bank cashier's check, or by the wire transfer of immediately available funds, in each case payable to the order of the Company. Common Stock payments (valued at the mean between the high and low sales prices of a share of Common Stock as reported on the New York Stock Exchange Composite Tape on the date of exercise) shall be made by delivery of stock certificates in negotiable form. If certificates representing Common Stock are used to pay all or part of the purchase price of an option, separate certificates shall be delivered by the Company representing the same number of shares as each certificate so used, and an additional certificate shall be delivered representing any additional shares to which the holder of the option is entitled as a result of the exercise of the option. Except as provided in paragraphs 11 and 12 hereof, no option may be exercised at any time unless the employee to whom the option was granted under the Plan is then an employee of the Company or of a subsidiary or, if the option agreement so provides, an Employee of an Affiliated Entity. For the purposes of this Plan, "Employee of an Affiliated Entity" shall mean an employee of any entity other than the Company or a subsidiary, whether or not incorporated, which is controlled by or under common control with the Company (an "Affiliated Entity"); provided, however, that no director, officer or holder of ten percent or more of any class of equity securities of the Company who was subject, directly or indirectly, to Section 16(b) of the Securities Exchange Act of 1934, as amended, at any time on or after May 14, 1991, shall be considered an Employee of an Affiliated

Entity. The holder of an option shall have none of the rights of a stockholder with respect to the shares subject to the option until such shares shall be transferred to the holder upon the exercise of his or her option.

Notwithstanding any contrary waiting period or installment period in any option agreement or in the Plan, each outstanding option granted under the Plan shall, except as otherwise provided in the option agreement, become exercisable in full for the aggregate number of shares covered thereby, in the event (i) the Board (or, if approval of the Board is not required as a matter of law, the stockholders of the Company) shall approve (a) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, other than a merger of the Company (x) as contemplated in the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995 among Time Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., as the same may be amended from time to time, or (y) in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the adoption of any plan or proposal for the liquidation or dissolution of the Company, or (ii) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (hereinafter called the Exchange Act)), corporation or other entity (a) shall purchase any Common Stock of the Company (or securities convertible into the Company's Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (b) any such person, corporation or other entity (other than the Company or any benefit plan sponsored by the Company or any subsidiary) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20 percent or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire the Company's securities), or (iii) during any period of two consecutive

years, individuals who at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Any transaction referred to in the foregoing clause (i) is hereinafter called an Approved Transaction, any purchase pursuant to a tender offer or exchange offer or otherwise as described in the foregoing clause (ii) is hereinafter called a Control Purchase and the cessation of individuals constituting a majority of the Board as described in the foregoing clause (iii) is hereinafter called a Board Change. The option agreement evidencing an option granted under the Plan may contain such provisions limiting the acceleration of the exercise of options as the Board deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect at the time of such acceleration, will not apply to any stock or cash received by the holder from the Company.

8. GENERAL STOCK APPRECIATION RIGHTS.

The Board may (but shall not be obligated to) grant general stock appreciation rights (hereinafter called SARs) pursuant to the provisions of this paragraph to the holder of any option granted under the Plan (hereinafter in this paragraph 8 called a related option) with respect to all or a portion of the shares subject to the related option. An SAR may only be granted concurrently with the grant of the related option. Subject to the terms and provisions of this paragraph 8, each SAR shall be exercisable only at the same time and to the same extent the related option is exercisable, and in no event after the termination or exercise of the related option.

Notwithstanding the foregoing, no SAR may be exercised within a period of six months after the date of grant of the SAR. SARs shall be exercisable only when the fair market value (determined as of the date of exercise of the SARs) of each share of Common Stock with respect to which the SARs are to be exercised shall exceed the option price per share of Common Stock subject to the related option. SARs granted under the Plan shall be exercisable in whole or in part by notice to the Company. Such notice shall state that the holder of the SARs elects to exercise the SARs and the number of shares in respect of which the SARs are being exercised.

Subject to the terms and provisions of this paragraph 8, upon the exercise of SARs, the holder thereof shall be entitled to receive from the Company consideration (in the form hereinafter provided) equal in value to the excess of the fair market value (determined as of the date of exercise of the SARs) of each share of Common Stock with respect to which such SARs have been exercised over the option price per share of Common Stock subject to the related option. Upon the exercise of an SAR, the holder may specify the form of consideration to be received by such holder, which shall be in shares of Common Stock (valued at fair market value on the date of exercise of the SAR), or in cash, or partly in cash and partly in shares of Common Stock as the holder shall request; provided, however, that the Board in its sole discretion may disapprove the form of consideration requested and instead authorize the payment of such consideration in shares of Common Stock (valued as aforesaid), or in cash, or partly in cash and partly in shares of Common Stock. Notwithstanding the foregoing, any election by the holder of an SAR to receive cash in full or partial settlement of the SAR, as well as any exercise of an SAR for such cash, shall be made only during the period beginning on the third business day following the date of release for publication of quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date (such period is hereinafter called the Exercise Period). Notwithstanding the foregoing, the number of SARs which may be exercised for cash, or partly for cash and partly for shares of Common Stock, during any Exercise Period may not exceed twenty percent of the aggregate number of shares of Common Stock originally subject to the related option (as such original number, without giving effect to the exercise of any portion of the related option, shall have been retroactively adjusted by application of the adjustment(s), if any, determined in accordance with paragraph 13 hereof or the corresponding provisions of any outstanding option agreement), but such SARs shall be exercisable only to the extent the related option is exercisable. For purposes of this paragraph 8, (a) fair market value of Common Stock shall be the mean between the high and low sales prices thereof as reported on the New York Stock Exchange Composite Tape on the date of exercise of an SAR, and (b) the date of exercise of an SAR shall mean the date on which the Company shall have received notice from the holder of the SAR of the exercise of such SAR. Notwithstanding the foregoing, upon the exercise during the Exercise Period of an SAR granted in tandem with a nonqualified stock option, the date of exercise of such SAR shall be deemed to be the date during the Exercise Period on which the highest

reported closing sales price of a share of Common Stock as reported on the New York Stock Exchange Composite Tape occurred and the fair market value of such shares shall be deemed to be such highest reported closing sales price.

Upon the exercise of SARs, the related option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such SARs are exercised, and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock available for the grant of options under the Plan. Upon the exercise or termination of the related option, the SARs with respect to such related option shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related option was so exercised or terminated.

The provisions of paragraphs 3, 6, 10 through 16, and 18 through 20 of the Plan (to the extent that such provisions are applicable to options granted under the Plan) shall also be applicable to SARs unless the context otherwise requires. The effective date of the grant of an SAR shall be the date on which the Board approves the grant of such SAR. Each grantee of an SAR shall be notified promptly of the grant of an SAR in such manner as the Board shall prescribe.

Notwithstanding anything to the contrary contained in this paragraph 8, SARs shall not be exercisable unless at the time of such exercise (i) the holder of the SARs is directly or indirectly subject to Section 16 of the Exchange Act or (ii) sales of Common Stock by the person exercising the SARs would be reportable under Section 16 by the original holder of the related option.

9. LIMITED STOCK APPRECIATION RIGHTS.

The Board may (but shall not be obligated to) grant limited stock appreciation rights (hereinafter called limited rights) pursuant to the provisions of this paragraph to the holder of any option granted under the Plan (hereinafter in this paragraph 9 called a related option) with respect to all or a portion of the shares subject to the related option. A limited right may only be granted concurrently with the grant of the related option. A limited right may be exercised only during the period (a) beginning on the first day following either (i) the date of approval by the stockholders of the

Company of an Approved Transaction (as defined in the last paragraph of paragraph 7 hereof), (ii) the date of a Control Purchase (as defined in the last paragraph of paragraph 7 hereof), or (iii) the date of a Board Change (as defined in the last paragraph of paragraph 7 hereof), and (b) ending on the thirtieth day following such date. Each limited right shall be exercisable only to the extent the related option is exercisable, and in no event after the termination of the related option. Notwithstanding the provisions of the two immediately preceding sentences, no limited right may be exercised within a period of six months after the date of grant of the limited right. Limited rights shall be exercisable only when the fair market value (determined as of the date of exercise of the limited rights) of each share of Common Stock with respect to which the limited rights are to be exercised shall exceed the option price per share of Common Stock subject to the related option.

Upon the exercise of limited rights, the related option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such limited rights are exercised, and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock available for the grant of options under the Plan. Upon the exercise or termination of the related option, the limited rights with respect to such related option shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related option was so exercised or terminated.

The provisions of paragraphs 3, 6, 10 through 16, and 18 through 20 of the Plan (to the extent that such provisions are applicable to options granted under the Plan) shall also be applicable to limited rights unless the context otherwise requires. The effective date of the grant of a limited right shall be the date on which the Board approves the grant of such limited right. Each grantee of a limited right shall be notified promptly of the grant of the limited right in such manner as the Board shall prescribe.

Limited rights granted under the Plan shall be exercisable in whole or in part by notice to the Company. Such notice shall state that the holder of the limited rights elects to exercise the limited rights and the number of shares in respect of which the limited rights are being exercised. The effective date of exercise of a limited right shall be deemed to be the

date on which the Company shall have received such notice. Upon the exercise of limited rights granted in tandem with an incentive stock option, except as otherwise provided in the option agreement, the holder thereof shall receive in cash an amount equal to the excess of the fair market value (determined as of the date of exercise of such limited rights) of each share of Common Stock with respect to which such limited right shall have been exercised over the option price per share of Common Stock subject to the related incentive stock option. For purposes of this paragraph 9, the fair market value of a share of Common Stock shall be the mean between the high and low sales price thereof as reported on the New York Stock Exchange Composite Tape on the date of exercise of a limited right.

Upon the exercise of limited rights granted in tandem with a nonqualified stock option, except as otherwise provided in the option agreement, the holder thereof shall receive in cash an amount equal to the product computed by multiplying (i) the excess of (a) the higher of (x) the Minimum Price Per Share (as hereinafter defined), or (y) the highest reported closing sales price of a share of Common Stock as reported on the New York Stock Exchange Composite Tape at any time during the period beginning on the sixtieth day prior to the date on which such limited rights are exercised and ending on the date on which such limited rights are exercised, over (b) the option price per share of Common Stock subject to the related nonqualified stock option, by (ii) the number of shares of Common Stock with respect to which such limited rights are being exercised.

For purposes of this paragraph 9, the term "Minimum Price Per Share" shall mean the highest gross price (before brokerage commissions, soliciting dealers' fees and similar charges) paid or to be paid for any share of Common Stock (whether by way of exchange, conversion, distribution, liquidation or otherwise) in, or in connection with, any Approved Transaction or Control Purchase which occurs at any time during the period beginning on the sixtieth day prior to the date on which such limited rights are exercised and ending on the date on which such limited rights are exercised. For purposes of this definition, if the consideration paid or to be paid in any such Approved Transaction or Control Purchase shall consist, in whole or in part, of consideration other than cash, the Board shall take such action, as in its judgment it deems appropriate, to establish the cash value of such consideration, but such valuation shall not be less than the value, if any, attributed to such consideration by any other party to such Approved

Transaction or Control Purchase.

Notwithstanding anything to the contrary contained in this paragraph 9, limited rights shall not be exercisable unless at the time of the occurrence of an Approved Transaction, Control Purchase or Board Change, (i) the holder of the limited rights is directly or indirectly subject to Section 16 of the Exchange Act or (ii) sales of Common Stock by the person exercising the limited rights would be reportable under Section 16 by the original holder of the related option. The option agreement evidencing an option granted under the Plan may contain such provisions limiting the exercise of limited rights as the Board deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect at the time of such exercise, will not apply to any stock or cash received from the Company by the holder of the limited rights.

10. NONTRANSFERABILITY OF OPTIONS.

Except as set forth in this paragraph 10, no option granted under the Plan shall be transferable otherwise than by will or the laws of descent and distribution, and an option may be exercised during the lifetime of the holder thereof only by such holder. The option agreement may provide that nonqualified stock options and SARs are transferable by gift to such persons or entities and upon such terms and conditions as specified in the option agreement.

11. TERMINATION OF EMPLOYMENT.

In the event that an employee to whom an option has been granted under the Plan ceases to be an employee of the Company and/or one or more of its subsidiaries otherwise than by reason of death, such option may, subject to the provisions of the last paragraph of this paragraph 11, be exercised (to the extent exercisable by the employee at the effective date of the termination of his or her employment) at any time (i) in the case of either a nonqualified or incentive stock option, within one year (or such shorter period as may be specified in the option agreement) after the termination of his or her employment due to his or her "permanent and total disability", as defined in
Section 22(e)(3) of the Code, as the same shall be amended from time to time (hereinafter called total disability); (ii) in the case of a nonqualified stock option, (x) within five years (or such shorter period as may be

specified in the option agreement) after the termination of his or her employment upon retirement pursuant to any retirement plan of the Company or a subsidiary, or (y) within three months after the termination of his or her employment for any reason other than as specifically provided in this paragraph
(or such shorter period as may be specified in the option agreement); or (iii)
in the case of an incentive stock option, within three months after the termination of his or her employment for any reason other than as specifically provided in this paragraph (or such shorter period as may be specified in the option agreement), but, in any case, in no event after the expiration date of such option. Options granted under the Plan shall not be affected by any change of employment so long as the employee to whom the option was granted under the Plan continues to be an employee of the Company or of a subsidiary. Retirement pursuant to any retirement plan of the Company or of a subsidiary shall be deemed to be a termination of employment for the purpose of this paragraph. The option agreement may contain such provisions as the Board may approve with reference to the effect of approved leaves of absence. Nothing in the Plan or in any option granted pursuant to the Plan shall confer on any individual any right to continue in the employ of the Company or any of its subsidiaries or to interfere in any way with the right of the Company or any of its subsidiaries to terminate his or her employment at any time, with or without cause, notwithstanding the possibility that the number of shares purchasable under an option may thereby be reduced or eliminated.

Anything herein to the contrary notwithstanding, in the event the employment of an employee to whom an option has been granted under the Plan shall be terminated by the Company or a subsidiary for cause, then, in such event, any option or options held by such employee or any permitted transferee pursuant to paragraph 10 under the Plan, to the extent not theretofore exercised, shall immediately terminate; provided, however, that the foregoing shall not apply to any employee employed under a separate written employment agreement if the termination of such employee's employment for cause hereunder would constitute a breach of such employment agreement. For purposes of this paragraph 11, termination for cause shall include, but shall not be limited to, termination of the employee's employment by reason of insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind, and the refusal to perform his or her normal duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs

within 12 months after an Approved Transaction, Control Purchase or Board Change, termination for cause shall only include fraud, misappropriation or embezzlement on the part of the employee. For purposes of this paragraph 11, whether or not such employment shall have been terminated for cause shall be determined by the Board and the determination of the Board shall be conclusive. If the option agreement provides that an option may be exercised by an employee who is an Employee of an Affiliated Entity, then the provisions of this paragraph 11 shall apply to such Employee of an Affiliated Entity to the same extent they would apply to an employee of the Company or a subsidiary and termination of employment under this paragraph 11 shall include termination of employment with such Affiliated Entity.

12. DEATH OF HOLDER OF OPTION.

In the event of the death of an employee to whom an option has been granted under the Plan, unless the option shall have been previously terminated pursuant to the provisions of paragraph 11 hereof, (i) in the case of an incentive stock option, if the employee dies while employed by the Company or a subsidiary or within three months after termination of his or her employment, such option may be exercised (to the extent exercisable by the employee at the time of death) by a legatee or legatees of such employee under his or her last will, or by his or her personal representatives or distributees, or by such employee's permitted transferee pursuant to paragraph 10, at any time within a period of one year after his or her death (or such shorter period as may be specified in the option agreement), but in no event after the expiration date of such option; and (ii) in the case of a nonqualified stock option (x) if the employee dies while employed by the Company or a subsidiary, then such option may be exercised at any time within a period of five years after his or her death (or such shorter period as may be specified in the option agreement), or
(y) if the employee dies within three months after termination of his or her employment, then such option may be exercised at any time within a period of one year after his or her death (or such shorter period as may be specified in the option agreement) by a legatee or legatees of such employee under his or her last will, or by his or her personal representatives or distributees, or by such employee's permitted transferee pursuant to paragraph 10, and, in each case, to the extent exercisable by such employee at the time of his or her death, but in no event after the expiration date of such option;

provided, however, that a nonqualified stock option agreement may provide that if the employee dies within five years (or such shorter period as may be specified in the option agreement) after his or her retirement pursuant to any retirement plan of the Company or a subsidiary, then such option may be exercised to the same extent and during the same period such option would otherwise have been exercisable by the employee at the time of his or her death by a legatee or legatees of such employee under his or her last will or by his or her personal representatives or distributees, or by such employee's permitted transferee pursuant to paragraph 10, but not after the expiration date of such option. Notwithstanding the foregoing, in the event of the death of an employee to whom an option has been granted under the Plan within one year after the termination of such employee's employment due to his or her total disability, such option (unless the option shall have been previously terminated pursuant to the provisions of paragraph 11 hereof, or unless otherwise provided in such holder's option agreement) may be exercised to the same extent and during the same period such option would otherwise have been exercisable by such employee at the time of his or her death by a legatee or legatees of such employee under his or her last will, or by his or her personal representatives or distributees, or by such employee's permitted transferee pursuant to paragraph 10, but not after the expiration date of such option. If the option agreement provides that an option may be exercised by an employee who is an Employee of an Affiliated Entity, then the provisions of this paragraph 12 shall apply to such Employee of an Affiliated Entity to the same extent they would apply to an employee of the Company or a subsidiary.

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

Notwithstanding any other provisions of the Plan, option agreements may contain such provisions as the Board shall determine to be appropriate for the adjustment of the number and class of shares subject to each outstanding option and the option prices in the event of changes in the outstanding Common Stock of the Company by reason of any stock dividend, distribution, split-up, recapitalization, combination or exchange of shares, merger, consolidation or liquidation and the like, and, in the event of any such change in the outstanding Common Stock of the Company, the aggregate number and class of shares available under the Plan and the maximum number of shares as to which options may be granted to any

individual shall be appropriately adjusted by the Board, whose determination shall be conclusive.

14. TERMINATION AND AMENDMENT.

Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall terminate on, and no option shall be granted after, December 31, 1991. The Board may at any time prior to December 31, 1991 terminate the Plan, and the Board may at any time also modify or amend the Plan in such respects as it shall deem advisable; provided, however, that the Board may not, without approval of the holders of a majority of the voting securities of the Company present, or represented, and entitled to vote at a meeting (i) increase (except as provided in paragraph 13 hereof) the maximum number of shares as to which options may be granted under the Plan, (ii) change the class of employees eligible to receive options, (iii) change the manner of determining the minimum option prices other than to change the manner of determining the fair market value of the Common Stock, as set forth in paragraph 5 hereof, or
(iv) extend the period during which options may be granted or exercised. No termination, modification or amendment of the Plan may, without the consent of the holder of an option, adversely affect the rights of such holder under such option.

15. EFFECTIVENESS OF THE PLAN.

The Plan shall become effective upon approval by the vote of a majority of the voting securities of the Company present, or represented, and entitled to vote at the 1986 Annual Meeting of Stockholders to be held on April 17, 1986, or any adjournment thereof. Prior to such approval, the Board may, in its discretion, grant or authorize the granting of options under the Plan the exercise of which shall be expressly subject to the condition that the Plan shall have been so approved. Unless the Plan shall be so approved, the Plan and all options theretofore granted thereunder shall be and become null and void.

16. GOVERNMENT AND OTHER REGULATIONS.

The obligation of the Company to sell and deliver shares under the options granted under the Plan shall be subject to (i) all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of a registration statement under the Securities Act of 1933, and (ii) the condition that the shares of Common Stock reserved for issuance upon the exercise of options granted under the Plan shall have been duly listed on the New York Stock Exchange.

17. TIME OF GRANTING OF OPTIONS.

The effective date of the granting of an option (hereinafter called the Granting Date) shall be the date on which the Board approves the granting of such option. Each grantee of an option shall be notified promptly of the grant of the option and a written option agreement shall promptly be executed and delivered by or on behalf of the Company and the grantee, provided that such grant of an option shall expire if a written option agreement is not signed by such grantee (or his or her agent or attorney) and delivered to the Company within 60 days after the Granting Date.

18. WITHHOLDING.

The Company's obligation to deliver shares of Common Stock or to pay cash upon the exercise of any nonqualified stock option or any stock appreciation right granted under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding taxes paid upon the exercise of any nonqualified stock option may be paid in shares of Common Stock upon such terms and conditions as the Board shall determine; provided, however, that the Board in its sole discretion may disapprove such payment and require that such taxes be paid in cash.

19. SEPARABILITY.

If any of the terms or provisions of this Plan conflict with the requirements of Rule 16b-3 under the Exchange Act (as the same shall be amended from time to time) and/or Section 422A of the Code (as the same shall be amended from time to

time), then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of said Rule 16b-3 and/or Section 422A of the Code.

If this Plan does not contain any provision required to be included herein under Section 422A of the Code (as the same shall be amended from time to time), such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been set out at length herein.

20. NON-EXCLUSIVITY OF THE PLAN.

Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

As Amended through July 18, 1996

1988 Stock Incentive Plan of Time Warner Inc.

1. PURPOSE OF THE PLAN.

Time Incorporated, a Delaware corporation, hereby adopts this stock incentive plan, providing for the granting of stock options, stock appreciation rights and restricted shares to key employees (including officers) of the Company and its subsidiaries. The general purpose of the Plan is to promote the interests of the Company and its stockholders by providing to key employees of the Company and its subsidiaries additional incentives to continue and increase their efforts with respect to, and to remain in the employ of, the Company or its subsidiaries.

2. CERTAIN DEFINITIONS.

The following terms shall have the meanings set forth below when used in this Plan:

(a) "Award" means grants of an Option, SAR and/or Restricted Shares under this Plan.

(b) "Board" means the Board of Directors of the Company.

(c) "Cash Award" means the amount of cash, if any, to be paid to an employee pursuant to paragraph 7D hereof.

(d) "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto.

(e) "Committee" means the Committee of the Board appointed pursuant to paragraph 4 hereof.

(f) "Common Stock" means the Common Stock, par value $1 per share, of the Company.

(g) "Company" means Time Warner Inc., a Delaware corporation.

(h) "Composite Tape" means the New York Stock Exchange Composite Tape.

(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto.

(j) "Exercise Period" shall have the meaning ascribed thereto in paragraph 6E hereof.

(k) "Fair Market Value" of a share of Common Stock shall mean the mean between the high and low sales prices of a share of Common Stock on the Composite Tape on the date in question, except as otherwise provided in paragraph 6E hereof.

(l) "Holder" means an employee of the Company or a Subsidiary who has received an Award under this Plan.

(m) "ISO" means an incentive stock option within the meaning of
Section 422A(b), or any successor section, of the Code.

(n) "Limited Rights" shall have the meaning ascribed thereto in paragraph 6F hereof.

(o) "Maturity Value" means, unless the Board shall determine otherwise, the average (rounded to the nearest cent) of the means between the high and low sales prices of a share of Common Stock on the Composite Tape on the sixty consecutive trading days ending on the Valuation Date with respect to each award of Restricted Shares, or if the Valuation Date is not a trading day, the sixty consecutive trading days prior thereto.

(p) "Nonqualified Stock Option" means a stock option that does not qualify as an ISO.

(q) "Option" means any option granted under this Plan.

(r) "Plan" means this 1988 Incentive Stock Plan of the Company.

(s) "Restricted Shares" means shares of Common Stock or the right to receive shares of Common Stock, as the

case may be, awarded to an employee of the Company or a Subsidiary, pursuant to paragraph 7 hereof.

(t) "Restricted Shares Agreement" means the agreement specified in paragraph 12 hereof.

(u) "Restriction Period" means a period of time beginning on the date of each award of Restricted Shares and ending on the Valuation Date with respect to each such award.

(v) "Retained Distributions" means distributions with respect to Restricted Shares that are retained by the Company pursuant to paragraph 7C hereof.

(w) "SARs" shall mean stock appreciation rights as defined in paragraph 6E hereof.

(x) "SEC" means the Securities and Exchange Commission.

(y) "Stock Option Agreement" means the agreement specified in paragraph 12 hereof.

(z) "Subsidiary" means any present or future subsidiary of the Company as such term is defined in Section 425, or any successor section, of the Code.

(aa) "Total Disability" means a permanent and total disability as defined in Section 22(e)(3), or any successor section, of the Code.

(bb) "Valuation Date" with respect to any Restricted Shares awarded hereunder means the date designated in the Restricted Shares Agreement with respect to each award of Restricted Shares pursuant to paragraph 7A hereof.

(cc) "Dividend Equivalents" means an amount equal to the cash dividend payable on each share of Common Stock on any dividend payment date multiplied by the number of shares of Common Stock covered by an award of Restricted Shares hereunder but only to the extent the shares of Common Stock covered by such award are not issued until the end of the Restriction Period.

(dd) "Employee of an Affiliated Entity" means an employee of any entity other than the Company or a Subsidiary, whether or not incorporated, which is controlled by or under common control with the Company (an "Affiliated Entity"); provided, however, that no director, officer or holder of ten percent or more of any class or equity securities of the Company who was subject, directly or indirectly, to
Section 16(b) of the Exchange Act at any time on or after May 14, 1991, shall be considered an Employee of an Affiliated Entity.

3. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of paragraph 13 hereof and this paragraph 3, the maximum aggregate number of shares of Common Stock which may be issued upon exercise of Options and SARs and which may be granted as Restricted Shares or issued at the end of the Restriction Period with respect to an award of Restricted Shares hereunder shall be 1,500,000. Such shares may be, in whole or in part, authorized and unissued shares of Common Stock or issued shares of Common Stock which shall have been reacquired by the Company. If any Option shall expire or terminate for any reason without having been exercised (or without having been considered to have been exercised as provided in paragraphs 6E and 6F hereof) in full, the unexercised shares subject thereto shall again be available for purposes of the Plan. In addition, any Restricted Shares which are forfeited by the terms of the Plan or any Restricted Shares Agreement shall again become available for purposes of the Plan.

4. ADMINISTRATION.

A. Powers. The Plan shall be administered by the Board. Subject to the express provisions of the Plan, the Board shall have plenary authority, in its discretion, to grant Options and award Restricted Shares under the Plan and to determine the terms and conditions (which need not be identical), of all Options and Restricted Shares granted or awarded under the Plan, including, without limitation, (i) the purchase price, if any, of each Restricted Share, (ii) the individuals to whom, and the time or times at which, Options and Restricted Shares shall be granted or awarded, (iii) the number of shares to be subject to each Option or award of Restricted Shares, (iv) whether an Option shall be an ISO or a Nonqualified Stock

Option, (v) when an Option can be exercised and whether in whole or in installments, (vi) the time or times and the conditions subject to which Restricted Shares shall become vested and any Cash Awards shall become payable, and (vii) the form, terms and provisions of any Stock Option Agreement and Restricted Shares Agreement evidencing a grant of Options or awards of Restricted Shares hereunder (which terms may be amended, subject to paragraph 15 hereof). In making such determinations, the Board may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and its subsidiaries, and such other factors as the Board in its discretion shall deem relevant. Subject to the express provisions of the Plan, the Board shall have plenary authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The determinations of the Board on the matters referred to in this paragraph 4 shall be conclusive.

B. Delegation to Committee. Notwithstanding anything to the contrary contained herein, the Board may at any time, or from time to time, appoint a Committee of at least three members, who shall be members of the Compensation Committee of the Board (or such other persons as the Board may designate), and delegate to such Committee the authority of the Board to administer the Plan. Upon such appointment and delegation, the Committee shall have all the powers, privileges and duties of the Board in the administration of the Plan, except the power to appoint members of the Committee and to terminate, modify or amend the Plan. The Board may from time to time appoint members of any such Committee in substitution for or in addition to members previously appointed, may fill vacancies in the Committee and may discharge the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held.

5. ELIGIBILITY.

Options and Restricted Shares may be awarded only to key salaried employees (including officers) of the Company and its Subsidiaries who are at the time of the Award regularly employed by the Company or a Subsidiary on a full-time basis. A director of the Company or of a Subsidiary who is not also an employee of the Company or of one of its Subsidiaries will not be eligible to receive any Awards under the Plan. No ISO shall be granted to any employee who, at the time the ISO is granted, owns (or is considered as owning within the meaning of Section 425(d), or any successor section, of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless at the time the ISO is granted the option price is at least 110% of the Fair Market Value of the Common Stock subject to the ISO and the ISO by its terms is not exercisable after the expiration of five years from the date it is granted. Awards may be made to employees who hold or have held Options and/or Restricted Shares under this Plan or any other plans of the Company. An employee who has received Awards under this Plan may be granted additional Options and Restricted Shares under this Plan or any other plan.

6. OPTIONS.

A. Option Prices. Except as otherwise specifically provided in paragraph 5 hereof, the purchase price of the Common Stock under each Option shall be determined by the Board, but shall not be less than 100% of the Fair Market Value of the Common Stock at the time of the granting of such Option.

B. Term of Options. The term of each Option shall be for such period as the Board shall determine, but not more than ten years from the date of grant in the case of each ISO, and, except as set forth in paragraph 9 hereof, shall expire upon termination of employment with the Company or any Subsidiary.

C. Exercise of Options. Unless otherwise provided in the Stock Option Agreement, an Option granted under the Plan shall be exercisable in whole, or in part, at any time during the term of the Option. Payment shall be made in cash or, unless otherwise provided in the Stock Option Agreement, in whole shares of Common Stock already owned by the person exercising the Option or, unless otherwise provided in the Stock Option Agreement, partly in cash and partly in such Common Stock. An

Option shall be exercised by written notice to the Company. Such notice shall state that the person exercising the Option elects to exercise the Option, the number of shares in respect of which it is being exercised and the manner of payment for such shares, and shall either (i) be accompanied by payment of the full purchase price of such shares or (ii) fix a date (not more than 10 business days from the date of exercise) for the payment of the full purchase price of such shares. Cash payments shall be made by wire transfer, certified or bank check or personal check, in each case payable to the order of the Company; provided, however, that the Company shall not be required to deliver certificates for shares with respect to which an Option is exercised until the Company has confirmed the receipt of good and available funds in payment of the purchase price thereof. Common Stock payments (valued at the Fair Market Value of a share of Common Stock on the date of exercise) shall be made by delivery of stock certificates in negotiable form. If certificates representing Common Stock are used to pay all or part of the purchase price of an Option, separate certificates shall be delivered by the Company representing the same number of shares as each certificate so used, and an additional certificate shall be delivered representing any additional shares to which the person exercising the Option is entitled as a result of the exercise of the Option. Except as provided in paragraph 9 hereof, no Option may be exercised at any time unless the Holder thereof is then an employee of the Company or of a Subsidiary or, if the option agreement so provides, is an Employee of an Affiliated Entity. No Holder or other person exercising the Option shall have any of the rights of a stockholder with respect to the shares subject to the Option until such shares shall be transferred to the Holder or such other person upon the exercise of the Option.

D. ISOs. Notwithstanding anything to the contrary contained herein, but subject to paragraph 8 hereof, in the case of ISOs, the aggregate Fair Market Value (determined at the time the Option is granted) of the shares of Common Stock covered by ISOs which first become exercisable in any calendar year under the Plan by any individual employee (and under all other plans of the Company or any Subsidiary which provide for the granting of ISOs) shall not exceed $100,000.

E. SARs. The Board may (but shall not be obligated to) grant SARs pursuant to the provisions of this subparagraph 6E to the Holder of any Option granted under the Plan (hereinafter in this subparagraph 6E called a related Option) with respect

to all or a portion of the shares subject to the related Option. An SAR may only be granted concurrently with the grant of the related Option. Subject to the terms and provisions of this subparagraph 6E, each SAR shall be exercisable only at the same time and to the same extent the related Option is exercisable, and in no event after the termination or exercise of the related Option. Notwithstanding the foregoing, no SAR may be exercised within a period of six months after the date of grant of the SAR. SARs granted under the Plan shall be exercisable in whole or in part by notice to the Company. Such notice shall state that the person exercising the SARs elects to exercise the SARs, the number of shares in respect of which the SARs are being exercised and the form of payment requested.

Subject to the terms and provisions of this subparagraph 6E, upon the exercise of SARs, the person exercising the SARs shall be entitled to receive from the Company consideration (in the form hereinafter provided) equal in value to the excess of the Fair Market Value as of the date of exercise of the SARs of each share of Common Stock with respect to which such SARs have been exercised over the option price per share of Common Stock subject to the related Option. Upon the exercise of an SAR, the person exercising the SARs may specify the form of consideration to be received, which shall be in shares of Common Stock (valued at Fair Market Value on the date of exercise of the SAR), or in cash, or partly in cash and partly in shares of Common Stock as the person exercising the SARs shall request; provided, however, that the Board in its sole discretion may disapprove the form of consideration requested and instead authorize the payment of such consideration in shares of Common Stock (valued as aforesaid), or in cash, or partly in cash and partly in shares of Common Stock. Any election by the person exercising the SARs to receive cash in full or partial settlement of the SAR, as well as any exercise of an SAR for such cash, shall be made only during the period beginning on the third business day following the date of release for publication of quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date (the "Exercise Period"). Unless the Board determines otherwise, the number of SARs which may be exercised for cash, or partly for cash and partly for shares of Common Stock, during any Exercise Period may not exceed twenty percent of the aggregate number of shares of Common Stock originally subject to the related Option (as such original number, without giving effect to the exercise of any portion of the related Option, shall have been retroactively adjusted by application of the adjustment(s), if any,

determined in accordance with paragraph 13 hereof or the corresponding provisions of any outstanding Stock Option Agreement), but such SARs shall be exercisable only to the extent the related Option is exercisable. For purposes of this subparagraph 6E, the date of exercise of an SAR shall mean the date on which the Company shall have received notice from the person exercising the SARs of the exercise of such SAR, except that, upon exercise during the Exercise Period of an SAR granted in tandem with a Nonqualified Stock Option, the date of exercise of such SAR shall be deemed to be the date during the Exercise Period on which the highest reported closing sales price of a share of Common Stock as reported on the Composite Tape occurred and the Fair Market Value of such shares shall be deemed to be such highest reported closing sales price.

Upon the exercise of SARs, the related Option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such SARs are exercised, and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock available for the grant of Options under the Plan. Upon the exercise or termination of the related Option, the SARs with respect to such related Option shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related Option was so exercised or terminated.

The provisions of paragraphs 4, 6B and 9 through 22 of the Plan (to the extent that such provisions are applicable to Options) shall also be applicable to SARs unless the context otherwise requires. The effective date of the grant of an SAR shall be the date on which the Board approves the grant of such SAR. Each grantee of an SAR shall be notified promptly of the grant of an SAR.

Notwithstanding anything to the contrary contained in this subparagraph 6E, SARs shall not be exercisable unless at the time of such exercise (i) the Holder or other person exercising the SARs is directly or indirectly subject to
Section 16 of the Exchange Act or (ii) sales of Common Stock by the person exercising the SARs would be reportable under Section 16 by the original Holder of the related Option.

F. Limited Rights. The Board may (but shall not be obligated to) grant Limited Rights pursuant to the provisions of this subparagraph 6F to the Holder of any Option (hereinafter in this subparagraph 6F called a related Option) with respect to all or a portion of the shares subject to the related Option. A Limited Right may only be granted concurrently with the grant of the related Option. A Limited Right may be exercised only during the period (a) beginning on the first day following either (i) the date of approval by the stockholders of the Company of an Approved Transaction (as defined in the last paragraph of paragraph 8 hereof), (ii) the date of a Control Purchase (as defined in the last paragraph of paragraph 8 hereof), or (iii) the date of a Board Change (as defined in the last paragraph of paragraph 8 hereof), and (b) ending on the thirtieth day (or such other date specified in the Stock Option Agreement) following such date. Each Limited Right shall be exercisable only to the extent the related Option is exercisable, and in no event after the termination of the related Option. Notwithstanding the provisions of the two immediately preceding sentences, no Limited Right may be exercised within a period of six months after the date of grant of the Limited Right.

Upon the exercise of Limited Rights, the related Option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such Limited Rights are exercised, and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock available for the grant of Options under the Plan. Upon the exercise or termination of the related Option, the Limited Rights with respect to such related Option shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related Option was so exercised or terminated.

The provisions of paragraphs 4, 6B and 9 through 22 of the Plan (to the extent that such provisions are applicable to Options) shall also be applicable to Limited Rights unless the context otherwise requires. The effective date of the grant of a Limited Right shall be the date on which the Board approves the grant of such Limited Right. Each grantee of a Limited Right shall be notified promptly of the grant of the Limited Right.

Limited Rights granted under the Plan shall be exercisable in whole or in part by notice to the Company. Such notice shall state that the person exercising the Limited Rights elects to exercise the Limited Rights and the number of shares in respect of which the Limited Rights are being exercised. The effective date of exercise of a Limited Right shall be deemed to be the date on which the Company shall have received such notice. Upon the exercise of Limited Rights granted in tandem with an ISO, except as otherwise provided in the Stock Option Agreement, the person exercising the Limited Rights shall receive in cash an amount equal to the excess of the Fair Market Value on the date of exercise of such Limited Rights of each share of Common Stock with respect to which such Limited Right shall have been exercised over the option price per share of Common Stock subject to the related ISO.

Upon the exercise of Limited Rights granted in tandem with a Nonqualified Stock Option, except as otherwise provided in the Stock Option Agreement, the person exercising the Limited Rights shall receive in cash an amount equal to the product computed by multiplying (i) the excess of (a) the higher of (x) the Minimum Price Per Share (as hereinafter defined), or (y) the highest reported closing sales price of a share of Common Stock as reported on the Composite Tape at any time during the period beginning on the sixtieth day prior to the date on which such Limited Rights are exercised and ending on the date on which such Limited Rights are exercised, over (b) the option price per share of Common Stock subject to the related Nonqualified Stock Option, by (ii) the number of shares of Common Stock with respect to which such Limited Rights are being exercised.

For purposes of this subparagraph 6F, the term "Minimum Price Per Share" shall mean the highest gross price (before brokerage commissions, soliciting dealers' fees and similar charges) paid or to be paid for any share of Common Stock (whether by way of exchange, conversion, distribution, liquidation or otherwise) in, or in connection with, any Approved Transaction or Control Purchase (as such terms are defined in paragraph 8 hereof) which occurs at any time during the period beginning on the sixtieth day prior to the date on which such Limited Rights are exercised and ending on the date on which such Limited Rights are exercised. For purposes of this definition, if the consideration paid or to be paid in any such Approved Transaction or Control Purchase shall consist, in whole or in part, of consideration other than cash, the Board shall take such action, as in its judgment it deems

appropriate, to establish the cash value of such consideration, but such valuation shall not be less than the value, if any, attributed to such consideration by any other party to such Approved Transaction or Control Purchase.

Notwithstanding anything to the contrary contained in this subparagraph 6F, Limited Rights shall not be exercisable unless at the time of the occurrence of an Approved Transaction, Control Purchase or Board Change (as such terms are defined in paragraph 8 hereof) (i) the Holder or other person exercising the Limited Rights is directly or indirectly subject to Section 16(b) of the Exchange Act or (ii) sales of Common Stock by the person exercising the Limited Rights would be reportable under Section 16 by the original Holder of the related Option. The Stock Option Agreement evidencing an Option may contain such provisions limiting the exercise of Limited Rights as the Board deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect at the time of such exercise, will not apply to any stock or cash received from the Company by the Holder or other person exercising the Limited Rights.

G. Nontransferability of Options. Except as set forth in this subparagraph 6G, no Options shall be transferable otherwise than by will or the laws of descent and distribution, and an Option may be exercised during the lifetime of the Holder thereof only by such Holder. A breach by the Holder of any of the restrictions, terms or conditions provided in the Plan or in the Holder's Stock Option Agreements will cause the Options covered thereby to be terminated. The Stock Option Agreement may provide that Nonqualified Stock Options and SARs are transferable by gift to such persons or entities and upon such terms and conditions as specified in the Holder's Stock Option Agreement.

7. RESTRICTED SHARES.

A. Valuation Date, Issuance and Price. The Board shall determine whether certificates representing shares of Common Stock covered by awards of Restricted Shares will be issued at the beginning or the end of the Restriction Period, whether Dividend Equivalents will be paid during the Restriction Period in the event shares of Common Stock are to be issued at the end of the Restriction Period and shall designate a Valuation Date with respect to each award of Restricted Shares and may prescribe restrictions, terms and conditions applicable to the

vesting of such Restricted Shares in addition to those provided in this Plan. The Board shall determine the price, if any, to be paid by the Holder for the Restricted Shares.

B. Issuance of Stock at Beginning of the Restriction Period. If certificates representing shares of Common Stock are issued at the beginning of the Restriction Period, the stock certificate or certificates representing such shares shall be registered in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, certificates representing the Restricted Shares and any securities constituting Retained Distributions shall bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the applicable Restricted Shares Agreement. Such certificates shall be deposited by such Holder with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Shares and any securities constituting Retained Distributions that shall be forfeited or that shall not become vested in accordance with the Plan and the applicable Restricted Shares Agreement.

C. Restrictions. If certificates representing shares of Common Stock covered by an award of Restricted Shares are issued at the beginning of the Restriction Period, the Restricted Shares shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Shares, to receive and retain all regular cash dividends, and such other distributions as the Board may in its sole discretion designate, paid or distributed on such Restricted Shares and to exercise all other rights, powers and privileges of a Holder of Common Stock with respect to such Restricted Shares, with the exception that (i) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Shares until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled; (ii) the Company will retain custody of the stock certificate or certificates representing such Restricted Shares during the Restriction Period; (iii) other than regular cash dividends and such other distributions as the Board may in its sole discretion designate, the Company will retain custody of all distributions ("Retained Distributions") made or declared with respect to such

Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and conditions as are applicable to such Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in separate accounts; (iv) the Holder may not sell, assign, transfer, pledge, exchange, encumber or dispose of such Restricted Shares or any Retained Distributions during the Restriction Period; and (v) a breach of any restrictions, terms or conditions provided in the Plan or established by the Board with respect to such Restricted Shares or Retained Distributions will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.

D. Issuance of Stock at End of the Restriction Period. If certificates representing shares of Common Stock covered by an award of Restricted Shares are to be issued at the end of the Restriction Period, the Holder shall have none of the rights of a stockholder with respect to the shares of Common Stock covered by an award of Restricted Shares until such shares have been transferred to the Holder at the end of the Restriction Period. If shares of Common Stock are to be issued at the end of the Restriction Period, the Holder, unless otherwise determined by the Board, shall be entitled to receive Dividend Equivalents during the Restriction Period with respect to the shares of Common Stock covered thereby.

E. Cash Awards. In connection with any award of Restricted Shares, the Board may authorize the payment of a cash amount to the Holder of such Restricted Shares at any time after such Restricted Shares shall have become vested; provided, however, that the amount of the cash payment, if any, that a Holder shall be entitled to receive shall not exceed 100% of the aggregate Maturity Value of the Restricted Shares awarded to such Holder hereunder. Such Cash Awards shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Board and shall be in addition to any other salary, incentive, bonus or other compensation payments which Holders shall be otherwise entitled or eligible to receive from the Company.

F. Completion of Restriction Period. On the Valuation Date with respect to each award of Restricted Shares, and the satisfaction of any other applicable restrictions, terms and conditions (i) all or part of such Restricted Shares shall

become vested, (ii) any Retained Distributions with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested, and (iii) any Cash Award to be received by the Holder with respect to such Restricted Shares shall become payable, all in accordance with the terms of the applicable Restricted Shares Agreement. Any such Restricted Shares and Retained Distributions that shall not have become vested shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Restricted Shares and Retained Distributions that shall have been so forfeited.

8. ACCELERATION OF OPTIONS AND RESTRICTED SHARES.

Notwithstanding any contrary waiting period or installment period in any Stock Option Agreement or any Restriction Period in any Restricted Share Agreement or in the Plan, each outstanding Option granted under the Plan shall, except as otherwise provided in the Stock Option Agreement, become exercisable in full for the aggregate number of shares covered thereby, and each Restricted Share, except as otherwise provided in the Restricted Shares Agreement, shall vest unconditionally, in the event (i) the Board (or, if approval of the Board is not required as a matter of law, the stockholders of the Company) shall approve (a) any consolidation or merger of the Company (x) as contemplated in the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995 among Time Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., as the same may be amended from time to time, or (y) in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the Holders of Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the adoption of any plan or proposal for the liquidation or dissolution of the Company, or (ii) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company or any employee benefit plan sponsored by the Company or any Subsidiary) (a) shall purchase any Common Stock of the Company (or securities convertible into the Company's Common Stock) for

cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (b) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20 percent or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire the Company's securities), or (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. Any transaction referred to in the foregoing clause (i) is herein called an Approved Transaction, any purchase pursuant to a tender offer or exchange offer or otherwise as described in the foregoing clause (ii) is herein called a Control Purchase and the cessation of individuals constituting a majority of the Board as described in the foregoing clause (iii) is herein called a Board Change. The Stock Option Agreement and Restricted Shares Agreement evidencing Options or Restricted Shares granted under the Plan may contain such provisions limiting the acceleration of the exercise of Options and the acceleration of the vesting of Restricted Shares as provided in this paragraph 8 as the Board deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect at the time of such acceleration, will not apply to any stock or cash received from the Company by the Holder or such Holder's permitted transferee pursuant to subparagraph 6G.

9. TERMINATION OF EMPLOYMENT.

A. Death of Holder. If a Holder shall die during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option, then:

(i) unless otherwise provided in a Restricted Shares Agreement, the Restriction Period applicable to each award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and Retained Distributions shall become vested and any Cash Award

payable pursuant to the applicable Restricted Shares Agreement shall be adjusted in such manner as provided in the Restricted Shares Agreement;

(ii) in the case of either an ISO or a Nonqualified Stock Option, if the Holder dies while employed by the Company or a Subsidiary or while the Holder is an Employee of an Affiliated Entity, then such Option (subject to clause (vi) below) may be exercised by the legatee(s) or personal representative or by a permitted transferee pursuant to subparagraph 6G of such Holder at any time within five years after such Holder's death;

(iii) in the case of either an ISO or a Nonqualified Option, if the Holder ceases to be an employee of the Company or any Subsidiary or ceases to be an Employee of an Affiliated Entity due to Total Disability and such Holder dies within one year after such termination of employment, then such Option (subject to clause (vi) below) may be exercised by the legatee(s) or personal representative or by a permitted transferee pursuant to subparagraph 6G of such Holder at any time during the remainder of the period during which such Holder would have been able to exercise such Option had the Holder not died;

(iv) in the case of either an ISO or a Nonqualified Stock Option, if the Holder ceases to be an employee of the Company or a Subsidiary or ceases to be an Employee of an Affiliated Entity as a result of retirement pursuant to any retirement plan of the Company, a Subsidiary or such Affiliated Entity and such Holder dies during the period after retirement when such Option was still exercisable by such Holder, then such Option (subject to clause (vi) below) may be exercised by the legatee(s) or personal representative or by a permitted transferee pursuant to subparagraph 6G of such Holder at any time during the remainder of the period during which such Holder would have been able to exercise such Option had the Holder not died;

(v) in the case of either an ISO or a Nonqualified Stock Option, if the Holder dies within three months after termination of employment with the Company or a Subsidiary or after ceasing to be an Employee of an Affiliated Entity and clauses (iii) and (iv) are not

applicable, then such Option (subject to clause (vi) below) may be exercised by the legatee(s) or personal representative or by a permitted transferee pursuant to subparagraph 6G of such Holder at any time within one year after such Holder's death, and;

(vi) the exercise of Options after the termination of employment with the Company or a Subsidiary or after ceasing to be an Employee of an Affiliated Entity for any reason is subject to the following: (a) no Option may be exercised after the expiration date of such Option; (b) only Options exercisable by the Holder or such Holder's permitted transferee pursuant to subparagraph 6G at the time of such termination may be exercised after such termination; and (c) any Stock Option Agreement may provide a shorter period of time for the exercise of Options than provided in clauses (ii) through (v) above.

B. Total Disability. If a Holder shall cease to be an employee of the Company or any Subsidiary or ceases to be an Employee of an Affiliated Entity during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option as a result of Total Disability; then:

(i) in the case of Restricted Shares, clause A(i) above shall apply; and

(ii) in the case of either an ISO or a Nonqualified Stock Option, such Option (subject to clause A(vi) above) may be exercised by such Holder (or his or her personal representative or permitted transferee pursuant to subparagraph 6G) at any time within one year after such termination of employment.

C. Retirement. If a Holder ceases to be an employee of the Company or any Subsidiary or ceases to be an Employee of an Affiliated Entity during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option as a result of retirement pursuant to any retirement plan of the Company, any Subsidiary or such Affiliated Entity, then:

(i) unless the Board determines otherwise, in the case of Restricted Shares, all Restricted Shares, Retained Distributions and rights to any Cash Awards will be forfeited;

(ii) in the case of an ISO, such ISO (subject

to clause A(vi) above) may be exercised at any time within three months after such Holder's termination of employment; and

(iii) in the case of a Nonqualified Stock Option, such Option (subject to clause A(vi) above) may be exercised at any time within five years after such Holder's termination of employment.

D. Termination by Company for Cause. If during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option, a Holder's employment with the Company or any Subsidiary shall be terminated by the Company or such Subsidiary for cause or an Affiliated Entity shall cause the Holder to cease to be an Employee of an Affiliated Entity for cause (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include but not be limited to, insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his or her duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs within 12 months after an Approved Transaction, Control Purchase or Board Change, termination for cause shall only mean a felony conviction for fraud, misappropriation or embezzlement), then:

(i) all options held by such Holder and any permitted transferee pursuant to subparagraph 6G shall immediately terminate; and

(ii) such Holder's rights to all Restricted Shares, Retained Distribution and any Cash Awards shall be forfeited immediately.

E. Termination by Holder for Cause or by Company without Cause. If during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option, a Holder's employment with the Company or any Subsidiary shall be terminated by the Holder for cause or by the Company or Subsidiary without cause or an Affiliated Entity shall cause the Holder to cease to be an Employee of an Affiliated Entity without cause or the Holder shall terminate his or her employment as an Employee of an Affiliated Entity for cause (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement to which the Holder is a

party or in the absence thereof, as determined by the Board) then:

(i) in the case of Restricted Shares, the provisions of clause A(i) above shall apply; and

(ii) in the case of either an ISO or a Nonqualified Stock Option, such Option (subject to clause A(vi) above) may be exercised at any time within three months after such Holder's termination of employment.

F. Termination for Other Reason. If during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option, a Holder shall cease to be an employee of the Company or any Subsidiary or shall cease to be an Employee of an Affiliated Entity for any reason other than as set forth in subparagraphs A through E above, then:

(i) all such Holder's rights to Restricted Shares, Retained Distributions and any Cash Awards shall be forfeited immediately; and

(ii) in the case of an ISO or a Nonqualified Stock Option, the provisions of clause E(ii) above shall apply.

G. General. A leave of absence, unless otherwise determined by the Board prior to the commencement thereof, shall not be considered a termination of employment. Awards made under this Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Company or a Subsidiary or an Employee of an Affiliated Entity.

10. RIGHT OF THE EMPLOYER TO TERMINATE EMPLOYMENT.

Nothing contained in the Plan or in any Award shall confer on any Holder any right to continue in the employ of the Company or any of its Subsidiaries or to continue as an Employee of an Affiliated Entity or interfere in any way with the right of the Company or a Subsidiary or an Affiliated Entity to terminate the employment of the Holder at any time, with or without cause.

11. NONALIENATION OF BENEFITS.

Except as provided in subparagraph 6G, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefit.

12. WRITTEN AGREEMENT.

Each award of Restricted Shares and any right to a Cash Award hereunder shall be evidenced by a Restricted Shares Agreement and each grant of an Option shall be evidenced by a Stock Option Agreement, each in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Board from time to time shall approve. The effective date of the granting of an Option shall be the date on which the Board approves the granting of such Option. Each grantee of an Option or Restricted Shares shall be notified promptly of such grant and a written Stock Option Agreement and/or Restricted Shares Agreement shall be promptly executed and delivered by the Company and the grantee, provided that such grant of Options or Restricted Shares shall terminate if such written Agreement is not signed by such grantee (or his or her attorney) and delivered to the Company within 60 days after the date the Board approved such grant. Any such written Agreement may contain such provisions as the Board deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto, will not apply to any stock or cash received from the Company by the Holder or such Holder's permitted transferee pursuant to subparagraph 6G.

13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

The Stock Option Agreements and Restricted Shares Agreements evidencing Awards may contain such provisions as the Board shall determine to be appropriate for the adjustment of the number and class of all Restricted Shares and the terms applicable to any Cash Awards and the number and class of shares subject to each outstanding Option and the option prices in the event of changes in the outstanding Common Stock of the

Company by reason of any stock dividend, distribution, split-up, recapitalization, combination or exchange of shares, merger, consolidation or liquidation and the like, and, in the event of any such change in the outstanding Common Stock of the Company, the aggregate number and class of shares available under the Plan shall be appropriately adjusted by the Board, whose determination shall be conclusive.

14. RIGHT OF FIRST REFUSAL.

The Stock Option Agreements and Restricted Shares Agreements may contain such provisions as the Board shall determine to the effect that if a Holder, or other person exercising an Option, elects to sell all or any shares of Common Stock that such Holder or other person acquired upon the exercise of an Option or upon the vesting of Restricted Shares awarded under this Plan, then such Holder or other person shall not sell such shares unless such Holder or other person shall have first offered in writing to sell such shares to the Company at Fair Market Value on a date specified in such offer (which date shall be at least three business days and not more than ten business days following the date of such offer). In any such event, certificates representing shares issued upon exercise of Options and the vesting of Restricted Shares shall bear a restrictive legend to the effect that transferability of such shares are subject to the restrictions contained in the Plan and the applicable Stock Option Agreement or Restricted Shares Agreement and the Company may cause the registrar of its Common Stock to place a stop transfer order with respect to such shares.

15. TERMINATION AND AMENDMENT.

Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan after December 31, 1997. The Board may at any time prior to December 31, 1997 terminate the Plan, and the Board may at any time also modify or amend the Plan in such respects as it shall deem advisable; provided, however, that the Board may not, without approval of the Holders of a majority of the voting securities of the Company present, either in person or by proxy, and entitled to vote at a meeting (i) materially increase (except as provided in paragraph 13 hereof) the maximum number of shares which may be issued under the Plan, (ii) materially modify the requirements as to eligibility for

participation in the Plan, or (iii) materially increase the benefits accruing to participants under the Plan. No termination, modification or amendment of the Plan or any outstanding Restricted Shares Agreement or Stock Option Agreement may, without the consent of the employee (or a transferee of such employee if the Award, or any part thereof, has been transferred pursuant to subparagraph 6G) to whom any Award shall theretofore have been granted, adversely affect the rights of such employee (or a transferee of such employee if the Award, or any part thereof, has been transferred pursuant to subparagraph 6G) with respect to such Award.

16. EFFECTIVENESS OF THE PLAN.

The Plan shall become effective upon approval by the vote of a majority of the voting securities of the Company present, either in person or by proxy, and entitled to vote at the 1988 Annual Meeting of Stockholders to be held on April 21, 1988, or any adjournment thereof. Prior to such approval, the Board may, in its discretion, grant or authorize the making of Awards under the Plan provided that the exercise of Options and the vesting of Restricted Shares shall be expressly subject to the condition that the Plan shall have been so approved. Unless the Plan shall be so approved, the Plan and all Awards theretofore made thereunder shall be and become null and void.

17. GOVERNMENT AND OTHER REGULATIONS.

The obligation of the Company with respect to Awards shall be subject to
(i) all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of a registration statement under the Securities Act of 1933, and
(ii) the rules and regulations of any securities exchange on which the Common Stock may be listed.

18. WITHHOLDING.

The Company's obligation to deliver shares of Common Stock or to pay cash upon the exercise of any Nonqualified Stock Option or any SAR granted under the Plan and to deliver stock certificates or to pay cash upon the vesting of Restricted Shares or Cash Awards shall be subject to applicable Federal, state and local tax withholding requirements. Federal, state

and local withholding tax paid upon the exercise of any Nonqualified Stock Option and upon the vesting of Restricted Shares may be paid in shares of Common Stock upon such terms and conditions as the Board shall determine; provided, however, that the Board in its sole discretion may disapprove such payment and require that such taxes be paid in cash.

19. SEPARABILITY.

If any of the terms or provisions of this Plan conflict with the requirements of Rule 16b-3 under the Exchange Act (as the same shall be amended from time to time) and/or Section 422A of the Code (as the same shall be amended from time to time), then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of said Rule 16b-3, and/or with respect to ISO's, Section 422A of the Code.

With respect to ISOs, if this Plan does not contain any provision required to be included herein under Section 422A of the Code (as the same shall be amended from time to time), such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been set out at length herein.

20. NON-EXCLUSIVITY OF THE PLAN.

Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

21. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION.

By acceptance of an Award, each Holder shall be deemed to have agreed that the award of Restricted Shares and any right to a Cash Award and the grant of any Option and the exercise thereof or of any SAR or Limited Right are special incentive compensation and that they will not be taken into account as

"salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement or other qualified employee benefit plan of the Company or any Subsidiary or any Affiliated Entity. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of any life insurance coverage provided by the Company on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of the Company or any Subsidiary or any Affiliated Entity.

22. GOVERNING LAW.

The Plan shall be governed by, and construed in accordance with, the laws of the State of New York.

As Amended through July 18, 1996

TIME WARNER
1989 STOCK INCENTIVE PLAN

1. PURPOSE OF THE PLAN

The purpose of the Time Warner 1989 Stock Incentive Plan, as amended (hereinafter the "Plan"), is to provide for the granting of stock options, stock appreciation rights and restricted shares to certain employees, including officers and directors who are also employees of the Company or its Subsidiaries. The general purpose of the Plan is to promote the interests of the Company and its stockholders by providing to certain employees of the Company or its Subsidiaries additional incentives to continue and increase their efforts with respect to, and to remain in the employ of, the Company or its Subsidiaries.

2. CERTAIN DEFINITIONS

The following terms (whether used in the singular or plural) have the meanings indicated when used in the Plan:

(a) "Agreement" means the stock option agreement, stock appreciation rights agreement and the restricted shares agreement specified in Section 12, both individually and collectively, as the context so requires.

(b) "Approved Transaction" means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the stockholders of the Company) shall approve (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, other than a merger of the Company (x) as contemplated in the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995 among Time Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., as the same may be amended from time to time, or (y) in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets

of the Company, or (iii) the adoption of any plan or proposal for the liquidation or dissolution of the Company.

(c) "Award" means grants of Options, SARs and/or Restricted Shares under this Plan.

(d) "Board" means the Board of Directors of the Company.

(e) "Board Change" means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board ceased for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

(f) "Cash Award" means the amount of cash, if any, to be paid to an employee pursuant to Section 7.5.

(g) "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section.

(h) "Committee" means the Committee of the Board appointed pursuant to Section 4.

(i) "Common Stock" means the common stock, par value $1.00 per share, of the Company.

(j) "Company" means Time Warner Inc., a Delaware corporation, and any successor thereto.

(k) "Composite Tape" means the New York Stock Exchange Composite Tape.

(l) "Control Purchase" means any transaction in which any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company or any employee benefit plan sponsored by the Company or any Subsidiary)
(i) shall purchase any Common Stock (or securities convertible into Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (ii) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the then

outstanding securities of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) in the case of rights to acquire the Company's securities).

(m) "Dividend Equivalents" means, with respect to Restricted Shares to be issued at the end of the Restriction Period, to the extent specified by the Board only, an amount equal to the regular cash dividends and all other distributions (or the economic equivalent thereof) which are payable to stockholders of record during the Restriction Period on a like number of shares of Common Stock.

(n) "Effective Date" means the date the Plan becomes effective pursuant to Section 16.

(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section.

(p) "Exercise Period" has the meaning ascribed thereto in Section 6.5.

(q) "Fair Market Value" of a share of Common Stock means the average of the high and low sales prices of a share of Common Stock on the Composite Tape on the date in question, except as otherwise provided in Section 6.5.

(r) "General SARs" means stock appreciation rights subject to the terms of Section 6.5(b).

(s) "Holder" means an employee of the Company or a Subsidiary who has received an Award under this Plan.

(t) "ISO" means an incentive stock option within the meaning of section 422A(b) of the Code.

(u) "Limited SARs" means stock appreciation rights subject to the terms of Section 6.5(c).

(v) "Minimum Price Per Share" means the highest gross price (before brokerage commissions, soliciting dealers' fees and similar charges) paid or to be paid for any share of Common Stock (whether by way of exchange, conversion, distribution, liquidation or otherwise) in, or in connection with, any Approved Transaction or Control Purchase which occurs at any time during the period beginning on the sixtieth day prior to the date on which Limited SARs are exercised and ending on the date on which

Limited SARs are exercised. If the consideration paid or to be paid in any such Approved Transaction or Control Purchase shall consist, in whole or in part, of consideration other than cash, the Board shall take such action, as in its judgment it deems appropriate, to establish the cash value of such consideration, but such valuation shall not be less than the value, if any, attributed to such consideration by any other party to such Approved Transaction or Control Purchase.

(w) "Nonqualified Stock Option" means a stock option that is designated as a nonqualified stock option.

(x) "Option" means any ISO or Nonqualified Stock Option.

(y) "Plan" has the meaning ascribed thereto in
Section 1.

(z) "Restricted Shares" means shares of Common Stock or the right to receive shares of Common Stock, as the case may be, awarded to an employee of the Company or a Subsidiary pursuant to Section 7.

(aa) "Restriction Period" means a period of time beginning on the date of each award of Restricted Shares and ending on the Valuation Date with respect to such award.

(bb) "Retained Distributions" has the meaning ascribed thereto in Section 7.3.

(cc) "SARs" means General SARs and Limited SARs.

(dd) "SEC" means the Securities and Exchange Commission.

(ee) "Subsidiary" means any present or future subsidiary of the Company as such term is defined in section 425 of the Code and any present or future trade or business, whether or not incorporated, controlled by or under common control with the Company. An entity shall be deemed a Subsidiary of the Company only for such periods as the requisite ownership or control relationship is maintained.

(ff) "Total Disability" means a permanent and total disability as defined in section 22(e)(3) of the Code.

(gg) "Valuation Date" with respect to any Restricted Shares awarded hereunder means the date designated as such in the Agreement with respect to such award of Restricted Shares pursuant to Section 7.

3. STOCK SUBJECT TO THE PLAN

3.1. Number of Shares. Subject to the provisions of Section 13 and this
Section 3, the maximum number of shares of Common Stock in respect of which Awards may be granted is 5,500,000. If and to the extent that an Option shall expire, terminate or be canceled for any reason without having been exercised (or without having been considered to have been exercised as provided in Section 6.5(a)), the shares of Common Stock subject to such expired, terminated or canceled portion of the Option shall again become available for purposes of the Plan. In addition, any Restricted Shares which are forfeited under the terms of the Plan or any Agreement shall again become available for purposes of the Plan.

3.2. Character of Shares. Shares of Common Stock deliverable under the terms of the Plan may be, in whole or in part, authorized and unissued shares of Common Stock or issued shares of Common Stock held in the Company's treasury, or both.

3.3. Reservation of Shares. The Company shall at all times reserve a number of shares of Common Stock (authorized and unissued Common Stock, issued Common Stock held in the Company's treasury, or both) equal to the maximum number of shares that may be subject to outstanding Awards and future Awards under the Plan.

4. ADMINISTRATION

4.1. Powers. The Plan shall be administered by the Board. Subject to the express provisions of the Plan, the Board shall have plenary authority, in its discretion, to grant Awards under the Plan and to determine the terms and conditions (which need not be identical) of all Awards so granted, including without limitation, (a) the purchase price, if any, of each Restricted Share,
(b) the individuals to whom, and the time or times at which, Awards shall be granted or awarded, (c) the number of shares to be subject to each Award, (d) whether an Option shall be an ISO or a Nonqualified Stock Option, (e) when an Option or SAR can be exercised and whether in whole or in installments, (f) the time or times and the conditions subject to which Restricted Shares shall become vested and any Cash Awards shall become payable, and (g) the form, terms and provisions of any Agreement (which terms may be amended, subject to Section 15).

4.2. Factors to Consider. In making determinations hereunder, the Board may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and its Subsidiaries and such other factors as the Board in its discretion shall deem relevant.

4.3. Interpretation. Subject to the express provisions of the Plan, the Board shall have plenary authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The determinations of the Board on the matters referred to in this Section 4 shall be conclusive.

4.4. Delegation to Committee. Notwithstanding anything to the contrary contained herein, the Board may at any time, or from time to time, appoint a Committee of at least three members, who shall be members of the Compensation Committee of the Board (or such other persons as the Board may designate), and delegate to such Committee the authority of the Board to administer the Plan. Upon such appointment and delegation, the Committee shall have all the powers, privileges and duties of the Board in the administration of the Plan, except for the power to appoint members of the Committee and to terminate, modify or amend the Plan. The Board may from time to time appoint members of any such Committee in substitution for or in addition to members previously appointed, may fill vacancies in the Committee and may discharge the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by all of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held.

5. ELIGIBILITY

5.1. General. Awards may be made only to (a) employees, including officers and directors who are also employees, of the Company or any of its Subsidiaries and (b) prospective employees of the Company or any of its Subsidiaries. The exercise of Options and SARs and the vesting of Restricted Shares granted to a prospective employee shall be conditioned upon such person becoming an employee of the Company or any of its Subsidiaries. For purposes of the Plan, the term "prospective employee" shall mean any person who holds an outstanding offer of employment on specific terms from the Company or any of its Subsidiaries. Awards may be made to employees who hold or have held Awards under this Plan or any

similar or other awards under any other plan of the Company or its Subsidiaries.

5.2. Intentionally Omitted.

5.3. Special ISO Rule. No ISO shall be granted to an employee who, at the time the ISO is granted, owns (or is considered as owning within the meaning of section 425(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary, unless at the time the ISO is granted the option price is at least 110% of the Fair Market Value of the Common Stock subject to the ISO and the ISO by its terms is not exercisable after the expiration of five years from the date it is granted.

6. OPTIONS AND SARS

6.1. Option Prices. Subject to Section 5.3, the purchase price of the Common Stock under each Option shall be determined by the Board and set forth in the applicable Agreement, but shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant.

6.2. Term of Options. The term of each Option shall be for such period as the Board shall determine, as set forth in the applicable Agreement, but not more than 10 years from the date of grant in the case of an ISO (except as provided in Section 5.3).

6.3. Exercise of Options. An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and this Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term; provided, however, that subsequent to the grant of an Option, the Board, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part (without reducing the term of such Option).

6.4. Manner of Exercise. Payment of the Option purchase price shall be made in cash or in whole shares of Common Stock already owned by the person exercising an Option or, partly in cash and partly in such Common Stock; provided, however, that such payment may be made in whole or in part in shares of Common Stock only if and to the extent permitted by the applicable Agreement. An Option shall be exercised by written notice to the Company upon such terms and conditions as provided in the Agreement. The Company shall effect the

transfer of the shares of Common Stock purchased under the Option as soon as practicable, and within a reasonable time thereafter such transfer shall be evidenced on the books of the Company. No Holder or other person exercising an Option shall have any of the rights of a stockholder of the Company with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment has been made. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment.

6.5. SARS. (a) General Conditions. The Board may (but shall not be obligated to) grant General SARs and/or Limited SARs pursuant to the provisions of this Section 6.5 to a Holder of any Option (hereinafter called a "related Option"), with respect to all or a portion of the shares of Common Stock subject to the related Option.

A SAR may be granted either concurrently with the grant of the related Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related Option. Subject to the terms and provisions of this Section 6.5, each SAR shall be exercisable to the extent the related Option is then exercisable (and may be subject to such additional limitations on exercisability as the Agreement may provide), and in no event after the complete termination or full exercise of the related Option. SARs shall be exercisable in whole or in part upon notice to the Company upon such terms and conditions as provided in the Agreement.

Upon the exercise of SARs, the related Option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such SARs are exercised and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock in respect of which other Awards may be granted. Upon the exercise or termination of the related Option, the SARs with respect thereto shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related Option was so exercised or terminated.

The provisions of Sections 4, 6 and 8 through 22 (to the extent that such provisions are applicable to Options) shall also be applicable to SARs unless the context otherwise requires.

(b) General SARs. General SARs shall be exercisable only at the time the related Option is exercisable and subject to the terms and provisions of this Section 6.5, upon the exercise of General SARs, the person exercising the General SAR shall be entitled to receive from the Company consideration (in

the form hereinafter provided) equal in value to the excess of the Fair Market Value on the date of exercise of the shares of Common Stock with respect to which such General SARs have been exercised over the aggregate related Option purchase price for such shares; provided, however, that the Board may, in any Agreement granting General SARs provide that the appreciation realizable upon exercise thereof shall be measured from a base higher than the related Option purchase price.

Upon the exercise of a General SAR, the person exercising the General SAR may specify the form of consideration to be received by such person exercising the General SAR, which shall be in shares of Common Stock (valued at Fair Market Value on the date of exercise of such General SAR), or in cash, or partly in cash and partly in shares of Common Stock. Any election by the person exercising the General SAR to receive cash in full or partial settlement of such General SAR shall comply with all applicable laws and shall additionally comply (to the extent necessary) with the requirements for exemptive relief under Rule 16b-3 promulgated under the Exchange Act. Unless otherwise specified in the applicable Agreement, the number of General SARs which may be exercised for cash, or partly for cash and partly for shares of Common Stock, during any permitted period of exercise (the "Exercise Period"), may not exceed 20% of the aggregate number of shares of Common Stock originally subject to the related Option (as such original number, without giving effect to the exercise of any portion of the related Option, shall have been retroactively adjusted in accordance with Section 13 or any corresponding provisions of an applicable Agreement).

For purposes of this Section 6.5, the date of exercise of a General SAR shall mean the date on which the Company shall have received notice from the person exercising the General SAR of the exercise of such General SAR, except that, upon exercise of a General SAR granted in connection with a Nonqualified Stock Option during an Exercise Period which consists of the ten business days beginning on the third business day following the date of the release for publication of quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date, the date of exercise of such General SAR shall be deemed to be the date during the Exercise Period on which the highest reported closing sales price of a share of Common Stock as reported on the Composite Tape occurred and the Fair Market Value of such shares shall be deemed to be such highest reported closing sales price.

Notwithstanding anything to the contrary contained in this
Section 6.5, a General SAR shall not be exercisable unless at the time of such exercise (i) the Holder or other person exercising the General SAR is directly or indirectly subject to

Section 16 of the Exchange Act or (ii) sales of Common Stock by the person exercising the General SAR would be reportable under Section 16 by the original Holder of the related Option.

(c) Limited SARs. Limited SARs may be exercised only during the period (a) beginning on the first day following either (i) the date of an Approved Transaction, (ii) the date of a Control Purchase, or (iii) the date of a Board Change, and (b) ending on the ninetieth day (or such other date specified in the Agreement) following such date. The effective date of exercise of a Limited SAR shall be deemed to be the date on which the Company shall have received notice from the person exercising the Limited SAR of the exercise thereof.

Upon the exercise of Limited SARs granted in connection with an ISO, except as otherwise provided in the Agreement, the person exercising the Limited SAR shall receive in cash an amount equal to the excess of the Fair Market Value on the date of exercise of such Limited SARs of the shares of Common Stock with respect to which such Limited SARs shall have been exercised over the aggregate related Option purchase price for such shares.

Upon the exercise of Limited SARs granted in connection with a Nonqualified Stock Option, except as otherwise provided in the Agreement, the person exercising the Limited SAR shall receive in cash an amount equal to the product computed by multiplying (a) the excess of (i) the higher of (A) the Minimum Price Per Share, or (B) the highest reported closing sales price of a share of Common Stock as reported on the Composite Tape at any time during the period beginning on the sixtieth day prior to the date on which such Limited SARs are exercised and ending on the date on which such Limited SARs are exercised over (ii) the per share Option price of the related Nonqualified Stock Option, by (b) the number of shares of Common Stock with respect to which such Limited SARs are being exercised.

Notwithstanding anything to the contrary contained in this
Section 6.5, Limited SARs shall not be exercisable unless at the time of the occurrence of an Approved Transaction, Control Purchase or Board Change, (i) the Holder or other person exercising the Limited SAR is directly or indirectly subject to Section 16 of the Exchange Act or (ii) sales of Common Stock by the person exercising the Limited SAR would be reportable under Section 16 by the original Holder of the related Option.

6.6. Nontransferability of Options and SARs. Except as set forth in this
Section 6.6, Options and SARs shall not be transferable other than by will or the laws of descent and distribution, and Options and SARs may be exercised during the

lifetime of the Holder thereof only by such Holder (or his or her court appointed legal representative). The Agreement may provide that Nonqualified Stock Options and SARs are transferable by gift to such persons or entities and upon such terms and conditions as specified in the Agreement.

7. RESTRICTED SHARES

7.1. Valuation Date, Issuance and Price. The Board shall determine whether shares of Common Stock covered by awards of Restricted Shares will be issued at the beginning or the end of the Restriction Period, whether Dividend Equivalents will be paid during the Restriction Period in the event shares of the Common Stock are to be issued at the end of the Restriction Period and shall designate a Valuation Date with respect to each award of Restricted Shares and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Shares in addition to those provided in the Plan. The Board shall determine the price, if any, to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully paid and nonassessable. All determinations made by the Board pursuant to this Section 7.1 shall be specified in the Agreement.

7.2. Issuance of Restricted Shares at Beginning of the Restriction Period. If shares of Common Stock are issued at the beginning of the Restriction Period, the stock certificate or certificates representing such Restricted Shares shall be registered in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, certificates representing the Restricted Shares and any securities constituting Retained Distributions shall bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the applicable Agreement. Such certificates shall remain in the custody of the Company and the Holder shall deposit with the Company stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to the Company of all or any portion of the Restricted Shares and any securities constituting Retained Distributions that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Agreement.

7.3. Restrictions. Restricted Shares issued at the beginning of the Restriction Period shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Shares,

to receive and retain all regular cash dividends and such other distributions, as the Board may in its sole discretion designate, paid or distributed on such Restricted Shares and to exercise all other rights, powers and privileges of a Holder of Common Stock with respect to such Restricted Shares; except, that, (a) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Shares until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (b) the Company will retain custody of the stock certificate or certificates representing the Restricted Shares during the Restriction Period as provided in Section 7.2; (c) other than regular cash dividends and such other distributions as the Board may in its sole discretion designate, the Company will retain custody of all distributions ("Retained Distributions") made or declared with respect to the Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and vesting and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account; (d) the Holder may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or any Retained Distributions or his interest in any of them during the Restriction Period; and (e) a breach of any restrictions, terms or conditions provided in the Plan or established by the Board with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.

7.4. Issuance of Stock at End of the Restriction Period. Restricted Shares issued at the end of the Restriction Period shall not constitute issued and outstanding shares of Common Stock and the Holder shall not have any of the rights of a stockholder with respect to the shares of Common Stock covered by such an award of Restricted Shares, in each case, until such shares shall have been transferred to the Holder at the end of the Restriction Period. If and to the extent that shares of Common Stock are to be issued at the end of the Restriction Period, the Holder shall be entitled to receive Dividend Equivalents with respect to the shares of Common Stock covered thereby either (a) during the Restriction Period or (b) in accordance with the rules applicable to Retained Distributions, as the Board may specify in the Agreement.

7.5. Cash Awards. In connection with any award of Restricted Shares, an Agreement may provide for the payment of a cash amount to the Holder of such Restricted Shares at any time after such Restricted Shares shall have become vested.

Such Cash Awards shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Board in the Agreement and shall be in addition to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled or eligible to receive from the Company.

7.6. Completion of Restriction Period. On the Valuation Date with respect to each award of Restricted Shares, and the satisfaction of any other applicable restrictions, terms and conditions (a) all or part of such Restricted Shares shall become vested, (b) any Retained Distributions and any unpaid Dividend Equivalents with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested and (c) any Cash Award to be received by the Holder with respect to such Restricted Shares shall become payable, all in accordance with the terms of the applicable Agreement. Any such Restricted Shares, Retained Distributions and any unpaid Dividend Equivalents that shall not become vested shall be forfeited to the Company and the Holder shall not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares, Retained Distributions and any unpaid Dividend Equivalents that shall have been so forfeited.

8. ACCELERATION OF OPTIONS, SARS AND RESTRICTED SHARES

If a Holder's employment shall terminate by reason of death or Total Disability, notwithstanding any contrary waiting period or installment period or Restriction Period in any Agreement or in the Plan or in the event of any Approved Transaction, Board Change or Control Purchase, unless the applicable Agreement provides otherwise: (a) in the case of an Option or SAR, each such outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby; and (b) in the case of Restricted Shares, the Restriction Period applicable to each such award of Restricted Shares shall be deemed to have expired and all such Restricted Shares, any related Retained Distributions and any unpaid Dividend Equivalents shall become vested and any Cash Award payable pursuant to the applicable Agreement shall be adjusted in such manner as provided in the Agreement.

9. TERMINATION OF EMPLOYMENT

9.1. General. If a Holder's employment shall terminate prior to the complete exercise of an Option (or deemed exercise thereof, as provided in
Section 6.5(a)), then such Option shall thereafter be exercisable solely to the extent provided in the

applicable Agreement; provided, however, that (a) no Option may be exercised after the scheduled expiration date of such Option; (b) if the Holder's employment terminates by reason of death or Total Disability, the Option shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option); and (c) any termination by the Company for cause will be treated in accordance with the provisions of Section 9.2.

9.2. Termination by Company for Cause. If a Holder's employment with the Company or a Subsidiary shall be terminated by the Company or such Subsidiary during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option for cause (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include but not be limited to, insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs within 12 months after an Approved Transaction, Control Purchase or Board Change, termination for cause shall mean only a felony conviction for fraud, misappropriation or embezzlement), then (a) all Options held by such Holder and any permitted transferees pursuant to Section 6.6 shall immediately terminate and (b) such Holder's rights to all Restricted Shares, Retained Distributions, any unpaid Dividend Equivalents and any Cash Awards shall be forfeited immediately.

9.3. Special Rule. Notwithstanding any other provision of the Plan, the Board may provide in the applicable Agreement that the Award shall become and/or remain exercisable at rates and times at variance with the rules otherwise herein set forth; provided, however, that any such Agreement provisions at variance with the exercisability rules otherwise set forth herein shall be effective only if reflected in the terms of an employment agreement approved or ratified by the Board.

9.4. Miscellaneous. The Board may determine whether any given leave of absence constitutes a termination of employment. Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Company or a Subsidiary.

10. RIGHT OF COMPANY TO TERMINATE EMPLOYMENT

Nothing contained in the Plan or in any Award shall confer on any Holder any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or a Subsidiary to terminate the

employment of the Holder at any time, with or without cause; subject, however, to the provisions of any employment agreement between the Holder and the Company or any Subsidiary.

11. NONALIENATION OF BENEFITS

Except as provided in Section 6.6, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits.

12. WRITTEN AGREEMENT

Each award of Restricted Shares and any right to a Cash Award hereunder shall be evidenced by a restricted shares agreement; each grant of an Option shall be evidenced by a stock option agreement which shall designate the Options granted thereunder as ISOs or Nonqualified Stock Options; and each SAR shall be evidenced by a stock appreciation rights agreement, each in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Board from time to time shall approve; provided, however, that such Awards may be evidenced by a single agreement. The effective date of the granting of an Award shall be the date on which the Board approves such grant. Each grantee of an Option, SAR or Restricted Shares shall be notified promptly of such grant and a written Agreement shall be promptly executed and delivered by the Company and the grantee, provided that such grant of Options, SARs or Restricted Shares shall terminate if such written Agreement is not signed by such grantee (or his attorney) and delivered to the Company within 60 days after the date the Board approved such grant or if the effectiveness of such grant is conditioned upon the grantee becoming an employee of the Company or one of its subsidiaries, the execution by the grantee of an employment agreement with the Company or one of its subsidiaries or any other similar condition, within 60 days after the occurrence of such condition, if later. Any such written Agreement may contain (but shall not be required to contain) such provisions as the Board deems appropriate to ensure that the penalty provisions of section 4999 of the Code will not apply to any stock or cash received by the Holder or such Holder's permitted transferee pursuant to Section 6.6 from the Company.

13. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.

In the event of any stock split, dividend, distribution, combination, reclassification or recapitalization that changes the character or amount of the Common Stock while any portion of any Award theretofore granted under the Plan is outstanding but unexercised or unvested, the Board shall make such adjustments in the character and number of shares subject to such Award, in the option price, in the relevant appreciation base and in the Cash Awards, as shall be applicable, equitable and appropriate in order to make such Award, immediately after any such change, as nearly as may be practicable, equivalent to such Award, immediately prior to any such change. If any merger, consolidation or similar transaction affects the Common Stock subject to any unexercised or unvested Award theretofore granted under the Plan, the Board or any surviving or acquiring corporation shall take such action as is equitable and appropriate to substitute a new award for such Award or to assume such Award in order to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award. If any such change or transaction shall occur, the number and kind of shares for which Awards may thereafter be granted under the Plan shall be adjusted to give effect thereto.

14. RIGHT OF FIRST REFUSAL

The Agreements may contain such provisions as the Board shall determine to the effect that if a Holder, or other person exercising an Option, elects to sell all or any shares of Common Stock that such Holder or other person acquired upon the exercise of an Option or upon the vesting of Restricted Shares awarded under the Plan, then such Holder or other person shall not sell such shares unless such Holder or other person shall have first offered in writing to sell such shares to the Company at Fair Market Value on a date specified in such offer (which date shall be at least three business days and not more than 10 business days following the date of such offer). In any such event, certificates representing shares issued upon exercise of Options and the vesting of Restricted Shares shall bear a restrictive legend to the effect that transferability of such shares are subject to the restrictions contained in the Plan and the applicable Agreement and the Company may cause the registrar of its Common Stock to place a stop transfer order with respect to such shares.

15. TERMINATION AND AMENDMENT

15.1. General. Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the

Effective Date. The Board may at any time prior to the tenth anniversary of the Effective Date terminate the Plan, and the Board may at any time modify or amend the Plan in such respects as it shall deem advisable; provided, however, that any such modification or amendment shall comply with all applicable laws, applicable stock exchange listing requirements, and applicable requirements for exemption (to the extent necessary) under Rule 16b-3 under the Exchange Act.

15.2. Modification. No termination, modification or amendment of the Plan may, without the consent of the person to whom any Award shall theretofore have been granted (or a transferee of such person if the Award, or any part thereof, has been transferred pursuant to Section 6.6), adversely affect the rights of such person with respect to such Award. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder (or a transferee of such Holder if the award, or any part thereof, has been transferred pursuant to Section 6.6) and subject to the terms and conditions of the Plan (including Section 15.1), the Board may amend outstanding Agreements with any Holder (or any such transferee), including, without limitation, any amendment which would (a) accelerate the time or times at which the Award may be exercised and/or (b) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Board may but solely with the Holder's consent, agree to cancel any Award under the Plan held by such Holder and issue a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made.

16. EFFECTIVENESS OF THE PLAN

The Plan shall become effective upon approval by the vote of a majority of the voting securities of the Company present, either in person or by proxy, and entitled to vote at a duly called and held meeting of stockholders of the Company. Prior to the Effective Date, the Board may, in its discretion, grant or authorize the making of Awards under the Plan as if the Effective Date had occurred, provided that the exercise of Options and SARs and the vesting of Restricted Shares so granted or made shall be expressly subject to the occurrence of the Effective Date.

17. GOVERNMENT AND OTHER REGULATIONS

The obligation of the Company with respect to Awards shall be subject to all applicable laws, rules and regulations and

such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of any registration statement required under the Securities Act of 1933, and the rules and regulations of any securities exchange on which the Common Stock may be listed. For so long as the Common Stock is registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (a) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all shares of Common Stock that may be issued to Holders under the Plan, and
(b) to file in a timely manner all reports required to be filed by it under the Exchange Act.

18. WITHHOLDING

The Company's obligation to deliver shares of Common Stock or pay cash in respect of any Award or Cash Award under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding taxes paid upon the exercise of any Option and upon the vesting of Restricted Shares may be paid in shares of Common Stock upon such terms and conditions as the Board shall determine; provided, however, that the Board in its sole discretion may disapprove such payment and require that such taxes be paid in cash.

19. SEPARABILITY

If any of the terms or provisions of this Plan conflict with the requirements of Rule 16b-3 under the Exchange Act and/or section 422A of the Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3, and/or with respect to ISOs, section 422A of the Code. With respect to ISOs, if this Plan does not contain any provision required to be included herein under section 422A of the Code, such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been set out at length herein; provided, further, that to the extent any Option which is intended to qualify as an ISO cannot so qualify, such Option, to that extent, shall be deemed to be a Nonqualified Stock Option for all purposes of the Plan.

20. NON-EXCLUSIVITY OF THE PLAN

Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements

as it may deem desirable, including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

21. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION

By acceptance of an Award or Cash Award, as applicable, each Holder shall be deemed to have agreed that such Award or Cash Award, as applicable, is special incentive compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining the amount of any payment under any pension, retirement or other employee benefit plan of the Company or any Subsidiary. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award or Cash Award, as applicable, will not affect the amount of any life insurance coverage, if any, provided by the Company on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of the Company or any Subsidiary.

22. GOVERNING LAW

The Plan shall be governed by, and construed in accordance with, the laws of the State of New York.

As Amended through July 18, 1996

TIME WARNER INC.
1994 STOCK OPTION PLAN

1. PURPOSE OF THE PLAN

The purpose of the Time Warner Inc. 1994 Stock Option Plan (hereinafter the "Plan") is to provide for the granting of nonqualified stock options and stock appreciation rights to certain employees of and consultants and advisors to Time Warner Inc. and its Subsidiaries in recognition of the valuable services provided, and contemplated to be provided, by such employees, consultants and advisors. The general purpose of the Plan is to promote the interests of Time Warner and its stockholders and to reward dedicated employees, consultants and advisors of Time Warner and its Subsidiaries by providing them additional incentives to continue and increase their efforts with respect to, and to remain in the employ of, Time Warner or its Subsidiaries. This plan is being adopted in connection with the development of an overall long-term compensation program for Time Warner and its Subsidiaries.

2. CERTAIN DEFINITIONS

The following terms (whether used in the singular or plural) have the meanings indicated when used in the Plan:

(a) "Agreement" means the stock option agreement and stock appreciation rights agreement specified in Section 12, both individually and collectively, as the context so requires.

(b) "Approved Transaction" means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the stockholders of Time Warner) shall approve (i) any consolidation or merger of Time Warner in which Time Warner is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, other than a merger of Time Warner (x) as contemplated in the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995 among Time

Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., as the same may be amended from time to time, or (y) in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of Time Warner, or (iii) the adoption of any plan or proposal for the liquidation or dissolution of Time Warner.

(c) "Award" means grants of Options and/or SARs under this Plan.

(d) "Board" means the Board of Directors of Time Warner.

(e) "Board Change" means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board ceased for any reason to constitute a majority thereof unless the election, or the nomination for election by Time Warner's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

(f) "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section.

(g) "Committee" means the Committee comprised of members of the Board appointed pursuant to Section 4.

(h) "Common Stock" means the common stock, par value $1.00 per share, of Time Warner.

(i) "Composite Tape" means the New York Stock Exchange Composite Tape.

(j) "Control Purchase" means any transaction in which any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than Time Warner or any employee benefit plan sponsored by Time Warner or any of its

Subsidiaries) (i) shall purchase any Common Stock (or securities convertible into Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (ii) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Time Warner representing 20% or more of the combined voting power of the then outstanding securities of Time Warner ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) in the case of rights to acquire Time Warner's securities).

(k) "Effective Date" means the date the Plan becomes effective pursuant to Section 15.

(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section.

(m) "Fair Market Value" of a share of Common Stock means the average of the high and low sales prices of a share of Common Stock on the Composite Tape on the date in question, except as otherwise provided in Section 6.5.

(n) "General SARs" means stock appreciation rights subject to the terms of Section 6.5(b).

(o) "Holder" means an employee of or a consultant or advisor to Time Warner or any of its Subsidiaries who has

received an Award under this Plan.

(p) "Limited SARs" means stock appreciation rights subject to the terms of Section 6.5(c).

(q) "Minimum Price Per Share" means the highest gross price (before brokerage commissions, soliciting dealers' fees and similar charges) paid or to be paid for any share of Common Stock (whether by way of exchange, conversion, distribution, liquidation or otherwise) in, or in connection with, any Approved Transaction or Control Purchase which occurs at any time during the period beginning on the sixtieth day prior to the date on which Limited SARs are exercised and ending on the date on which Limited SARs are exercised. If the consideration paid or

to be paid in any such Approved Transaction or Control Purchase shall consist, in whole or in part, of consideration other than cash, the Board shall take such action, as in its judgment it deems appropriate, to establish the cash value of such consideration, but such valuation shall not be less than the value, if any, attributed to such consideration by any other party to such Approved Transaction or Control Purchase.

(r) "Option" means any nonqualified stock option granted pursuant to this Plan.

(s) "Plan" has the meaning ascribed thereto in
Section 1.

(t) "SARs" means General SARs and Limited SARs.

(u) "SEC" means the Securities and Exchange Commission.

(v) "Subsidiary" of a person means any present or future subsidiary of such person as such term is defined in section 425 of the Code and any present or future trade or business, whether or not incorporated, controlled by or under common control with such person. An entity shall be deemed a Subsidiary of a person only for such periods as the requisite ownership or control relationship is maintained.

(w) "Time Warner" means Time Warner Inc., a Delaware corporation, and any successor thereto.

(x) "Total Disability" means a permanent and total disability as defined in section 22(e)(3) of the Code.

3. STOCK SUBJECT TO THE PLAN

3.1. Number of Shares. Subject to the provisions of Section 12 and this
Section 3, the maximum number of shares of Common Stock in respect of which Awards may be granted is the sum of 1.5% (one and one-half percent) of the number of shares of Common Stock outstanding on December 31, 1993, plus 1.25% (one and one-quarter percent) of the number of shares of Common Stock outstanding on December 31, 1994, plus 1% (one percent) of the number of shares of Common Stock outstanding on December 31, 1995, plus two million. If and to the extent that an Option shall expire, terminate or be canceled for any reason without having been exercised (or without having been

considered to have been exercised as provided in Section 6.5(a)), the shares of Common Stock subject to such expired, terminated or canceled portion of the Option shall again become available for purposes of the Plan.

3.2. Character of Shares. Shares of Common Stock deliverable under the terms of the Plan may be, in whole or in part, authorized and unissued shares of Common Stock or issued shares of Common Stock held in Time Warner's treasury, or both.

3.3. Reservation of Shares. Time Warner shall at all times reserve a number of shares of Common Stock (authorized and unissued Common Stock, issued Common Stock held in Time Warner's treasury, or both) equal to the maximum number of shares that may be subject to outstanding Awards and future Awards under the Plan.

4. ADMINISTRATION

4.1. Powers. The Plan shall be administered by the Board. Subject to the express provisions of the Plan, the Board shall have plenary authority, in its discretion, to grant Awards under the Plan and to determine the terms and conditions (which need not be identical) of all Awards so granted, including without limitation, (a) the individuals to whom, and the time or times at which, Awards shall be granted or awarded, (b) the number of shares to be subject to each Award, (c) when an Option or SAR can be exercised and whether in whole or in installments, and (d) the form, terms and provisions of any Agreement (which terms may be amended, subject to Section 14).

4.2. Factors to Consider. In making determinations hereunder, the Board may take into account the nature of the services rendered by the respective employees, consultants or advisors, their dedication and past contributions to Time Warner and its Subsidiaries, their present and potential contributions to the success of Time Warner and its Subsidiaries and such other factors as the Board in its discretion shall deem relevant.

4.3. Interpretation. Subject to the express provisions of the Plan, the Board shall have plenary authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The determinations of the Board on

the matters referred to in this Section 4 shall be conclusive.

4.4. Delegation to Committee. Notwithstanding anything to the contrary contained herein, the Board may at any time, or from time to time, appoint a Committee and delegate to such Committee the authority of the Board to administer the Plan, including to the extent provided by the Board, the power to further delegate such authority. Upon such appointment and delegation, any such Committee shall have all the powers, privileges and duties of the Board in the administration of the Plan to the extent provided in such delegation, except for the power to appoint members of the Committee and to terminate, modify or amend the Plan. The Board may from time to time appoint members of any such Committee in substitution for or in addition to members previously appointed, may fill vacancies in such Committee and may discharge such Committee.

Any such Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by all of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held.

5. ELIGIBILITY

Awards may be made only to (a) employees of Time Warner or any of its Subsidiaries (including officers and directors of any of Time Warner's Subsidiaries), other than officers or directors of Time Warner who are subject to Section 16 of the Exchange Act, (b) prospective employees of Time Warner or any of its Subsidiaries and (c) consultants or advisors to Time Warner or any of its Subsidiaries. The exercise of Options and SARs granted to a prospective employee shall be conditioned upon such person becoming an employee of Time Warner or any of its Subsidiaries. For purposes of the Plan, the term "prospective employee" shall mean any person who holds an outstanding offer of employment on specific terms from Time Warner or any of its Subsidiaries. Awards may be made to employees, consultants and advisors who hold or have held Awards under this Plan or any similar or other awards under any other plan of Time Warner or its Subsidiaries.

6. OPTIONS AND SARS

6.1. Option Prices. Subject to Section 5.2, the purchase price of the Common Stock under each Option shall be determined by the Board and set forth in the applicable Agreement, but shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant.

6.2. Term of Options. The term of each Option shall be for such period as the Board shall determine, as set forth in the applicable Agreement.

6.3. Exercise of Options. An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and this Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term; provided, however, that subsequent to the grant of an Option, the Board, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part (without reducing the term of such Option). The Agreement may contain conditions precedent to the exercisability of Options, including without limitation, the achievement of minimum performance criteria.

6.4. Manner of Exercise. Payment of the Option purchase price shall be made in cash or in whole shares of Common Stock already owned by the person exercising an Option or, partly in cash and partly in such Common Stock; provided, however, that such payment may be made in whole or in part in shares of Common Stock only if and to the extent permitted by the applicable Agreement. An Option shall be exercised by written notice to Time Warner upon such terms and conditions as provided in the Agreement. Time Warner shall effect the transfer of the shares of Common Stock purchased under the Option as soon as practicable, and within a reasonable time thereafter such transfer shall be evidenced on the books of Time Warner. No Holder or other person exercising an Option shall have any of the rights of a stockholder of Time Warner with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment has been made. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment.

6.5. SARs. (a) General Conditions. The Board may (but shall not be obligated to) grant General SARs and/or Limited SARs pursuant to the provisions of this Section 6.5 to a Holder of any Option (hereinafter called a "related Option"), with respect to all or a portion of the shares of Common Stock subject to the related Option.

A SAR may be granted either concurrently with the grant of the related Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related Option. Subject to the terms and provisions of this Section 6.5, each SAR shall be exercisable to the extent the related Option is then exercisable (and may be subject to such additional limitations on exercisability as the Agreement may provide), and in no event after the complete termination or full exercise of the related Option. SARs shall be exercisable in whole or in part upon notice to Time Warner upon such terms and conditions as provided in the Agreement.

Upon the exercise of SARs, the related Option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such SARs are exercised and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock in respect of which other Awards may be granted. Upon the exercise or termination of the related Option, the SARs with respect thereto shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related Option was so exercised or terminated.

The provisions of Sections 4 and 6 through 21 (to the extent that such provisions are applicable to Options) shall also be applicable to SARs unless the context otherwise requires.

(b) General SARs. General SARs shall be exercisable only at the time the related Option is exercisable and subject to the terms and provisions of this
Section 6.5, upon the exercise of General SARs, the person exercising the General SAR shall be entitled to receive consideration (in the form hereinafter provided) equal in value to the excess of the Fair Market Value on the date of exercise of the shares of Common Stock with respect to which such General SARs have been exercised over the aggregate related Option purchase price for such shares; provided, however, that the Board may, in any Agreement granting General SARs provide that the appreciation realizable

upon exercise thereof shall be measured from a base higher than the related Option purchase price.

Upon the exercise of a General SAR, the person exercising the General SAR may specify the form of consideration to be received by such person exercising the General SAR, which shall be in shares of Common Stock (valued at Fair Market Value on the date of exercise of such General SAR), or in cash, or partly in cash and partly in shares of Common Stock. Any election by the person exercising the General SAR to receive cash in full or partial settlement of such General SAR shall comply with all applicable laws and shall be subject to the discretion of the Board to settle General SARs only in shares of Common Stock if necessary or advisable in the judgment of the Board to preserve pooling of interests accounting treatment for any proposed transaction involving the Company. Unless otherwise specified in the applicable Agreement, the number of General SARs which may be exercised for cash, or partly for cash and partly for shares of Common Stock, during any calendar quarter, may not exceed 20% of the aggregate number of shares of Common Stock originally subject to the related Option (as such original number, without giving effect to the exercise of any portion of the related Option, shall have been retroactively adjusted in accordance with Section 13 or any corresponding provisions of an applicable Agreement).

For purposes of this Section 6.5, the date of exercise of a General SAR shall mean the date on which Time Warner shall have received notice from the person exercising the General SAR of the exercise of such General SAR.

(c) Limited SARs. Limited SARs may be exercised only during the period
(a) beginning on the first day following either (i) the date of an Approved Transaction, (ii) the date of a Control Purchase, or (iii) the date of a Board Change, and (b) ending on the ninetieth day (or such other date specified in the Agreement) following such date. The effective date of exercise of a Limited SAR shall be deemed to be the date on which Time Warner shall have received notice from the person exercising the Limited SAR of the exercise thereof.

Upon the exercise of Limited SARs granted in connection with an Option, except as otherwise provided in the Agreement and the immediately succeeding sentence, the person exercising the Limited SAR shall receive in cash an amount equal to the product computed by multiplying (a) the excess of (i) the higher of (A) the Minimum Price Per Share, or (B) the highest

reported closing sales price of a share of Common Stock as reported on the Composite Tape at any time during the period beginning on the sixtieth day prior to the date on which such Limited SARs are exercised and ending on the date on which such Limited SARs are exercised over (ii) the per share Option price of the related Nonqualified Stock Option, by (b) the number of shares of Common Stock with respect to which such Limited SARs are being exercised. The Board shall have the discretion to settle Limited SARs by the delivery of Common Stock rather than cash if in the judgment of the Board such action is necessary or advisable to preserve pooling of interests accounting treatment for any proposed transaction involving the Company.

6.6. Nontransferability of Options and SARs. Except as set forth in this
Section 6.6, Options and SARs shall not be transferable other than by will or the laws of descent and distribution, and Options and SARs may be exercised during the lifetime of the Holder thereof only by such Holder (or his or her court appointed legal representative). The Agreement may provide that Options and SARs are transferable by gift to such persons or entities and upon such terms and conditions specified in the Agreement.

7. ACCELERATION OF OPTIONS AND SARS

If a Holder's employment shall terminate by reason of death or Total Disability, notwithstanding any contrary waiting period or installment period in any Agreement or in the Plan or in the event of any Approved Transaction, Board Change or Control Purchase, unless the applicable Agreement provides otherwise, each outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby.

8. TERMINATION OF EMPLOYMENT

8.1. General. If a Holder's employment shall terminate prior to the complete exercise of an Option (or deemed exercise thereof, as provided in
Section 6.5(a)), then such Option shall thereafter be exercisable solely to the extent provided in the applicable Agreement; provided, however, that (a) no Option may be exercised after the scheduled expiration date of such Option; (b) if the Holder's employment terminates by reason of death or Total Disability, the Option shall remain exercisable for a period of at least one year following such termination

(but not later than the scheduled expiration of such Option); and (c) any termination by the employing company for cause will be treated in accordance with the provisions of Section 8.2.

8.2. Termination for Cause. If a Holder's employment with Time Warner or any of its Subsidiaries shall be terminated by Time Warner or such Subsidiary prior to the exercise of any Option for cause (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include but not be limited to, insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs within 12 months after an Approved Transaction, Control Purchase or Board Change, termination for cause shall mean only a felony conviction for fraud, misappropriation or embezzlement), then all Options held by such Holder and any permitted transferee pursuant to Section 6.6 shall immediately terminate.

8.3. Special Rule. Notwithstanding any other provision of the Plan, the Board may provide in the applicable Agreement that the Award shall become and/or remain exercisable at rates and times at variance with the rules otherwise herein set forth; provided, however, that any such Agreement provisions at variance with the exercisability rules otherwise set forth herein shall be effective only if reflected in the terms of an employment agreement approved or ratified by the Board.

8.4. Miscellaneous. The Board may determine whether any given leave of absence constitutes a termination of employment. Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of Time Warner or one of its Subsidiaries.

9. RIGHT OF COMPANY TO TERMINATE EMPLOYMENT

Nothing contained in the Plan or in any Award shall confer on any Holder any right to continue in the employ of Time Warner or any of its Subsidiaries or interfere in any way with the right of Time Warner or a Subsidiary to terminate the employment of the Holder at any time, with or without cause; subject, however, to the provisions of any employment agreement between the Holder and Time Warner or any of its Subsidiaries.

10. NONALIENATION OF BENEFITS

Except as specifically provided in Section 6.6, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits.

11. WRITTEN AGREEMENT

Each grant of an Option shall be evidenced by a stock option agreement and each SAR shall be evidenced by a stock appreciation rights agreement, each in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Board from time to time shall approve; provided, however, that such Awards may be evidenced by a single agreement. The effective date of the granting of an Award shall be the date on which the Board approves such grant. Each grantee of an Option or SAR shall be notified promptly of such grant and a written Agreement shall be promptly executed and delivered by Time Warner and the grantee, provided that such grant of Options or SARs shall terminate if such written Agreement is not signed by such grantee (or his attorney) and delivered to Time Warner within 60 days after the date the Board approved such grant or if the effectiveness of such grant is conditioned upon the grantee becoming an employee of Time Warner or one of its Subsidiaries, the execution by the grantee of an employment agreement with Time Warner or one of its Subsidiaries or any other similar condition, within 60 days after the occurrence of such condition, if later. Any such written Agreement may contain (but shall not be required to contain) such provisions as the Board deems appropriate to ensure that the penalty provisions of section 4999 of the Code will not apply to any stock or cash received by the Holder or such Holder's permitted transferee pursuant to Section 6.6 from Time Warner or any of its Subsidiaries.

12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.

In the event of any stock split, dividend, distribution, combination, reclassification or recapitalization that changes

the character or amount of the Common Stock while any portion of any Award theretofore granted under the Plan is outstanding but unexercised, the Board shall make such adjustments in the character and number of shares subject to such Award and, in the option price, as shall be applicable, equitable and appropriate in order to make such Award, immediately after any such change, as nearly as may be practicable, equivalent to such Award, immediately prior to any such change. If any merger, consolidation or similar transaction affects the Common Stock subject to any unexercised Award theretofore granted under the Plan, the Board or any surviving or acquiring corporation shall take such action as is equitable and appropriate to substitute a new award for such Award or to assume such Award in order to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award. If any such change or transaction shall occur, the number and kind of shares for which Awards may thereafter be granted under the Plan shall be adjusted to give effect thereto.

13. RIGHT OF FIRST REFUSAL

The Agreements may contain such provisions as the Board shall determine to the effect that if a Holder, or such other person exercising an Option, elects to sell all or any shares of Common Stock that such Holder or other person acquired upon the exercise of an Option awarded under the Plan, then such Holder or other person shall not sell such shares unless such Holder or other person shall have first offered in writing to sell such shares to Time Warner at Fair Market Value on a date specified in such offer (which date shall be at least three business days and not more than 10 business days following the date of such offer). In any such event, certificates representing shares issued upon exercise of Options shall bear a restrictive legend to the effect that transferability of such shares are subject to the restrictions contained in the Plan and the applicable Agreement and Time Warner may cause the registrar of its Common Stock to place a stop transfer order with respect to such shares.

14. TERMINATION AND AMENDMENT

14.1. General. Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Board may at any time prior to the tenth

anniversary of the Effective Date terminate the Plan, and the Board may at any time modify or amend the Plan in such respects as it shall deem advisable; provided, however, that any such modification or amendment shall comply with all applicable laws and stock exchange listing requirements.

14.2. Modification. No termination, modification or amendment of the Plan may, without the consent of the person to whom any Award shall theretofore have been granted (or a transferee of such person if the Award, or any part thereof, has been transferred pursuant to Section 6.6), adversely affect the rights of such person with respect to such Award. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder (or a transferee of such Holder if the Award, or any part thereof, has been transferred pursuant to Section 6.6) and subject to the terms and conditions of the Plan (including Section 14.1), the Board may amend outstanding Agreements with any Holder (or any such transferee), including, without limitation, any amendment which would (a) accelerate the time or times at which the Award may be exercised and/or (b) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Board may but solely with the Holder's consent, agree to cancel any Award under the Plan held by such Holder and issue a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made.

15. EFFECTIVENESS OF THE PLAN

The Plan shall become effective upon approval by the Board of Directors of Time Warner.

16. GOVERNMENT AND OTHER REGULATIONS

The obligation of Time Warner with respect to Awards shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of any registration statement required under the Securities Act of 1933, and the rules and regulations of any securities exchange on which the Common Stock may be listed. For so long as the Common Stock is registered under the Exchange Act, Time Warner

shall use its reasonable efforts to comply with any legal requirements (a) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all shares of Common Stock that may be issued to Holders under the Plan, and (b) to file in a timely manner all reports required to be filed by it under the Exchange Act.

17. WITHHOLDING

Time Warner's obligation to deliver shares of Common Stock or pay cash in respect of any Award under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding taxes paid upon the exercise of any Option may be paid in shares of Common Stock upon such terms and conditions as the Board shall determine; provided, however, that the Board in its sole discretion may disapprove such payment and require that such taxes be paid in cash.

18. SEPARABILITY

If any of the terms or provisions of this Plan conflict with the requirements of applicable law, then such terms or provisions shall be deemed inoperative to the extent necessary to avoid the conflict with applicable law without invalidating the remaining provisions hereof.

19. NON-EXCLUSIVITY OF THE PLAN

The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

20. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION

By acceptance of an Award, each Holder shall be deemed to have agreed that such Award is special incentive compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining the amount of any payment

under any pension, retirement or other employee benefit plan of Time Warner or any of its Subsidiaries. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of any life insurance coverage, if any, provided by Time Warner or any of its Subsidiaries on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of Time Warner or any of its Subsidiaries.

21. GOVERNING LAW

The Plan shall be governed by, and construed in accordance with, the laws of the State of New York.

As Amended through July 18, 1996

TIME WARNER
CORPORATE GROUP
STOCK INCENTIVE PLAN

1. PURPOSE OF THE PLAN

The purpose of the Time Warner Corporate Group Stock Incentive Plan (hereinafter the "Plan"), is to provide for the granting of stock options, stock appreciation rights and restricted shares to certain employees of Time Warner Inc., Warner Communications Inc., Time Warner Enterprises, Inc. and their respective Subsidiaries in recognition of the valuable services provided, and contemplated to be provided, by such employees. The general purpose of the Plan is to promote the interests of Time Warner and its stockholders and to reward dedicated employees of these companies by providing such employees additional incentives to continue and increase their efforts with respect to, and to remain in the employ of, Time Warner or its Subsidiaries. This plan is being adopted in connection with the development of an overall long-term compensation program for these companies and it is expected that certain Options granted hereunder will become exercisable only if certain performance criteria are met.

2. CERTAIN DEFINITIONS

The following terms (whether used in the singular or plural) have the meanings indicated when used in the Plan:

(a) "Agreement" means the stock option agreement, stock appreciation rights agreement and the restricted shares agreement specified in Section 12, both individually and collectively, as the context so requires.

(b) "Approved Transaction" means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the stockholders of Time Warner) shall approve (i) any consolidation or merger of Time Warner in which Time Warner is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, other than a merger of Time Warner (x) as

contemplated in the Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995 among Time Warner Inc., TW Inc., Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., as the same may be amended from time to time, or (y) in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of Time Warner, or (iii) the adoption of any plan or proposal for the liquidation or dissolution of Time Warner.

(c) "Award" means grants of Options, SARs and/or Restricted Shares under this Plan.

(d) "Board" means the Board of Directors of Time Warner.

(e) "Board Change" means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board ceased for any reason to constitute a majority thereof unless the election, or the nomination for election by Time Warner's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

(f) "Cash Award" means the amount of cash, if any, to be paid to an employee pursuant to Section 7.5.

(g) "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section.

(h) "Committee" means the Committee comprised of members of the Board appointed pursuant to Section 4.

(i) "Common Stock" means the common stock, par value $1.00 per share, of Time Warner.

(j) "Composite Tape" means the New York Stock Exchange Composite Tape.

(k) "Control Purchase" means any transaction in which any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than Time Warner or any employee benefit plan sponsored by Time Warner or any if its Subsidiaries) (i) shall purchase any Common Stock (or securities convertible into Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (ii) shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Time Warner representing 20% or more of the combined voting power of the then outstanding securities of Time Warner ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) in the case of rights to acquire Time Warner's securities).

(l) "Dividend Equivalents" means, with respect to Restricted Shares to be issued at the end of the Restriction Period, to the extent specified by the Board only, an amount equal to the regular cash dividends and all other distributions (or the economic equivalent thereof) which are payable to stockholders of record during the Restriction Period on a like number of shares of Common Stock.

(m) "Effective Date" means the date the Plan becomes effective pursuant to Section 16.

(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section.

(o) "Fair Market Value" of a share of Common Stock means the average of the high and low sales prices of a share of Common Stock on the Composite Tape on the date in question, except as otherwise provided in Section 6.5.

(p) "General SARs" means stock appreciation rights subject to the terms of Section 6.5(b).

(q) "Holder" means an employee of Time Warner or any of its Subsidiaries who has received an Award under this Plan.

(r) "ISO" means an incentive stock option within the meaning of section 422A(b) of the Code.

(s) "Limited SARs" means stock appreciation rights subject to the terms of Section 6.5(c).

(t) "Minimum Price Per Share" means the highest gross price (before brokerage commissions, soliciting dealers' fees and similar charges) paid or to be paid for any share of Common Stock (whether by way of exchange, conversion, distribution, liquidation or otherwise) in, or in connection with, any Approved Transaction or Control Purchase which occurs at any time during the period beginning on the sixtieth day prior to the date on which Limited SARs are exercised and ending on the date on which Limited SARs are exercised. If the consideration paid or to be paid in any such Approved Transaction or Control Purchase shall consist, in whole or in part, of consideration other than cash, the Board shall take such action, as in its judgment it deems appropriate, to establish the cash value of such consideration, but such valuation shall not be less than the value, if any, attributed to such consideration by any other party to such Approved Transaction or Control Purchase.

(u) "Nonqualified Stock Option" means a stock option that is designated as a nonqualified stock option.

(v) "Option" means any ISO or Nonqualified Stock Option.

(w) "Plan" has the meaning ascribed thereto in
Section 1.

(x) "Restricted Shares" means shares of Common Stock or the right to receive shares of Common Stock, as the case may be, awarded pursuant to Section 7.

(y) "Restriction Period" means a period of time beginning on the date of each award of Restricted Shares and ending on the Valuation Date with respect to such

award.

(z) "Retained Distributions" has the meaning ascribed thereto in Section 7.3.

(aa) "SARs" means General SARs and Limited SARs.

(bb) "SEC" means the Securities and Exchange Commission.

(cc) "Subsidiary" of a person means any present or future subsidiary of such person as such term is defined in section 425 of the Code and any present or future trade or business, whether or not incorporated, controlled by or under common control with such person. An entity shall be deemed a Subsidiary of a person only for such periods as the requisite ownership or control relationship is maintained.

(dd) "Time Warner" means Time Warner Inc., a Delaware corporation, and any successor thereto.

(ee) "Total Disability" means a permanent and total disability as defined in section 22(e)(3) of the Code.

(ff) "Valuation Date" with respect to any Restricted Shares awarded hereunder means the date designated as such in the Agreement with respect to such award of Restricted Shares pursuant to Section 7.

3. STOCK SUBJECT TO THE PLAN

3.1. Number of Shares. Subject to the provisions of Section 13 and this
Section 3, the maximum number of shares of Common Stock in respect of which Awards may be granted is 325,000. If and to the extent that an Option shall expire, terminate or be canceled for any reason without having been exercised (or without having been considered to have been exercised as provided in Section 6.5(a)), the shares of Common Stock subject to such expired, terminated or canceled portion of the Option shall again become available for purposes of the Plan. In addition, any Restricted Shares which are forfeited under the terms of the Plan or any Agreement shall again become available for purposes of the Plan.

3.2. Character of Shares. Shares of Common Stock deliverable under the terms of the Plan may be, in whole or in part, authorized and unissued shares of Common Stock or issued shares of Common Stock held in Time Warner's treasury, or both.

3.3. Reservation of Shares. Time Warner shall at all times reserve a number of shares of Common Stock (authorized and unissued Common Stock, issued Common Stock held in Time Warner's treasury, or both) equal to the maximum number of shares that may be subject to outstanding Awards and future Awards under the Plan.

4. ADMINISTRATION

4.1. Powers. The Plan shall be administered by the Board. Subject to the express provisions of the Plan, the Board shall have plenary authority, in its discretion, to grant Awards under the Plan and to determine the terms and conditions (which need not be identical) of all Awards so granted, including without limitation, (a) the purchase price, if any, of each Restricted Share,
(b) the individuals to whom, and the time or times at which, Awards shall be granted or awarded, (c) the number of shares to be subject to each Award, (d) whether an Option shall be an ISO or a Nonqualified Stock Option, (e) when an Option or SAR can be exercised and whether in whole or in installments, (f) the time or times and the conditions subject to which Restricted Shares shall become vested and any Cash Awards shall become payable, and (g) the form, terms and provisions of any Agreement (which terms may be amended, subject to Section 15).

4.2. Factors to Consider. In making determinations hereunder, the Board may take into account the nature of the services rendered by the respective employees, their dedication and past contributions to Time Warner and its Subsidiaries, their present and potential contributions to the success of Time Warner and its Subsidiaries and such other factors as the Board in its discretion shall deem relevant.

4.3. Interpretation. Subject to the express provisions of the Plan, the Board shall have plenary authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The determinations of the Board on

the matters referred to in this Section 4 shall be conclusive.

4.4. Delegation to Committee. Notwithstanding anything to the contrary contained herein, the Board may at any time, or from time to time, appoint a Committee and delegate to such Committee the authority of the Board to administer the Plan, including to the extent provided by the Board, the power to further delegate such authority. Upon such appointment and delegation, any such Committee shall have all the powers, privileges and duties of the Board in the administration of the Plan to the extent provided in such delegation, except for the power to appoint members of the Committee and to terminate, modify or amend the Plan. The Board may from time to time appoint members of any such Committee in substitution for or in addition to members previously appointed, may fill vacancies in such Committee and may discharge such Committee.

Any such Committee shall select one of its members as its chairman and shall hold its meeting at such times and places as it shall deem advisable. A majority of members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by all of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held.

5. ELIGIBILITY

5.1. General. Awards may be made only to (a) employees of Time Warner or any of its Subsidiaries (including officers and directors of any of Time Warner's Subsidiaries), other than officers or directors of Time Warner who are subject to Section 16 of the Exchange Act, and (b) prospective employees of Time Warner or any of its Subsidiaries. The exercise of Options and SARs and the vesting of Restricted Shares granted to a prospective employee shall be conditioned upon such person becoming an employee of Time Warner or any of its Subsidiaries. For purposes of the Plan, the term "prospective employee" shall mean any person who holds an outstanding offer of employment on specific terms from Time Warner or any of its Subsidiaries. Awards may be made to employees who hold or have held Awards under this Plan or any similar or other awards under any other plan of Time Warner or its Subsidiaries.

5.2. Special ISO Rule. No ISO shall be granted to an employee who, at the time the ISO is granted, owns (or is considered as owning within the meaning of section 425(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of Time Warner or any of its Subsidiaries, unless at the time the ISO is granted the option price is at least 110% of the Fair Market Value of the Common Stock subject to the ISO and the ISO by its terms is not exercisable after the expiration of five years from the date it is granted.

6. OPTIONS AND SARS

6.1. Option Prices. Subject to Section 5.2, the purchase price of the Common Stock under each Option shall be determined by the Board and set forth in the applicable Agreement, but shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant.

6.2. Term of Options. The term of each Option shall be for such period as the Board shall determine, as set forth in the applicable Agreement, but not more than 10 years from the date of grant in the case of an ISO (except as provided in Section 5.2).

6.3. Exercise of Options. An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and this Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term; provided, however, that subsequent to the grant of an Option, the Board, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part (without reducing the term of such Option). The Agreement may contain conditions precedent to the exercisability of Options, including without limitation, the achievement of minimum performance criteria.

6.4. Manner of Exercise. Payment of the Option purchase price shall be made in cash or in whole shares of Common Stock already owned by the person exercising an Option or, partly in cash and partly in such Common Stock; provided, however, that such payment may be made in whole or in part in shares of Common Stock only if and to the extent permitted by the

applicable Agreement. An Option shall be exercised by written notice to Time Warner upon such terms and conditions as provided in the Agreement. Time Warner shall effect the transfer of the shares of Common Stock purchased under the Option as soon as practicable, and within a reasonable time thereafter such transfer shall be evidenced on the books of Time Warner. No Holder or other person exercising an Option shall have any of the rights of a stockholder of Time Warner with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment has been made. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment.

6.5. SARS. (a) General Conditions. The Board may (but shall not be obligated to) grant General SARs and/or Limited SARs pursuant to the provisions of this Section 6.5 to a Holder of any Option (hereinafter called a "related Option"), with respect to all or a portion of the shares of Common Stock subject to the related Option.

A SAR may be granted either concurrently with the grant of the related Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related Option. Subject to the terms and provisions of this Section 6.5, each SAR shall be exercisable to the extent the related Option is then exercisable (and may be subject to such additional limitations on exercisability as the Agreement may provide), and in no event after the complete termination or full exercise of the related Option. SARs shall be exercisable in whole or in part upon notice to Time Warner upon such terms and conditions as provided in the Agreement.

Upon the exercise of SARs, the related Option shall be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such SARs are exercised and shall be considered to have been exercised to that extent for purposes of determining the number of shares of Common Stock in respect of which other Awards may be granted. Upon the exercise or termination of the related Option, the SARs with respect thereto shall be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the related Option was so exercised or terminated.

The provisions of Sections 4, 6 and 8 through 22 (to the extent that such provisions are applicable to Options) shall also be applicable to SARs unless the context otherwise requires.

(b) General SARs. General SARs shall be exercisable only at the time the related Option is exercisable and subject to the terms and provisions of this
Section 6.5, upon the exercise of General SARs, the person exercising the General SAR shall be entitled to receive consideration (in the form hereinafter provided) equal in value to the excess of the Fair Market Value on the date of exercise of the shares of Common Stock with respect to which such General SARs have been exercised over the aggregate related Option purchase price for such shares; provided, however, that the Board may, in any Agreement granting General SARs provide that the appreciation realizable upon exercise thereof shall be measured from a base higher than the related Option purchase price.

Upon the exercise of a General SAR, the person exercising the General SAR may specify the form of consideration to be received by such person exercising the General SAR, which shall be in shares of Common Stock (valued at Fair Market Value on the date of exercise of such General SAR), or in cash, or partly in cash and partly in shares of Common Stock. Any election by the person exercising the General SAR to receive cash in full or partial settlement of such General SAR shall comply with all applicable laws. Unless otherwise specified in the applicable Agreement, the number of General SARs which may be exercised for cash, or partly for cash and partly for shares of Common Stock, during any calendar quarter, may not exceed 20% of the aggregate number of shares of Common Stock originally subject to the related Option (as such original number, without giving effect to the exercise of any portion of the related Option, shall have been retroactively adjusted in accordance with Section 13 or any corresponding provisions of an applicable Agreement).

For purposes of this Section 6.5, the date of exercise of a General SAR shall mean the date on which Time Warner shall have received notice from the person exercising the General SAR of the exercise of such General SAR.

(c) Limited SARs. Limited SARs may be exercised only during the period
(a) beginning on the first day following either (i) the date of an Approved Transaction, (ii) the date

of a Control Purchase, or (iii) the date of a Board Change, and (b) ending on the ninetieth day (or such other date specified in the Agreement) following such date. The effective date of exercise of a Limited SAR shall be deemed to be the date on which Time Warner shall have received notice from the person exercising the Limited SAR of the exercise thereof.

Upon the exercise of Limited SARs granted in connection with an ISO, except as otherwise provided in the Agreement, the person exercising the Limited SAR shall receive in cash an amount equal to the excess of the Fair Market Value on the date of exercise of such Limited SARs of the shares of Common Stock with respect to which such Limited SARs shall have been exercised over the aggregate related Option purchase price for such shares.

Upon the exercise of Limited SARs granted in connection with a Nonqualified Stock Option, except as otherwise provided in the Agreement, the person exercising the Limited SAR shall receive in cash an amount equal to the product computed by multiplying (a) the excess of (i) the higher of (A) the Minimum Price Per Share, or (B) the highest reported closing sales price of a share of Common Stock as reported on the Composite Tape at any time during the period beginning on the sixtieth day prior to the date on which such Limited SARs are exercised and ending on the date on which such Limited SARs are exercised over (ii) the per share Option price of the related Nonqualified Stock Option, by (b) the number of shares of Common Stock with respect to which such Limited SARs are being exercised.

6.6. Nontransferability of Options and SARs. Except as set forth in this
Section 6.6, Options and SARs shall not be transferable other than by will or the laws of descent and distribution, and Options and SARs may be exercised during the lifetime of the Holder thereof only by such Holder (or his or her court appointed legal representative). The Agreement may provide that Nonqualified Stock Options and SARs are transferable by gift to such persons or entities and upon such terms and conditions specified in the Agreement.

7. RESTRICTED SHARES

7.1. Valuation Date, Issuance and Price. The Board shall determine whether shares of Common Stock covered by awards of

Restricted Shares will be issued at the beginning or the end of the Restriction Period, whether Dividend Equivalents will be paid during the Restriction Period in the event shares of the Common Stock are to be issued at the end of the Restriction Period and shall designate a Valuation Date with respect to each award of Restricted Shares and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Shares in addition to those provided in the Plan. The Board shall determine the price, if any, to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully paid and nonassessable. All determinations made by the Board pursuant to this Section 7.1 shall be specified in the Agreement.

7.2. Issuance of Restricted Shares at Beginning of the Restriction Period. If shares of Common Stock are issued at the beginning of the Restriction Period, the stock certificate or certificates representing such Restricted Shares shall be registered in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, certificates representing the Restricted Shares and any securities constituting Retained Distributions shall bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the applicable Agreement. Such certificates shall remain in the custody of Time Warner and the Holder shall deposit with Time Warner stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to Time Warner of all or any portion of the Restricted Shares and any securities constituting Retained Distributions that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Agreement.

7.3. Restrictions. Restricted Shares issued at the beginning of the Restriction Period shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Shares, to receive and retain all regular cash dividends and such other distributions, as the Board may in its sole discretion designate, paid or distributed on such Restricted Shares and to exercise all other rights, powers and privileges of a Holder of Common Stock with respect to such Restricted Shares; except,

that, (a) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Shares until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (b) Time Warner will retain custody of the stock certificate or certificates representing the Restricted Shares during the Restriction Period as provided in Section 7.2; (c) other than regular cash dividends and such other distributions as the Board may in its sole discretion designate, Time Warner will retain custody of all distributions ("Retained Distributions") made or declared with respect to the Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and vesting and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account; (d) the Holder may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or any Retained Distributions or his interest in any of them during the Restriction Period; and (e) a breach of any restrictions, terms or conditions provided in the Plan or established by the Board with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.

7.4. Issuance of Stock at End of the Restriction Period. Restricted Shares issued at the end of the Restriction Period shall not constitute issued and outstanding shares of Common Stock and the Holder shall not have any of the rights of a stockholder with respect to the shares of Common Stock covered by such an award of Restricted Shares, in each case, until such shares shall have been transferred to the Holder at the end of the Restriction Period. If and to the extent that shares of Common Stock are to be issued at the end of the Restriction Period, the Holder shall be entitled to receive Dividend Equivalents with respect to the shares of Common Stock covered thereby either (a) during the Restriction Period or (b) in accordance with the rules applicable to Retained Distributions, as the Board may specify in the Agreement.

7.5. Cash Awards. In connection with any award of Restricted Shares, an Agreement may provide for the payment of a cash amount to the Holder of such Restricted Shares at any

time after such Restricted Shares shall have become vested. Such Cash Awards shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Board in the Agreement and shall be in addition to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled or eligible to receive from Time Warner or any of its Subsidiaries.

7.6. Completion of Restriction Period. On the Valuation Date with respect to each award of Restricted Shares, and the satisfaction of any other applicable restrictions, terms and conditions (a) all or part of such Restricted Shares shall become vested, (b) any Retained Distributions and any unpaid Dividend Equivalents with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested and (c) any Cash Award to be received by the Holder with respect to such Restricted Shares shall become payable, all in accordance with the terms of the applicable Agreement. Any such Restricted Shares, Retained Distributions and any unpaid Dividend Equivalents that shall not become vested shall be forfeited to Time Warner and the Holder shall not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares, Retained Distributions and any unpaid Dividend Equivalents that shall have been so forfeited.

8. ACCELERATION OF OPTIONS, SARS AND RESTRICTED SHARES

If a Holder's employment shall terminate by reason of death or Total Disability, notwithstanding any contrary waiting period or installment period or Restriction Period in any Agreement or in the Plan or in the event of any Approved Transaction, Board Change or Control Purchase, unless the applicable Agreement provides otherwise: (a) in the case of an Option or SAR, each such outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby; and (b) in the case of Restricted Shares, the Restriction Period applicable to each such award of Restricted Shares shall be deemed to have expired and all such Restricted Shares, any related Retained Distributions and any unpaid Dividend Equivalents shall become vested and any Cash Award payable pursuant to the applicable Agreement shall be adjusted in such manner as provided in the Agreement.

9. TERMINATION OF EMPLOYMENT

9.1. General. If a Holder's employment shall terminate prior to the complete exercise of an Option (or deemed exercise thereof, as provided in
Section 6.5(a)), then such Option shall thereafter be exercisable solely to the extent provided in the applicable Agreement; provided, however, that (a) no Option may be exercised after the scheduled expiration date of such Option; (b) if the Holder's employment terminates by reason of death or Total Disability, the Option shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option); and (c) any termination by the employing company for cause will be treated in accordance with the provisions of Section 9.2.

9.2. Termination for Cause. If a Holder's employment with Time Warner or any of its Subsidiaries shall be terminated by Time Warner or such Subsidiary during the Restriction Period with respect to any Restricted Shares or prior to the exercise of any Option for cause (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include but not be limited to, insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs within 12 months after an Approved Transaction, Control Purchase or Board Change, termination for cause shall mean only a felony conviction for fraud, misappropriation or embezzlement), then (a) all Options held by such Holder and any permitted transferee pursuant to Section 6.6 shall immediately terminate and (b) such Holder's rights to all Restricted Shares, Retained Distributions, any unpaid Dividend Equivalents and any Cash Awards shall be forfeited immediately.

9.3. Special Rule. Notwithstanding any other provision of the Plan, the Board may provide in the applicable Agreement that the Award shall become and/or remain exercisable at rates and times at variance with the rules otherwise herein set forth; provided, however, that any such Agreement provisions at variance with the exercisability rules otherwise set forth herein shall be effective only if reflected in the terms of an employment agreement approved or ratified by the Board.

9.4. Miscellaneous. The Board may determine whether any given leave of absence constitutes a termination of employment. Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of Time Warner or any of its Subsidiaries.

10. RIGHT OF COMPANY TO TERMINATE EMPLOYMENT

Nothing contained in the Plan or in any Award shall confer on any Holder any right to continue in the employ of Time Warner or any of its Subsidiaries or interfere in any way with the right of Time Warner or a Subsidiary to terminate the employment of the Holder at any time, with or without cause; subject, however, to the provisions of any employment agreement between the Holder and Time Warner or any of its Subsidiaries.

11. NONALIENATION OF BENEFITS

Except as provided in Section 6.6, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits.

12. WRITTEN AGREEMENT

Each award of Restricted Shares and any right to a Cash Award hereunder shall be evidenced by a restricted shares agreement; each grant of an Option shall be evidenced by a stock option agreement which shall designate the Options granted thereunder as ISOs or Nonqualified Stock Options; and each SAR shall be evidenced by a stock appreciation rights agreement, each in such form and containing such terms and provisions not inconsistent with the provisions of the Plan as the Board from time to time shall approve; provided, however, that such Awards may be evidenced by a single agreement. The effective date of the granting of an Award shall be the date on which the Board approves such grant. Each grantee of an Option, SAR or Restricted Shares shall be notified promptly of

such grant and a written Agreement shall be promptly executed and delivered by Time Warner and the grantee, provided that such grant of Options, SARs or Restricted Shares shall terminate if such written Agreement is not signed by such grantee (or his attorney) and delivered to Time Warner within 60 days after the date the Board approved such grant or if the effectiveness of such grant is conditioned upon the grantee becoming an employee of Time Warner or one of its Subsidiaries, the execution by the grantee of an employment agreement with Time Warner or one of its subsidiaries or any other similar condition, within 60 days after the occurrence of such condition, if later. Any such written Agreement may contain (but shall not be required to contain) such provisions as the Board deems appropriate to ensure that the penalty provisions of section 4999 of the Code will not apply to any stock or cash received by the Holder or such Holder's permitted transferee pursuant to Section 6.6 from Time Warner or any of its Subsidiaries.

13. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.

In the event of any stock split, dividend, distribution, combination, reclassification or recapitalization that changes the character or amount of the Common Stock while any portion of any Award theretofore granted under the Plan is outstanding but unexercised or unvested, the Board shall make such adjustments in the character and number of shares subject to such Award, in the option price, in the relevant appreciation base and in the Cash Awards, as shall be applicable, equitable and appropriate in order to make such Award, immediately after any such change, as nearly as may be practicable, equivalent to such Award, immediately prior to any such change. If any merger, consolidation or similar transaction affects the Common Stock subject to any unexercised or unvested Award theretofore granted under the Plan, the Board or any surviving or acquiring corporation shall take such action as is equitable and appropriate to substitute a new award for such Award or to assume such Award in order to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award. If any such change or transaction shall occur, the number and kind of shares for which Awards may thereafter be granted under the Plan shall be adjusted to give effect thereto.

14. RIGHT OF FIRST REFUSAL

The Agreements may contain such provisions as the Board shall determine to the effect that if a Holder, or other person exercising an Option, elects to sell all or any shares of Common Stock that such Holder or other person acquired upon the exercise of an Option or upon the vesting of Restricted Shares awarded under the Plan, then such Holder or other person shall not sell such shares unless such Holder or other person shall have first offered in writing to sell such shares to Time Warner at Fair Market Value on a date specified in such offer (which date shall be at least three business days and not more than 10 business days following the date of such offer). In any such event, certificates representing shares issued upon exercise of Options and the vesting of Restricted Shares shall bear a restrictive legend to the effect that transferability of such shares are subject to the restrictions contained in the Plan and the applicable Agreement and Time Warner may cause the registrar of its Common Stock to place a stop transfer order with respect to such shares.

15. TERMINATION AND AMENDMENT

15.1. General. Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Board may at any time prior to the tenth anniversary of the Effective Date terminate the Plan, and the Board may at any time modify or amend the Plan in such respects as it shall deem advisable; provided, however, that any such modification or amendment shall comply with all applicable laws and stock exchange listing requirements.

15.2. Modification. No termination, modification or amendment of the Plan may, without the consent of the person (or a transferee of such person if the Award, or any part thereof, has been transferred pursuant to Section 6.6) to whom any Award shall theretofore have been granted, adversely affect the rights of such person with respect to such Award. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder (or a transferee of such Holder if the Award, or any part thereof, has been transferred pursuant to Section 6.6) and subject to the terms and

conditions of the Plan (including Section 15.1), the Board may amend outstanding Agreements with any Holder (or any such transferee), including, without limitation, any amendment which would (a) accelerate the time or times at which the Award may be exercised and/or (b) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Board may but solely with the Holder's consent, agree to cancel any Award under the Plan held by such Holder and issue a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made.

16. EFFECTIVENESS OF THE PLAN

The Plan shall become effective upon approval by the Board of Directors of Time Warner.

17. GOVERNMENT AND OTHER REGULATIONS

The obligation of Time Warner with respect to Awards shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of any registration statement required under the Securities Act of 1933, and the rules and regulations of any securities exchange on which the Common Stock may be listed. For so long as the Common Stock is registered under the Exchange Act, Time Warner shall use its reasonable efforts to comply with any legal requirements (a) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all shares of Common Stock that may be issued to Holders under the Plan, and (b) to file in a timely manner all reports required to be filed by it under the Exchange Act.

18. WITHHOLDING

Time Warner's obligation to deliver shares of Common Stock or pay cash in respect of any Award or Cash Award under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding taxes paid upon the exercise of any Option and upon the vesting of Restricted Shares may be paid in shares of Common Stock upon such terms and conditions as the Board shall

determine; provided, however, that the Board in its sole discretion may disapprove such payment and require that such taxes be paid in cash.

19. SEPARABILITY

If any of the terms or provisions of this Plan conflict with the requirements of section 422A of the Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of section 422A of the Code. If this Plan does not contain any provision required to be included herein under section 422A of the Code, such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been set out at length herein; provided, however, that to the extent any Option which is intended to qualify as an ISO cannot so qualify, such Option, to that extent, shall be deemed to be a Nonqualified Stock Option for all purposes of the Plan.

20. NON-EXCLUSIVITY OF THE PLAN

The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

21. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION

By acceptance of an Award or Cash Award, as applicable, each Holder shall be deemed to have agreed that such Award or Cash Award, as applicable, is special incentive compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining the amount of any payment under any pension, retirement or other employee benefit plan of Time Warner or any of its Subsidiaries. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award or Cash Award, as applicable, will not affect the amount of any life insurance coverage, if any, provided by Time Warner or any of its Subsidiaries on the life of the Holder which is payable to such beneficiary under any life

insurance plan covering employees of Time Warner or any of its Subsidiaries.

22. GOVERNING LAW

The Plan shall be governed by, and construed in accordance with, the laws of the State of New York.

EMPLOYMENT AGREEMENT made and effective as of October 10, 1996, (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and R.E. Turner III (the "Executive").

This Agreement is being entered into pursuant to the provisions of the Amended and Restated Agreement and Plan of Merger, dated as of September 22, 1995, as amended on August 8, 1996 (the "Merger Agreement"), among Time Warner Inc., Turner Broadcasting System, Inc. ("TBS"), the Company, Time Warner Acquisition Corp. and TW Acquisition Corp., pursuant to which, among other things, TBS became a wholly owned subsidiary of the Company upon the terms and subject to the conditions set forth in the Merger Agreement (the "Merger").

Pursuant to the Merger Agreement, the Company wishes to secure the services of the Executive for the period to and including December 31, 2001 (the "Term Date") on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing to provide such services on and subject to the terms and conditions set forth in this Agreement. The parties therefore agree as follows:

1. Term of Employment. The Executive's "term of employment", as this phrase is used throughout this Agreement, shall be for the period beginning on the Effective Date and ending on the Term Date, subject, however, to the terms and conditions set forth in this Agreement.

2. Employment. During the term of employment, the Company shall employ the Executive, and the Executive shall serve, as Vice Chairman of the Company and Chief Executive Officer of the Company's newly created Video Division (the "Video Division"). The Video Division shall consist of (i) TBS, including all of the businesses conducted by TBS and its subsidiaries at the time of the Merger, and any business thereafter conducted by TBS and its subsidiaries, (ii) the businesses conducted from time to time by the Home Box Office division of Time Warner Entertainment Company, L.P., including all such businesses so conducted at the time of the Merger, (iii) the Company's interest in Court TV, and (iv) subject only

to contractual obligations of the Company and its subsidiaries existing at September 22, 1995, substantially all other nationally distributed cable networks and nationally distributed cable programming services operated from time to time by the Company or its subsidiaries or controlled affiliates. The Executive shall have responsibility for the direction and supervision of the Video Division with all of the authority, duties, functions and powers appropriate and customary to discharge such responsibility. The Chief Operating Officer of the Video Division shall be selected by the Company's Chairman of the Board subject to the consent of the Executive, which consent shall not be unreasonably withheld. In addition, the Executive shall be invited to participate in all meetings of the chief executive officers of the divisions of the Company held during the term of employment and shall have such other authority, functions, duties, powers and responsibilities as the Board of Directors or the Chief Executive Officer of the Company may from time to time delegate to the Executive in addition thereto, consistent with the terms hereof and his status as Vice Chairman of the Company and Chief Executive Officer of the Video Division. The Executive shall, subject to his election as such from time to time and without additional compensation, serve during the term of employment in such additional offices of comparable or greater stature and responsibility in the Company and its subsidiaries and as a director and as a member of any committee of the Board of Directors of the Company and its subsidiaries, to which he may be elected from time to time. So long as the Executive is employed by the Company pursuant to the terms of this Agreement and subject to the Company's obligations under the provisions of the Investors Agreement No. 1 dated as of October 10, 1996 between the Company, the Executive and Turner Outdoor, Inc., the Company shall include the Executive in the management slate for election as a director at every stockholders' meeting at which his term as a director would otherwise expire and shall use its best efforts to cause the Executive to be elected a member of its Board of Directors at each such meeting.

During the term of employment, (i) the Executive shall report only to the Company's Board of Directors and its Chief Executive Officer, (ii) the Executive shall have no other employment and, without the prior written consent of the Chief Executive Officer of the Company, no outside business activities which require the devotion of substantial amounts of

the Executive's time; provided, however, that the Executive's engaging in bison raising, the ownership and operation of ranch properties and other real estate, the management of the Executive's investments, including without limitation, the operation of venture capital or investment funds or partnerships that are owned primarily by the Executive and/or members of his family and activities on behalf of not-for-profit and charitable organizations or foundations shall not be deemed a breach of this Section 2, and (iii) the place for the performance of the Executive's services shall be the principal executive offices of TBS in the Atlanta, Georgia metropolitan area, subject to such reasonable travel as may be appropriate or required in the performance of the Executive's duties in the business of the Company, including without limitation, regular trips to the Company's headquarters in New York City. The foregoing shall be subject to the Company's policies, as in effect from time to time, regarding vacations, holidays, illness and the like and shall not prevent the Executive from devoting such time to his personal affairs as he devoted to such affairs while serving as Chairman, Chief Executive Officer and President of TBS prior to the Merger; provided, however, that the Executive shall in any event comply with the provisions of Sections 9 and 10 and any Company policies in effect from time to time on conflicts of interest.

3. Compensation.

3.1 Base Salary. The Company shall pay or cause to be paid to the Executive a base salary of not less than $700,000 per annum during the term of employment (the "Base Salary"). The Company may increase, but not decrease, the Base Salary at any time and from time to time during the term of employment and upon each such increase the term "Base Salary" shall mean such increased amount. The Company shall consider an increase in the Executive's Base Salary each time it increases the Base Salary of its Chief Executive Officer. Base Salary shall be payable in monthly or more frequent installments in accordance with the Company's then current practices and policies with respect to senior executives. For the purposes of this Agreement "senior executives" shall mean the executive officers of the Company.

3.2 Bonus. In addition to Base Salary, the Executive shall be entitled to receive during the term of employment an annual cash bonus based on the performance of the Company and of the Executive. The Executive's annual bonus will be targeted at 90% of the annual bonus received by the Company's Chief Executive Officer, however, the actual amount of the Executive's bonus for all periods commencing on or after January 1, 1997, shall be determined by the Compensation Committee of the Company's Board of Directors in accordance with the provisions of the Company's Annual Bonus Plan for Executive Officers. Such determination with respect to the amount, if any, of annual bonuses to be paid to the Executive under this Agreement shall be final and conclusive except as specifically provided otherwise in this Agreement. If the Executive is not employed hereunder for a full fiscal year, the bonus provided for herein shall be prorated based upon the number of full or partial months of actual employment during such year. Payments of any bonus compensation under this Section 3.2 shall be made in accordance with the Company's then current practices and policies with respect to senior executives.

3.3 Deferred Compensation. In addition to Base Salary and bonus as set forth in Sections 3.1 and 3.2, the Executive shall be credited with deferred compensation which shall be determined and paid out as provided in this Agreement, including Annex A hereto. Subject to the provisions of Sec tion A.7 of Annex A, during the term of employment, the Company shall credit to a special account maintained on the Company's books for the Executive (the "Account"), monthly, an amount equal to 50% of one-twelfth of the Executive's then current Base Salary. If a lump sum payment is made pursuant to Section 4.2.2 or 4.2.3, the Company shall credit to the Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Account shall be maintained by the Company in accordance with the terms of this Agreement, including Annex A, until the full amount which the Executive is entitled to receive therefrom has been paid in full.

3.4 Deferred Bonus. In addition to any other deferred bonus plan in which the Executive may be entitled to participate, the Executive may elect by written notice delivered to the Company at least 15 days prior to the

commencement of any calendar year during the term of employment during which an annual cash bonus would otherwise accrue or to which it would relate, to defer payment of and to have the Company credit to the Account all or any portion of the Executive's bonus for such year. Any such election shall only apply to the calendar year during the term of employment with respect to which such election is made and a new election shall be required with respect to each successive calendar year during the term of employment. Notwithstanding the foregoing, the Executive hereby elects to defer payment of and have the Company credit to the Account 100% of the annual bonus payable to the Executive with respect to the period beginning on the Effective Date and ending on December 31, 1996.

3.5 Reimbursement. The Company shall pay or reimburse the Executive for all reasonable travel (including use of the Executive's personal means of transportation), entertainment and other business expenses actually incurred or paid by the Executive during the term of employment in the performance of his services under this Agreement provided such expenses are incurred or paid in accordance with the Company's then current practices and policies with respect to senior executives of the Company and upon presentation of expense statements or vouchers or such other supporting information as the Company may customarily require of its senior executives.

3.6 No Anticipatory Assignments. Except as specifically contemplated in Section 12.8 or under the life insurance policies and benefit plans referred to in Sections 7 and 8, respectively, neither the Executive, his legal representative nor any beneficiary designated by him shall have any right, without the prior written consent of the Company, to assign, transfer, pledge, hypothecate, anticipate or commute to any person or any corporation, partnership, trust or other entity ("Entity") any payment due in the future pursuant to any provision of this Agreement, and any attempt to do so shall be void and shall not be recognized by the Company.

3.7 Indemnification. The Executive shall be entitled throughout the term of employment in his capacity as an officer or director of the Company or any of its subsidiaries or a member of the Board of Representatives or other governing body of any partnership or joint venture in which the Company has an equity interest (and after the term of

employment, to the extent relating to his service as such officer, director or member) to the benefit of the indemnification provisions contained on the date hereof in the Certificate of Incorporation and By-Laws of the Company (not including any amendments or additions after the date of execution hereof that limit or narrow, but including any that add to or broaden, the protection afforded to the Executive by those provisions), to the extent not prohibited by applicable law at the time of the assertion of any liability against the Executive. In addition, if at any time during the term of employment the Company generally provides indemnification agreements to its other directors or executive officers, the Company shall provide a substantially similar agreement to the Executive.

4. Termination.

4.1 Termination for Cause. The Company may terminate the term of employment and all of the Company's obligations hereunder, other than its obligations set forth below in this Section 4.1, only for "cause" and only if the term of employment has not previously been terminated pursuant to any other provision of this Agreement. Termination by the Company for "cause" shall mean termination by action of the Company's Board of Directors, or a committee thereof, because of the Executive's conviction (treating a nolo contendere plea as a conviction) of a felony (whether or not any right to appeal has been or may be exercised) or willful refusal without proper cause to perform his obligations under this Agreement or because of the Executive's material breach of any of the covenants provided for in Section 9. Such termination shall be effected by written notice thereof delivered by the Company to the Executive and shall be effective as of the date of such notice; provided, however, that if (i) such termination is because of (x) the Executive's willful refusal without proper cause to perform any one or more of his obligations under this Agreement or (y) the Executive's breach of any of the covenants in Sections 9.1.2 or 9.1.3 or the Executive's inadvertent breach of any limitation contained in Section 9.2 relating to the acquisition or ownership of an interest in any Entity, (ii) such notice is the first such notice of termination for any reason delivered by the Company to the Executive under this Section 4.1, and (iii) within 15 days following the date of

such notice the Executive shall (x) cease his refusal and shall use his best efforts to perform such obligations or (y) cure such breach, as applicable, the termination shall not be effective.

In the event of such termination by the Company for cause in accordance with the foregoing procedures, without prejudice to any other rights or remedies that the Company may have at law or in equity, except as set forth in the last sentence of this Section 4.1, the Executive shall have no further obligation to the Company under this Agreement and the Company shall have no further obligations to the Executive under this Agreement other than (i) to pay Base Salary and make credits of deferred compensation to the Account accrued through the effective date of termination (including but not limited to pursuant to Section 3.4),(ii) to pay any annual bonus pursuant to Section 3.2 to the Executive in respect of the calendar year prior to the calendar year in which such termination is effective, in the event such annual bonus has been determined but not yet paid as of the date of such termination and (iii) with respect to any rights the Executive has in respect of amounts credited to the Account or pursuant to any insurance or other benefit plans or arrangements of the Company maintained for the benefit of the Executive or the Company's senior executives. The Executive hereby disclaims any right to receive a pro rata portion of the Executive's annual bonus with respect to the year in which such termination occurs. The last sentence of Section 3.3, the provisions of Section 3.5 with respect to expenses incurred prior to such termination and the provisions of Sections 3.7, 8.2, 8.3 and 9 through 12 and Annex A shall survive any termination pursuant to this Section 4.1.

4.2 Termination by Executive for Material Breach by the Company and Wrongful Termination by the Company. Unless previously terminated pursuant to any other provision of this Agreement and unless a Disability Period shall be in effect, the Executive shall have the right, exercisable by written notice to the Company, to terminate the term of employment effective 15 days after the giving of such notice, if, at the time of the giving of such notice, the Company shall be in material breach of its obligations under this Agreement; provided, however, that, with the exception of clause (i) below, the term of employment shall not so terminate if such notice is the first such notice of termination delivered by the

Executive pursuant to this Section 4.2 and within such 15-day period the Company shall have cured all such material breaches of its obligations under this Agreement. A material breach by the Company shall include, but not be limited to, (i) the Company failing to cause the Executive to retain any titles specified in the first two sentences of Section 2; (ii) the Executive being required to report to persons other than those specified in Section 2; (iii) the Company violating the provisions of Section 2 with respect to the Executive's authority, functions, duties, powers or responsibilities (whether or not accompanied by a change in title); (iv) the Company requiring the Executive's primary services to be rendered at a place other than at the principal executive offices of TBS in the Atlanta, Georgia metropolitan area; and (v) the Company failing to cause any successor to all or substantially all of the business and assets of the Company expressly to assume the obligations of the Company under this Agreement.

In the event of a termination pursuant to the preceding paragraph of this Section 4.2, or in the event of a termination of this Agreement or the term of employment by the Company in breach of this Agreement,(A) the Executive shall cease being an employee of the Company and shall be entitled to receive a lump sum payment as provided in Section 4.2.2; provided, however, that (B) the Executive may elect by delivery of written notice to the Company prior to the date written notice of such termination is given by the Executive pursuant to the preceding paragraph of this Section 4.2 or any time prior to 10 days after written notice of such termination is given by the Company in breach of this Agreement, to remain an employee of the Company as provided in Section 4.2.3.

4.2.1 Regardless of whether the election set forth in clause (B) of Section 4.2 is made by the Executive, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Section 4.4 and Sections 6 through 12 shall survive such termination, and (ii) the Executive shall be entitled to receive (A) any earned and unpaid Base Salary and deferred compensation accrued through the Termination Date, (B) any annual bonus pursuant to Section 3.2 in respect of the calendar year prior to the calendar year in which such termination is effective, in the event such

annual bonus has been determined but not yet paid as of the Termination Date and
(C) a pro rata portion of the Executive's annual bonus for the year in which such termination occurs through the date of such termination based on the average annual bonus received by the Executive from the Company for the two fiscal years immediately preceding the year of termination (or the prior year's annual bonus, if only one annual bonus has been received by the Executive, or an amount equal to 90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive), all or a portion of which pro rata bonus will be credited to the Account if the Executive previously elected to defer all or any portion of the Executive's bonus for such year pursuant to Section 3.4.

4.2.2 In the event the Executive shall not have made the election provided in clause (B) of Section 4.2 above, the Company shall pay to the Executive as damages in a lump sum within 30 days thereafter an amount (discounted as provided in the immediately following sentence) equal to all amounts otherwise payable pursuant to Sections 3.1, 3.2 and 3.3 for the year or part thereof in which such termination occurs and for each subsequent year through and including the Term Date (assuming that annual bonuses are required to be paid for each such year (or portion thereof, in which case a pro rata portion of such bonus shall be payable), with each such annual bonus being equal to the average annual bonus received by the Executive from the Company for the two fiscal years immediately preceding the year of termination (or the prior year's annual bonus, if only one annual bonus has been received by the Executive, or an amount equal to 90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive), assuming that no portion of such bonus is deferred pursuant to Section 3.4). Any payments required to be made to the Executive pursuant to this Section 4.2.2 upon such termination in respect of Sections 3.1 and 3.2 and the credit to the Account provided for in the penultimate sentence of Section 3.3 shall be discounted to present value as of the date of payment from the times at which such amounts would have become payable absent any such termination at an annual discount rate for the relevant periods equal to 120% of the "applicable Federal rate" (within the meaning of
Section 1274(d) of the Internal Revenue Code of 1986 (the "Code")), in effect on the date of such

termination, compounded semi-annually, the use of which rate is hereby elected by the parties hereto pursuant to Treas. Reg. ss.1.280G-1 Q/A 32 (provided that, in the event such election is not permitted under Section 280G of the Code and the regulations thereunder, such other rate determined as of such other date as is applicable for determining present value under Section 280G of the Code shall be used).

4.2.3 In the event the Executive shall have made the election provided in clause (B) of Section 4.2 above, the term of employment shall continue and the Executive shall remain an employee of the Company until the Term Date and during such period the Executive shall be entitled to receive, whether or not he becomes disabled during such period but subject to Section 6,
(a) Base Salary at an annual rate equal to his Base Salary in effect immediately prior to the date of the notice of termination, (b) an annual bonus (all or a portion of which may be deferred by the Executive pursuant to Section 3.4) in respect of each calendar year or portion thereof (in which case a pro rata portion of such annual bonus will be payable) during such period equal to the average annual bonus received by the Executive from the Company for the two years immediately preceding the year in which the notice of termination is given (or the prior year's annual bonus if only one annual bonus has been received by the Executive, or an amount equal to 90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive), and (c) deferred compensation as provided in Section 3.3. Except as provided in the next sentence, if the Executive accepts full-time employment with any other Entity during such period or notifies the Company in writing of his intention to terminate his status as an employee during such period, then the term of employment shall end and the Executive shall cease to be an employee of the Company effective upon the commencement of such employment or the effective date of such termination as specified by the Executive in such notice, whichever is applicable, and the Executive shall be entitled to receive as damages in a lump sum within 30 days after such commencement or such effective date an amount (discounted as provided in the second sentence of Section 4.2.2) for the balance of the Base Salary, deferred compensation (which shall be credited to the Account as provided in the penultimate sentence of Section 3.3) and regular annual bonuses (assuming no deferral pursuant to

Section 3.4) the Executive would have been entitled to receive pursuant to this
Section 4.2.3 had the Executive remained on the Company's payroll until the Term Date. Notwithstanding the preceding sentence, if the Executive accepts employment with any not-for-profit or charitable organization or foundation, then the Executive shall be entitled to remain an employee of the Company and receive the payments as provided in the first sentence of this Section 4.2.3; and if the Executive accepts full-time employment with any affiliate of the Company, then the payments provided for in this Section 4.2.3 and the term of employment shall cease and the Executive shall not be entitled to any such lump sum payment. For purposes of this Agreement, the term "affiliate" shall mean any Entity which, directly or indirectly, controls, is controlled by, or is under common control with, the Company.

4.3 Office Facilities. In the event the Executive shall make the election provided in clause (B) of Section 4.2, then for the period beginning on the day the Executive makes such election and ending one year thereafter, the Company shall, without charge to the Executive, make available to the Executive office space at the Executive's principal job location immediately prior to his termination of employment, or other location reasonably close to such location, together with secretarial services, office facilities, services and furnishings, in each case reasonably appropriate to an employee of the Executive's position and responsibilities prior to such termination of employment.

4.4 Mitigation. In the event of termination of the term of employment by the Executive pursuant to Section 4.2 as a result of a material breach by the Company of any of its obligations hereunder, or in the event of termination of the term of employment by the Company in breach of this Agreement, the Executive shall not be required to seek other employment in order to mitigate his damages hereunder; provided, however, that, notwithstanding the foregoing, if there are any damages hereunder by reason of the events of termination described above which are "contingent on a change" (within the meaning of Section 280G(b)(2)(A)(i) of the Code), the Executive shall be required to mitigate such damages hereunder, including any such damages theretofore paid, but not in excess of the extent, if any, necessary to prevent the Company from losing any tax deductions to which it otherwise would be entitled in

connection with such damages if they were not so "contingent on a change". With respect to the preceding sentence, any payments or rights to which the Executive is entitled by reason of the termination of the term of employment by the Executive pursuant to Section 4.2 or in the event of the termination of the term of employment by the Company in breach of this Agreement shall be considered as damages hereunder. Any obligation of the Executive to mitigate his damages pursuant to this Section 4.4 shall not be a defense or offset to the Company's obligation to pay the Executive in full the amounts provided in Section 4.2.2 or 4.2.3, at the time provided therein or the timely and full performance of any of the Company's other obligations under this Agreement.

4.5 Payments. So long as the Executive remains on the payroll of the Company or any subsidiary of the Company, payments of salary, deferred compensation and bonus required to be made pursuant to Section 4.2 shall be made at the same times as such payments are made to senior executives of the Company or such subsidiary

4.6 Termination by the Executive Without Cause. If the term of employment has not previously been terminated pursuant to any other provision of this Agreement, the Executive may terminate the term of employment and all of his obligations hereunder on 90 days prior written notice to the Company. In the event of such termination, the Company shall have no further obligations to the Executive other than (i) to pay Base Salary and make credits of deferred compensation to the Account accrued through the effective date of termination,
(ii) to pay any annual bonus pursuant to Section 3.2 to the Executive in respect of the calendar year prior to the calendar year in which such termination is effective, in the event such annual bonus has been determined but not yet paid as of the date of such termination, (iii) to pay the Executive a pro rata annual bonus for the portion of the year in which such termination occurs based on the average annual bonus received by the Executive from the Company for the two fiscal years immediately preceding the year of termination (or the prior year's annual bonus, if only one annual bonus has been received by the Executive), or an amount equal to 90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive, all or a portion of which pro rata bonus will be

credited to the Account if the Executive previously elected to defer all or any portion of the Executive's bonus for such year pursuant to Section 3.4 and (iv) with respect to any rights the Executive has in respect of amounts credited to the Account or pursuant to any insurance or other benefit plans or arrangements of the Company maintained for the benefit of the Executive or the Company's Senior executives. The last sentence of Section 3.3, the provisions of Section 3.5 with respect to expenses incurred prior to such termination and the provisions of Sections 3.7, 8.2, 8.3 and 9 through 12 and Annex A shall survive any termination pursuant to this Section 4.6.

5. Disability. If during the term of employment and prior to any termination of the term of employment or of this Agreement under Section 4.2, the Executive shall become physically or mentally disabled, whether totally or partially, so that he is prevented from performing his usual duties for a period of six consecutive months, or for shorter periods aggregating six months in any twelve-month period, the Company shall, nevertheless, continue to pay the Executive his full compensation and continue to credit the Account, when otherwise due, as provided in Section 3 and Annex A, through the last day of the sixth consecutive month of disability or the date on which the shorter periods of disability shall have equaled a total of six months in any twelve-month period (such last day or date being referred to herein as the "Disability Date"). If the Executive has not resumed his usual duties on or prior to the Disability Date, the Company shall pay the Executive a pro rata bonus through the Disability Date for the year in which the Disability Date occurs in an amount equal to the average annual bonus received by the Executive from the Company for the two years immediately preceding the year in which the notice of termination is given, or the prior year's annual bonus if only one annual bonus has been received by the Executive, or an amount equal to 90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive and shall pay the Executive disability benefits until the Term Date (the "Disability Period"), in an amount equal to 75% of (a) the Executive's Base Salary at the time the Executive becomes disabled (and this reduced amount shall also be deemed to be the Base Salary for purposes of determining the amounts to be credited to his Account pursuant to Section 3.3 and Annex A as

further disability benefits) and (b) the average of the annual bonuses in respect of the two calendar years for which the annual bonus received by the Executive from the Company was the greatest (or if only two annual bonuses have been received by the Executive, the average of such bonuses or the prior year's annual bonus if only one annual bonus has been received, or an amount equal to 90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive), all or a portion of which may be deferred by the Executive pursuant to Section
3.4. If during the Disability Period the Executive shall fully recover from his disability, the Company shall have the right (exercisable within 60 days after notice from the Executive of such recovery), but not the obligation, to restore the Executive to full-time service at full compensation. If the Company elects to restore the Executive to full-time service, then this Agreement shall continue in full force and effect in all respects and the Term Date shall not be extended by virtue of the occurrence of the Disability Period. If the Company elects not to restore the Executive to full-time service, the Executive shall be entitled to obtain other employment, subject, however, to the following: (i) the Executive shall be obligated to perform advisory services during any balance of the Disability Period, unless he is rendering the services described in clause
(iii) below; (ii) the provisions of Sections 9.1, 9.3 and 10 shall continue to apply to the Executive during the Disability Period; and (iii) if the Executive renders any services to any persons that are in competition with the Company or any of its subsidiaries or affiliates (which, notwithstanding Section 9.2, the parties agree the Executive shall be permitted to do if the Company elects not to restore the Executive to full-time service, as described above), the total cash salary and bonus received in connection therewith, whether paid to the Executive or deferred for his benefit, prior to the last day of the Disability Period, shall reduce, pro tanto, any amount that the Company would otherwise be required to pay to him hereunder. The advisory services referred to in clause
(i) of the immediately preceding sentence shall consist of rendering advice concerning the business, affairs and management of the Company as requested by the Chief Executive Officer of the Company but the Executive shall not be required to devote more than five days (up to eight hours per day) each month to such services, which shall be performed at a time and place mutually convenient to

both parties. Subject to clause (iii) of the second preceding sentence, any income from such other employment shall not be applied to reduce the Company's obligations under this Agreement. The Company shall be entitled to deduct from all payments to be made to the Executive during the Disability Period pursuant to this Section 5 an amount equal to all disability payments received by the Executive during the Disability Period from Workmen's Compensation, Social Security and disability insurance policies maintained by the Company; provided, however, that for so long as, and to the extent that, proceeds paid to the Executive from such disability insurance policies are not includible in his income for federal income tax purposes, the Company's deduction with respect to such payments shall be equal to the product of (i) such payments and (ii) a fraction, the numerator of which is one and the denominator of which is one less the maximum marginal rate of federal income taxes applicable to individuals at the time of receipt of such payments. All payments made under this Section 5 after the Disability Date are intended to be disability payments, regardless of the manner in which they are computed. Except as otherwise provided in this
Section 5, the term of employment shall continue during the Disability Period and the Executive shall be entitled to all of the rights and benefits provided for in this Agreement except that, Section 4.2 shall not apply during the Disability Period and the term of employment shall end and the Executive shall cease to be an employee of the Company at the end of the Disability Period and shall not be entitled to notice and severance or to receive or be paid for any accrued vacation time or unused sabbatical.

6. Death. Upon the death of the Executive during the term of employment, this Agreement and all obligations of the Company to make any payments under Sections 3, 4 and 5 shall terminate except that (i) the Executive's estate (or a designated beneficiary) shall be entitled to receive, to the extent being received by the Executive immediately prior to his death, Base Salary and deferred compensation to the last day of the month in which his death occurs and bonus compensation (at the time bonuses are normally paid) based on the average of the annual bonuses in respect of the three years for which the annual bonus received by the Executive from the Company was the greatest (or if only two annual bonuses have been received, the average of such bonuses or the prior year's annual bonus if only one annual bonus has been received, or an amount equal to

90 percent of the annual bonus earned by the Company's Chief Executive Officer with respect to 1995, if no annual bonus has been received by the Executive), but prorated according to the number of whole or partial months the Executive was employed by the Company in such calendar year, and (ii) the Account shall be liquidated and revalued as provided in Annex A as of the date of the Executive's death (except that all taxes shall be computed and charged to the Account as of such date of death to the extent not theretofore so computed and charged) and the entire balance thereof (plus any amount due under the last paragraph of
Section A.6 of Annex A) shall be paid to the Executive's estate (or a designated beneficiary) in a single payment not later than 75 days following such date of death.

7. Life Insurance. Subject to the Executive's satisfactory completion of any applications and other documentation and any physical examination that may be required by the insurer, the Company shall obtain $6,000,000 face amount of split ownership, whole or universal life insurance on the life of the Executive, to be owned by the Executive or the trustees of a trust for the benefit of the Executive's spouse and/or descendants. The Executive shall use reasonable efforts to fulfill all requirements necessary to obtain such insurance. Until the death of the Executive, and irrespective of any termination of this Agreement except pursuant to Section 4.1, the Company shall pay all premiums on such policy and shall maintain such policy (without reduction of the face amount of the coverage). At the death of the Executive, or on the earlier surrender of such policy by the owner, the Executive agrees that the owner of the policy shall promptly pay to the Company an amount equal to the premiums on such policy paid by the Company (net of (i) tax benefits, if any, to the Company in respect of payments of such premiums, (ii) any amounts payable by the Company which had been paid by or on behalf of the Executive with respect to such insurance, (iii) dividends received by the Company in respect of such premiums, but only to the extent such dividends are not used to purchase additional insurance on the life of the Executive, and (iv) any unpaid borrowings by the Company on the policy), whether before, during or after the term of this Agreement. The owner of the policy from time to time shall execute, deliver and maintain a customary split dollar insurance and collateral assignment form, assigning to the Company the proceeds of such policy

but only to the extent necessary to secure the reimbursement obligation contained in the preceding sentence. The life insurance provided for in this
Section 7 shall be in addition to any other insurance hereafter provided by the Company on the life of the Executive under any group policy.

8. Other Benefits.

8.1 General Availability. To the extent that (a) the Executive is eligible under the general provisions thereof and (b) the Company maintains such plan or program for the benefit of its senior executives, during the term of employment and so long as the Executive is an employee of the Company, the Executive shall be eligible to participate in any pension, profit-sharing, stock option or similar plan or program and in any group insurance, hospitalization, medical, dental, accident, disability or similar plan or program of the Company now existing or established hereafter. In addition, the Executive shall be entitled during the term of employment and so long as the Executive is an employee of the Company, to receive other benefits generally available to all senior executives of the Company to the extent the Executive is eligi ble under the general provisions thereof, including, without limitation, to the extent maintained in effect by the Company for its senior executives, an automobile allowance and financial services.

8.2 Stock Options. The Compensation Committee of the Board of Directors (the "Committee") has approved the Company's commitment to grant to the Executive options to purchase shares of the Company's Common Stock in the amounts and at the times and in accordance with the other provisions set forth in Annex B attached hereto (the "Contract Options"), subject to the execution of this Agreement by the Executive. All Contract Options granted to the Executive shall be subject to substantially the same terms and conditions as options granted to other senior executives of the Company, except as otherwise provided herein or in Annex B. The Executive shall be eligible to receive grants of stock options in addition to the Contract Options in the discretion of the Committee.

8.3 Benefits After a Termination or Disability. During the period the Executive remains on the payroll of the Company after a termination pursuant to Section 4.2 and during the Disability Period the Executive shall continue to be eligible to receive the benefits required to be provided to the Executive under Section 8.1 to the extent such benefits are maintained in effect by the Company for its senior executives; provided, however, that except with respect to the Contract Options, the Executive shall not be entitled to any additional awards or grants under any stock option, restricted stock or other stock based incentive plan. The Executive shall continue to be an employee of the Company for purposes of any stock option and restricted shares agreements and any other incentive plan awards during the term of employment and until such time as the Executive shall leave the payroll of the Company. At the time the Executive's term of employment with the Company terminates and he leaves the payroll of the Company pursuant to the provisions of Section 4.1, 4.2, 4.6, 5 or 6, the Executive's rights to benefits and payments under any benefit plans or any insurance or other death benefit plans or arrangements of the Company or under any stock option, restricted stock, stock appreciation right, bonus unit, management incentive or other plan of the Company shall be determined, subject to the other terms and provisions of this Agreement, in accordance with the terms and provisions of such plans and any agreements under which such stock options, restricted stock or other awards were granted; provided, however, that notwithstanding the foregoing or the provisions of any plan or agreement, all stock options granted to the Executive by the Company shall become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2.

8.4 Payments in Lieu of Other Benefits. In the event the term of employment and the Executive's employment with the Company is terminated pursuant to Sections 4.1, 4.2, 5 or 6 (and regardless of whether the Executive elects (B) as provided in Section 4.2), the Executive shall not be entitled to notice and severance or to be paid for any accrued vacation time or unused sabbatical, the payments provided for in such Sections being in lieu thereof.

9. Protection of Confidential Information; Non- Compete. The provisions of Section 9.2 shall apply from the Effective Date through the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason. Except as otherwise provided therein, the provisions of Sections 9.1 and 9.3 shall apply from the Effective Date to the date that is three years after the event described in the preceding sentence.

9.1 Confidentiality Covenant. The Executive acknowledges that his employment by the Company (which, for purposes of this Section 9 shall mean Time Warner Inc. and its affiliates) will, throughout the term of employment, bring him into close contact with many confidential affairs of the Company, including information about costs, profits, markets, sales, products, key personnel, pricing policies, operational methods, technical processes and other business affairs and methods and other information not readily available to the public, and plans for future development. The Executive further acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character. The Executive further acknowledges that the business of the Company is international in scope, that its products are marketed throughout the world, that the Company competes in nearly all of its business activities with other Entities that are or could be located in nearly any part of the world and that the nature of the Executive's services, position and expertise are such that he is capable of competing with the Company from nearly any location in the world. In recognition of the foregoing, the Executive covenants and agrees:

9.1.1 The Executive shall keep secret all material confidential matters of the Company and shall not intentionally disclose such matters to anyone outside of the Company, either during or after the term of employment, except with the Company's written consent, provided that (i) the Executive shall have no such obligation to the extent such matters are or become publicly known other than as a result of the Executive's breach of his obligations hereunder and (ii) the Executive may, after giving prior notice to the Company to the extent practicable under the circumstances, disclose such matters to the extent required by applicable laws or governmental regulations or judicial or regulatory process;

9.1.2 At the Company's request and expense, the Executive shall deliver promptly to the Company, all memoranda, notes, records, reports and other documents (and all copies thereof) relating to the Company's business, which he obtained while employed by, or otherwise serving or acting on behalf of, the Company and which he may then possess or have under his control; and

9.1.3 If the term of employment is terminated pursuant to
Section 4.1 or 4.2, or ends as scheduled on the Term Date, for a period of one year after such termina tion, without the prior written consent of the Company, the Executive shall not solicit the employment of, and shall not cause any Entity of which he is an affiliate to solicit the employment of, any person who was a full-time executive employee of the Company at the date of such termination or within six months prior thereto. The parties agree that the restrictions set forth in the immediately preceding sentence shall not apply to any solicitation directed by the Executive at the public in general in publications available to the public in general or any contact which Executive can demonstrate was initiated by such employee.

9.2 Non-Compete. The Executive shall not, directly or indirectly, without the prior written consent of the Chief Executive Officer of the Company, render any services to any person or Entity or acquire any interest of any type in any Entity, that is in competition with the Company; provided, however, that the foregoing shall not be deemed to prohibit the Executive from
(a) acquiring, solely as an investment and through market purchases, securities of any Entity which are registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 and which are publicly traded, so long as he is not part of any control group of such Entity and such securities, if converted, do not constitute more than three percent (3%) of the outstanding voting power of that Entity, (b) acquiring, solely as an investment, any securities of an Entity (other than an Entity that has outstanding securities covered by the preceding clause (a)) so long as he remains a passive investor in such Entity and does not become part of any control group thereof and so long as such Entity is not, directly or through subsidiaries, in competition with the Company, or
(c) serving as a director of any Entity that is not

in competition with the Company. For purposes of the foregoing, a person or Entity shall be deemed to be in competition with the Company if such person or Entity engages in any line of business that is substantially the same as any line of operating business which the Company engages in, conducts or, to the knowledge of the Executive, has definitive plans to engage in or conduct.

9.3 Specific Remedy. In addition to such other rights and remedies as the Company may have at equity or in law with respect to any breach of this Agreement, if the Executive commits a material breach of any of the provisions of Section 9.1 or 9.2, the Company shall have the right and remedy to have such provisions specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

10. Ownership of Work Product. The Executive acknowledges that during the term of employment, he may conceive of, discover, invent or create inventions, improve ments, new contributions, literary property, material, ideas and discoveries, whether patentable or copyrightable or not (all of the foregoing being collectively referred to herein as "Work Product"), and that various business opportunities shall be presented to him by reason of his employment by the Company. The Executive acknowledges that all of the foregoing shall be owned by and belong exclusively to the Company and that he shall have no personal interest therein, provided that they are either related in any manner to the business (commercial or experimental) of the Company, or are, in the case of Work Product, conceived or made on the Company's time or with the use of the Company's facilities or materials, or, in the case of business opportunities, are presented to him for the possible interest or participation of the Company. The Executive shall (i) promptly disclose any such Work Product and business opportunities to the Company; (ii) assign to the Company, upon request and without additional compensation, the entire rights to such Work Product and business opportunities; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of his inventorship or creation in any appropriate case. The Executive agrees that he will not

assert any rights to any Work Product or business opportunity as having been made or acquired by him prior to the date of this Agreement except for Work Product or business opportunities, if any, disclosed to and acknowledged by the Company in writing prior to the date hereof. The Company hereby agrees that the Executive shall have all rights and interest in any biographical or autobiographical materials concerning the Executive's life, which materials shall be owned by and belong exclusively to the Executive and with respect to which the Company shall have no interest or rights therein.

11. Notices. All notices, requests, consents and other communications required or permitted to be given under this Agreement shall be effective only if given in writing and shall be deemed to have been duly given if delivered personally or sent by overnight courier, or mailed first-class, postage prepaid, by registered or certified mail, as follows (or to such other or additional address as either party shall designate by notice in writing to the other in accordance herewith):

11.1 If to the Company:

Time Warner Inc. 75 Rockefeller Plaza New York, New York 10019

Attention: Chief Executive Officer

(with a copy, similarly addressed but Attention: General Counsel)

11.2 If to the Executive, to his residence address set forth on the records of the Company.

12. General.

12.1 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of New York applicable to agreements made and to be performed entirely in New York.

12.2 Captions. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

12.3 Entire Agreement. This Agreement, including Annexes A and B, sets forth the entire agreement and understanding of the parties relating to the subject matter of this Agreement and supersedes all prior agreements, arrangements and understandings, written or oral, between the parties.

12.4 No Other Representations. No representa tion, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or be liable for any alleged representation, promise or inducement not so set forth.

12.5 Assignability. This Agreement and the Executive's rights and obligations hereunder may not be assigned by the Executive. The Company may assign its rights together with its obligations hereunder, in connection with any sale, transfer or other disposition of all or substantially all of its business and assets; and such rights and obligations shall inure to, and be binding upon, any successor to all or substantially all of the business and assets of the Company, whether by merger, purchase of stock or assets or otherwise. The Company shall cause such successor expressly to assume such obligations.

12.6 Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect such party's right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

12.7 Legal Fees. In addition to any obligations the Company may have under Section 3.8, the Company shall promptly pay, upon demand by the Executive, all legal fees, court costs, fees of experts, and other costs and

expenses when incurred by the Executive arising in connection with any actual, threatened or contemplated litigation or legal, administrative or other proceeding relating to this Agreement to which the Executive is or expects to become a party. Subject to any rights of the Executive under Section 3.8, if the Company or, if the Company is not a party to such litigation or proceeding, the party opposing the Executive, shall substantially prevail on the material issues involved in any such litigation or proceeding (but in no other case), then, after all rights of appeal have been exercised or lapsed, the Executive shall promptly repay to the Company all amounts previously paid to the Executive under this Section in respect of such litigation or proceeding, but without interest thereon.

12.8 Beneficiaries. Whenever this Agreement provides for any payment to the Executive's estate, such payment may be made instead to such beneficiary or beneficiaries as the Executive may designate by written notice to the Company. The Executive shall have the right to revoke any such designation and to redesignate a beneficiary or beneficiaries by written notice to the Company (and to any applicable insurance company) to such effect.

12.9 No Conflict. The Executive represents and warrants to the Company that this Agreement is legal, valid and binding upon the Executive and the execution of this Agreement and the performance of the Executive's obligations hereunder does not and will not constitute a breach of, or conflict with the terms or provisions of, any agreement or understanding to which the Executive is a party (including, without limitation, any other employment agreement). The Company represents and warrants to the Executive that this Agreement is legal, valid and binding upon the Company and the execution of this Agreement and the performance of the Company's obligations hereunder does not and will not constitute a breach of, or conflict with the terms or provisions of, any agreement or understanding to which the Company is a party.

12.10 Withholding Taxes. Payments made to the Executive pursuant to this Agreement shall be subject to withholding and social security taxes and other ordinary and customary payroll deductions.

25

12.11 No Offset. Neither the Company nor the Executive shall have any right to offset any amounts owed by one party hereunder against amounts owed or claimed to be owed to such party, whether pursuant to this Agreement or otherwise, and the Company and the Executive shall make all the payments provided for in this Agreement in a timely manner.

12.12 Severability. If any provision of this Agreement shall be held invalid, the remainder of this Agreement shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to equitable modification of the provision or application thereof held to be invalid. To the extent that it may effectively do so under applicable law, each party hereby waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect.

12.13 Definitions. The following terms are defined in this Agreement in the places indicated:

Account - Section 3.3
Account Retained Income - Section A.6 of Annex A affiliate - Section 4.2.3
Applicable Tax Law - Section A.5 of Annex A Base Salary - Section 3.1
cause - Section 4.1
Code - Section 4.2.2
Company - the first paragraph on page 1 and Section 9.1
Contract Options - Section 8.2 Disability Date - Section 5 Disability Period - Section 5 Effective Date - the first paragraph on page 1 eligible securities - Section A.1 of Annex A Entity - Section 3.6
Executive - the first paragraph in page 1 fair market value - Section A.1 of Annex A Investment Advisor - Section A.1 of Annex A Other Period Deferred Amount - Section A.6 of Annex A Pay-Out Period - Section A.6 of Annex A senior executives - Section 3.1 TBS - Section 2
Term Date - the second paragraph on page 1 term of employment - Section 1

Valuation Date - Section A.6 of Annex A

Video Division - Section 2 Work Product - Section 10

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

TIME WARNER INC.

    /s/ Gerald M. Levin
By _________________________________


/s/ R.E. Turner
____________________________________
R.E. Turner III

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Account, at the Company's option, shall either be actually invested and reinvested, or deemed invested and reinvested, in an account in securities selected from time to time by an investment advisor designated from time to time by the Company (the "Investment Advisor"), substantially all of which securities shall be "eligible securities". The designation from time to time by the Company of an Investment Advisor shall be subject to the approval of the Executive, which approval shall not be withheld unreasonably. "Eligible securities" are common and preferred stocks, warrants to purchase common or preferred stocks, put and call options, and corporate or governmental bonds, notes and debentures, either listed on a national securities exchange or for which price quotations are published in newspapers of general circulation, including The Wall Street Journal, and certificates of deposit. Eligible securities shall not include the common or preferred stock, any warrants, options or rights to purchase common or preferred stock or the notes or debentures of the Company or any corporation or other entity of which the Company owns directly or indirectly 5% or more of any class of outstanding equity securities. The Investment Advisor shall have the right, from time to time, to designate eligible securities which shall be either actually purchased and sold, or deemed to have been purchased or sold, for the Account on the date of reference. Such purchases may be made or deemed to be made on margin; provided that the Company may, from time to time, by written notice to the Executive and the Investment Advisor, limit or prohibit margin purchases in any manner it deems prudent and, upon three business days written notice to the Executive and the Investment Advisor, cause all eligible securities theretofore purchased or deemed purchased on margin to be sold or deemed sold. The Investment Advisor shall notify the Executive in writing of each transaction within five business days thereafter and shall render to the Executive written monthly reports as to the current status of his Account. In the case of any purchase, the Account shall be charged with a dollar amount equal to the quantity and kind of securities purchased or deemed to have been purchased multiplied by the fair market value of such securities on the date of reference and shall be credited with the quantity and

kind of securities so purchased or deemed to have been purchased. In the case of any sale, the Account shall be charged with the quantity and kind of securities sold or deemed to have been sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold or deemed to have been sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Account shall take place immediately upon the consummation of the transactions to which they relate. As used herein "fair market value" means either (i) if the security is actually purchased or sold by the Company on the date of reference, the actual purchase or sale price per security to the Company or (ii) if the security is not purchased or sold on the date of reference, in the case of a listed security, the closing price per security on the date of reference, or if there were no sales on such date, then the closing price per security on the nearest preceding day on which there were such sales, and, in the case of an unlisted security, the mean between the bid and asked prices per security on the date of reference, or if no such prices are available for such date, then the mean between the bid and asked prices per security on the nearest preceding day for which such prices are available. If no bid or asked price information is available with respect to a particular security, the price quoted to the Company as the value of such security on the date of reference (or the nearest preceding date for which such information is available) shall be used for purposes of administering the Account, including determining the fair market value of such security. The Account shall be charged currently with all interest paid or deemed payable by the Account with respect to any credit extended or deemed extended to the Account. Such interest shall be charged to the Account, for margin purchases actually made, at the rates and times actually paid by the Account and, for margin purchases deemed to have been made, at the rates and times then charged by an investment banking firm designated by the Company with which the Company does significant business. The Company may, in the Company's sole discretion, from time to time serve as the lender with respect to any margin transactions by notice to the then Investment Advisor and in such case interest shall be charged at the rate and times then charged by an investment banking firm designated by the Company with which the Company does significant business. Brokerage fees shall be charged to the Account, for transactions actually made, at the rates and times actually paid and, for

transactions deemed to have been made, at the rates and times then charged for transactions of like size and kind by an investment banking firm designated by the Company with which the Company does significant business.

A.2 Dividends and Interest. The Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held or deemed to be held therein. Dividends shall be credited as of the payment date. The Account shall similarly be credited with interest payable on interest bearing securities held or deemed to be held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Account shall be charged with the dollar amount of interest accrued to the date of purchase, and in the case of sales of such interest-bearing securities the Account shall be credited with the dollar amount of interest accrued to the date of sale. All dollar amounts of dividends or interest credited to the Account pursuant to this Section A.2 shall be charged with all taxes thereon deemed payable by the Company (as and when determined pursuant to Section A.5). The Investment Advisor shall have the same right with respect to the investment and reinvestment of net dividends and net interest as he has with respect to the balance of the Account.

A.3 Adjustments. The Account shall be equitably adjusted to reflect stock dividends, stock splits, recapitalizations, mergers, consolidations, reorganizations and other changes affecting the securities held or deemed to be held therein.

A.4 Obligation of the Company. The Company shall not be required to purchase, hold or dispose of any of the securities designated by the Investment Advisor; however, whether or not it elects to purchase or sell any such securities, such transactions shall be deemed to have been made and the Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, deemed payable by the Company and attributable to such transactions (in all cases net after any tax benefits that the Company would be deemed to derive from the payment thereof, as and when determined pursuant to Section A.5), but no other costs of the Company. The only obligation of the Company is its contractual obligation to make payments

to the Executive measured as set forth below. To the extent that the Company, in its discretion, purchases or holds any of the securities designated by the Investment Advisor, the same shall remain the sole property of the Company, subject to the claims of its general creditors, and shall not be deemed to form part of the Account. Neither the Executive nor his legal representative nor any beneficiary designated by him shall have any right, other than the right of an unsecured general creditor, against the Company in respect of any portion of the Account.

A.5 Taxes. The Account shall be charged with all federal, state and local taxes deemed payable by the Company with respect to income recognized upon the dividends and interest received or deemed to have been received by the Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are deemed to have been sold pursuant to Section A.1 or A.6. The Account shall be credited with the amount of the tax benefit received or deemed to be received by the Company as a result of any payment of interest actually made or deemed to be made pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made or deemed to be made pursuant to Section A.1. If any of the sales of the securities which are deemed to have been sold pursuant to Section A.1 or A.6 results in a loss to the Account, such net loss shall be deemed to offset the income and gains referred to in the second preceding sentence (and thus reduce the charge for taxes referred to therein) to the extent then permitted under the Internal Revenue Code of 1986, as amended from time to time, and under applicable state and local income and franchise tax laws (collectively referred to as "Applicable Tax Law"); provided, however, that for the purposes of this Section A.5 the Account shall, except as provided in the third following sentence, be deemed to be a separate corporate taxpayer and the losses referred to above shall be deemed to offset only the income and gains referred to in the second preceding sentence. Such losses shall be carried back and carried forward within the Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Account. For the purposes of this Section A.5, all charges and credits to the Account for taxes shall be deemed to be made as of the end of the Company's taxable year during which the transactions, from which the liabilities for such

taxes are deemed to have arisen, are deemed to have occurred. Notwithstanding the foregoing, if and to the extent that in any year there is a net loss in the Account that cannot be offset against income and gains in any prior year, then an amount equal to the tax benefit or deemed tax benefit to the Company of such net loss (after such net loss is reduced by the amount of any net capital loss of the Account for such year) shall be credited to the Account on the last day of such year. If and to the extent that any such net loss of the Account shall be utilized to determine a credit to the Account pursuant to the preceding sentence, it shall not thereafter be carried forward under this Section A.5. For purposes of determining taxes payable by the Company under any provision of this Annex A it shall be assumed that the Company is a taxpayer and pays all taxes at the maximum marginal rate of federal income taxes and state and local income and franchise taxes (net of assumed federal income tax benefits) applicable to business corporations and that all of such dividends, interest, gains and losses are allocable to its corporate headquarters, which are currently located in New York City.

A.6 Payments. Subject to the provisions of Section A.7, payments of deferred compensation shall be made as provided in this Section A.6. Deferred compensation shall be paid monthly for a period of 60 months (the "Pay-Out Period") commencing on the first day of the month after the later of (i) the Term Date and (ii) the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason. On each payment date, the Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held or deemed to be held in the Account shall be not less than the payment then due and the Company may select the securities to be sold or deemed sold to provide such cash if the Investment Advisor shall fail to do so on a timely basis. The amount of any taxes payable with respect to any such sales shall be computed, as provided in Section A.5 above, and deducted from the Account, as of the end of the taxable year of the Company during which such sales are deemed to have occurred. Solely for the purpose of determining the amount of monthly payments during the Pay-Out Period, the Account shall be valued on the fifth trading day preceding the first monthly payment of each year of the Pay-Out Period, or more frequently at the Company's election (the "Valuation Date"), by adjusting all of the securities held or

deemed to be held in the Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company) and by deducting from the Account the amount of all outstanding indebtedness and all amounts with respect to which the Executive has elected pursuant to clause (ii) of Section A.7 to receive payments at times different from the time provided in this Section A.6 (the "Other Period Deferred Amount"). The extent, if any, by which the Account, valued as provided in the immediately preceding sentence (but not reduced by the Other Period Deferred Amount to the extent not theretofore distributed), exceeds the aggregate amount of credits to the Account pursuant to Sections 3.3 and 3.4 of the Agreement as of each Valuation Date and not theretofore distributed or deemed distributed pursuant to this Section A.6 is herein called "Account Retained Income". The amount of each payment for the year, or such shorter period as may be determined by the Company, of the Pay-Out Period immediately succeeding such Valuation Date, including the payment then due, shall be determined by dividing the aggregate value of the Account, as valued and adjusted pursuant to the second preceding sentence, by the number of payments remaining to be paid in the Pay-Out Period, including the payment then due; provided that each payment made shall be deemed made first out of Account Retained Income (to the extent remaining after all prior distributions thereof since the last Valuation Date). The balance of the Account (excluding the Other Period Deferred Amount), after all the securities held or deemed to have been held therein have been sold or deemed to have been sold and all indebtedness liquidated, shall be paid to the Executive in the final payment, which shall be decreased by deducting therefrom the amount of all taxes attributable to the sale of any securities held or deemed to have been held in the Account since the end of the preceding taxable year of the Company, which taxes shall be computed as of the date of such payment.

If this Agreement is terminated by the Company pursuant to
Section 4.1 or if the Executive terminates this Agreement or the term of employment in breach of this Agreement, the Account shall be valued as of the later of (i) the Term Date or (ii) twelve months after termination of the Executive's employment with the Company, and the balance of the Account, after the securities held or deemed to have been held therein have been sold or deemed to have been sold and all related indebtedness liquidated, shall be paid to the

Executive as soon as practicable and in any event within 75 days following the later of such dates in a final lump sum payment, which shall be decreased by deducting therefrom the amount of all taxes attributable to the sale of any securities held or deemed to have been held in the Account since the end of the preceding taxable year of the Company, which taxes shall be computed as of the date of such payment. Payments made pursuant to this Section A.6 shall be deemed made first out of Account Retained Income.

If the Executive becomes disabled within the meaning of Section 5 of the Agreement and is not thereafter returned to full-time employment with the Company as provided in said Section 5, then deferred compensation shall be paid monthly during the Pay-Out Period commencing on the first day of the month following the end of the Disability Period in accordance with the provisions of the first paragraph of this Section A.6.

If the Executive shall die at any time whether during or after the term of employment, the Account shall be valued as of the date of the Executive's death and the balance of the Account shall be paid to the Executive's estate or beneficiary within 75 days of such death in accordance with the provisions of the second preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Account and at the time of the final payment from the Account, the Company shall compute and shall credit to the Account, the amount of the tax benefit assumed to be received by it from the payment to the Executive of amounts of Account Retained Income during such taxable year or since the end of the last taxable year, as the case may be. No additional credits shall be made to the Account pursuant to the preceding sentence in respect of the amounts credited to the Account pursuant to the preceding sentence. Notwithstanding any provision of this Section A.6, the Executive shall not be entitled to receive pursuant to this Annex A an aggregate amount that shall exceed the sum of (i) all credits made to the Account pursuant to Sections 3.3 and 3.4 of the Agreement to which this Annex is attached, (ii) the net cumulative amount (positive or negative) of all income, gains, losses, interest and expenses charged or credited to the Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits

and charges to the Account with respect to the tax benefits or burdens thereof, and (iii) an amount equal to the tax benefit to the Company from the payment of the amount (if positive) determined under clause (ii) above; and the final payment(s) otherwise due may be adjusted or eliminated accordingly. In determining the tax benefit to the Company under clause (iii) above, the Company shall be deemed to have made the payments under clause (ii) above with respect to the same taxable years and in the same proportions as payments of Account Retained Income were actually made from the Account. Except as otherwise provided in this paragraph, the computation of all taxes and tax benefits referred to in this Section A.6 shall be determined in accordance with Section
A.5 above.

A.7 Other Payment Methods. Notwithstanding the foregoing provisions of this Annex A, the Executive may, prior to the commencement of any calendar year elect by written notice to the Company to cause (i) all or any portion of the amounts otherwise to be credited to the Account in such year under Section 3.3 of the Agreement not to be so credited but to be paid to the Executive on the date(s) such credits otherwise would have been made thereunder and/or (ii) all or any portion of the amounts to be credited to the Account under Section 3.3 of the Agreement in such year (after giving effect to clause
(i) above) to be payable from the Account at times different from those provided in Section A.6 above but not earlier than the dates on which such amounts were to be credited to the Account.

No. of Shares                              Exercise Price
-------------                              --------------
650,000                             fair market value*
325,0000                            125% of fair market value*
325,0000                            150% of fair market value*

To be granted on or before each of the first four anniversaries of the Effective Date:

Options to purchase not less than 300,000 shares of Common Stock, to be awarded at exercise prices no less favorable to the Executive (on a percentage basis) than those most recently granted to the Chief Executive Officer of the Company.

All Contract Options shall have a term of 10 years from the date of grant and, upon becoming exercisable, shall remain exercisable by the Executive (or his estate or beneficiary) for the full ten-year term thereof; provided, however, that the Contract Options shall (a) terminate immediately if the Executive's employment is terminated for "cause" pursuant to Section 4.1 of the Employment Agreement to which this Annex B is attached or pursuant to any similar provision of any successor employment agreement and (b) terminate one year after the death of the Executive (but not beyond the option term). All Contract Options will become vested and exercisable in installments of one-third on each of the first three anniversaries of the date of grant except that Contract Options granted after termination of the term of employment pursuant to
Section 4.2 will vest in full on the date of grant and will become exercisable in full twelve months thereafter. All Contract Options will become immediately exercisable in full if the Executive's employment terminates by reason of death or Total Disability.

* In each case, fair market value is determined at date of grant.

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated as of May 15, 1996, between TIME WARNER INC., a Delaware corporation (the "Company"), and Timothy A. Boggs (the "Executive").

The Company currently employs the Executive on a full-time basis pursuant to an Employment Agreement dated as of February 1, 1992 (the "Prior Agreement") which expired on December 31, 1995. The Company has continued to employ the Executive pursuant to the terms of the Prior Agreement and desires to continue to secure the services of the Executive on a full-time basis subject to the terms and conditions set forth in this Agreement, and the Executive is willing to provide such services on and subject to the terms and conditions set forth in this Agreement. The parties therefore agree as follows:

1. Term of Services. The Executive's "term of employment", as this phrase is used throughout this Agreement, shall be for the period beginning May 15, 1996 (the "Effective Date") and ending on December 31, 2000 (the "Term Date") subject, however, to earlier termination as expressly provided herein.

2. Employment. The Company shall employ the Executive, and the Executive shall serve, as Senior Vice President, Government and Public Affairs of the Company during the term of employment, and the Executive shall have the authority, functions, duties, powers and responsibilities normally associated with such position and as the Board of Directors, the Chief Executive Officer, the President or the Senior Vice President-Communications of the Company may from time to time delegate to the Executive in addition thereto. The Executive agrees, subject to his election as such and without additional compensation, to serve during the term of employment in such particular additional offices of comparable stature and responsibility to which he may be elected from time to time in the Company and its subsidiaries and to serve as a director and as a member of any committee of the Board of Directors of the Company and its subsidiaries. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis, (ii) he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, and shall report only to the Senior Vice President - Communications of the Company, the Company's Board of Directors, if so requested, and to such other corporate officer(s) of the Company more senior than the Executive as the Board of Directors shall determine, (iii) he shall have no other employment and, without the prior written consent of the Chief Executive Officer or

the President of the Company, no outside business activities which require the devotion of substantial amounts of the Executive's time and (iv) unless the Executive otherwise consents, the headquarters for the performance of his services shall be the principal executive offices of the Company in the greater Washington, D.C. area, subject to such reasonable travel as the performance of his duties in the business of the Company may require. The foregoing shall be subject to the policies of the Company, as in effect from time to time, regarding vacations, holidays, illness and the like and shall not prevent the Executive from devoting such time to his personal affairs as shall not interfere with the performance of his duties hereunder.

During the term of employment and so long as the Executive remains on the payroll of the Company, the Executive shall not, directly or indirectly, without the prior written consent of the Chief Executive Officer or the President of the Company, render any services to any other person, or acquire any interest of any type in any other person, that might be deemed in competition with the Company or any of its subsidiaries or affili- ates or in conflict with his full-time, exclusive position as a senior executive officer of the Company; provided, however, that the foregoing shall not be deemed to prohibit the Executive from (a) acquiring, solely as an investment and through market pur- chases, securities of any corporation which are registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934 and which are publicly traded, so long as he is not part of any control group of such corporation and such securities, if converted, do not constitute more than one percent (1%) of the outstanding voting power of that public company, (b) acquiring, solely as an investment, any securities of a partnership, trust, corporation (other than a corporation that has outstanding securities covered by the preceding clause (a)) or other entity so long as he remains a passive investor in such entity and does not become part of any control group thereof and so long as such entity is not, directly or indirectly, in competition with the Company or any of its subsidiaries or affiliates, or (c) serving as a director of any other public company that is not in competition with the Company or any of its subsidiaries or affiliates. For purposes of the foregoing, a person or entity shall be deemed to be in competition with the Company or any of its subsidiaries or affiliates if he or it engages in any line of business that is substantially the same as either (i) any line of operating business which the Company or any of its subsidiaries or affiliates engages in, conducts or, to the knowledge of the Executive, has definitive plans to engage in or conduct during the term of employment, or (ii) any operating business that is engaged in or conducted by the Company or any of its subsidiaries or affiliates during the term of employment and as to which, to the knowledge of the Executive, the Company or any of its subsidiaries or affiliates covenants in writing, in connection with the disposition of such business, not to compete therewith (in each case, a "Competitive Entity").

3. Compensation.

3.1 Base Salary. The Company shall pay or cause to be paid to the Executive a base salary of not less than $300,000 per annum during the term of employment (the "Base Salary"). The Company may increase, but not decrease, the Base Salary at any time and from time to time during the term of employment and upon each such increase the term "Base Salary" shall mean such increased amount. Base Salary shall be payable in monthly or more frequent installments in accordance with the Company's regular payroll practices for senior executives of the Company.

3.2 Bonus. In addition to Base Salary, the Executive shall be eligible to receive an annual cash bonus based on the performance of the Company and of the Executive as determined by the Compensation Committee of the Company's Board of Directors or the Company's Chief Executive Officer, President or Senior Vice President-Communications, as the case may be. The Executive's target bonus shall be 100% of the Executive's Base Salary but the Executive acknowledges that the Executive's actual bonus will vary depending upon the performance of the Company and the Executive. The Company may increase, but not decrease, the target bonus from time to time. The Company's determination of the amount, if any, of annual bonuses to be paid to the Executive under this Agreement shall be final and conclusive except as otherwise provided herein. Payments of any bonus compensation under this Section 3.2 shall be made in accordance with the Company's then current practices and policies with respect to other senior executives of the Company.

3.3 Deferred Compensation. In addition to Base Salary and bonus as set forth in Sections 3.1 and 3.2, the Executive will be credited with deferred compensation which shall be determined and paid out as provided in this Agreement and in Annex A hereto. During the term of employment, the Company shall credit to a special account maintained on the Company's books for the Executive (the "Account"), monthly, an amount equal to 25% of one-twelfth of Executive's then annual Base Salary. If a lump sum payment is made pursuant to
Section 4.2.2, 4.2.3 or 4.3 hereof, the Company shall credit to the Account at the time of such payment an amount equal to 25% of any portion of such lump sum payment attributable to Base Salary. The Account will be maintained by the Company in accordance with the terms of this Agreement and Annex A until the full amount which the Executive is entitled to receive therefrom has been paid in full.

3.4 Deferred Bonus. In addition to any other deferred bonus plan in which the Executive may be entitled to participate, the Executive may elect by written notice delivered to the Company as of the Effective Date or at least 15 days prior to the commencement of any subsequent calendar year during the term of employment during which an annual cash bonus would otherwise accrue

or to which it would relate, to defer payment of and to have the Company credit to the Account all or any portion of the Executive's bonus for such year. Any such election shall only apply to the calendar year during the term of employment with respect to which such election is made and a new election shall be required with respect to each successive calendar year during the term of employment.

3.5 Prior Account. The parties confirm that the Company has maintained a deferred compensation account (the "Prior Account") for the Executive in accordance with the Prior Agreement through the Effective Date. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Account and shall continue to be maintained by the Company in accordance with this Agreement. All prior credits to the Prior Account shall be deemed to be credits made under this Agreement, all "Account Retained Income" thereunder shall be deemed to be Account Retained Income under this Agreement and all increases or decreases to the Prior Account as a result of income, gains, losses and other changes shall be deemed to have been made under this Agreement.

3.6 Reimbursement. The Company shall pay or reim- burse the Executive for all reasonable expenses actually incurred or paid by the Executive during the term of employment in the performance of his services hereunder upon presentation of expense statements or vouchers or such other supporting information as the Company may customarily require of its senior executives.

3.7 No Anticipatory Assignments. Except as specifically contemplated hereunder (including Section 12.8 and the life insurance policies and benefit plans referred to herein), neither the Executive, his legal representative nor any beneficiary designated by him shall have any right, without the prior written consent of the Company, to assign, transfer, pledge, hypothecate, anticipate or commute any payment due in the future to such person pursuant to any provision of this Agreement, and any attempt to do so shall be void and will not be recognized by the Company.

3.8 Indemnification. The Executive shall be entitled throughout the term of employment in his capacity as an officer or director of the Company or any of its subsidiaries or a member of the board of representatives or other governing body of any partnership or joint venture in which the Company has an equity interest (and after the term of employment to the extent relating to his service as such officer, director or member) to the benefit of the indemnification provisions contained on the date hereof in the Certificate of Incorporation and By-Laws of the Company (not including any amendments or additions that limit or narrow, but including any that add to or broaden, the protection afforded to the Executive by those provisions), to the extent not prohibited by applicable law at the time of the assertion of any liability against the Executive.

4. Termination.

4.1 Termination for Cause. The Company may termi- nate the term of employment and all of the Company's obligations hereunder, other than its obligations set forth below in this Section 4.1, for "cause" but only if the term of employment has not previously been terminated pursuant to any other provision of this Agreement. Termination by the Company for "cause" shall mean termination by the Company's Board of Directors (or a Committee thereof), Chief Executive Officer or President (as the case may be) because of the Executive's conviction (treating a nolo contendere plea as a conviction) of a felony (whether or not any right to appeal has been or may be exercised) or willful refusal without proper cause to perform his obligations under this Agreement or because of the Executive's material breach of any of the covenants provided for in Section 9. Such termination shall be effected by notice thereof delivered by the Company to the Executive and shall be effective as of the date of such notice; provided, however, that if (i) such termination is because of the Executive's willful refusal without proper cause to perform any one or more of his obligations under this Agreement, (ii) such notice is the first such notice of termination for any reason delivered by the Company to the Executive under this Section 4.1, and (iii) within 15 days following the date of such notice the Executive shall cease his refusal and shall use his best efforts to perform such obligations, the termination shall not be effective.

In the event of termination by the Company for cause in accordance with the foregoing procedures, without prejudice to any other rights or remedies that the Company may have at law or equity, the Company shall have no further obligations to the Executive other than (i) to pay Base Salary and make credits of deferred compensation to the Account accrued through the effective date of termination, (ii) to pay any annual bonus pursuant to Sec- tion 3.2 to the Executive in respect of the year prior to the year in which such termination is effective, in the event such annual bonus has been determined but not yet paid as of the date of such termination and (iii) with respect to any rights the Executive has under Section 8 through the effective date of termination (except as may be otherwise specifically provided in any such plan or program) or any rights which the Executive has in respect of amounts credited to the Account through the effective date of termination or pursuant to any insurance or other benefit plans or arrangements of the Company maintained for the benefit of its senior executives. The Executive hereby disclaims any right to receive a pro rata portion of the Executive's annual bonus with respect to the year in which such termination occurs. The last paragraph of Section 2, the last sentence of Section 3.3 and Sections 3.6, 3.8 and 9 through 12 and Annex A shall survive any termination pursuant to this Section 4.1.

4.2 Termination by Executive for Material Breach by the Company and Wrongful Termination by the Company. The Executive shall have the right, exercisable by notice to the Company, to terminate the term of employment effective 15 days after the giving of such notice, if, at the time of such notice, the Company shall be in material breach of its obligations hereunder; provided, however, that, with the exception of clause (i) below, this Agreement shall not so terminate if such notice is the first such notice of termination delivered by the Executive pursuant to this Section 4.2 and within such 15-day period the Company shall have cured all such material breaches of its obligations hereunder. The parties acknowledge and agree that a material breach by the Company shall include, but not be limited to, (i) the Company failing to cause the Executive to remain as Senior Vice President Government and Public Affairs of the Company; (ii) the Executive being required to report to persons other than those specified in Section 2; (iii) the Company violating the provisions of Section 2 with respect to the Executive's authority, functions, duties, powers or responsibilities (whether or not accompanied by a change in title); and (iv) unless the Executive otherwise consents, the Company requiring the Executive's primary services to be rendered in an area other than at the Company's principal offices in the greater Washington, D.C. area and (v) the Company failing to cause the successor to all or substantially all of the business and assets of the Company expressly to assume the obligations of the Company under this Agreement.

The parties agree that in the event of a termination pursuant to this Section 4.2, or in the event of a termination of this Agreement or the term of employment by the Company in breach of this Agreement, the Executive shall be entitled to elect, within 30 days after notice of termination is given by either party, either (A) to cease being an employee of the Company and receive the lump sum payment (and credits) described in Section 4.2.2 or (B) to remain an employee of the Company as provided in Section 4.2.3. After the Executive makes such election, the following provisions shall apply:

4.2.1 Regardless of the election made by the Executive, (i) the Executive shall have no further obligations or liabilities to the Company whatsoever, except that the last paragraph of Section 2, Sections 3.8, 4.4 and 4.5, and Sections 6 through 12 and Annex A shall survive such termination and
(ii) the Executive shall be entitled to receive any earned and unpaid Base Salary and deferred compensation accrued through the effective date of such termination and a pro rata portion of the Executive's annual bonus for the year in which such termination occurs through the date of such termination, based on the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) received by the Executive from the Company for the two calendar years immediately preceding the year of termination, provided that all or a portion of such pro rata bonus shall be

credited to the Account in accordance with any timely deferral election the Executive may previously have made pursuant to Section 3.4 hereof.

4.2.2 In the event the Executive shall make the election provided in clause (A) above, the Company shall pay to the Executive as damages (or credit to the Account with respect to Section 3.3) within 30 days thereafter in a lump sum (discounted as provided in the immediately following sentence) all amounts otherwise payable (whether or not deferred) pursuant to Section 3 for the year in which such termination occurs and for each subsequent year of the term of employment (assuming that annual bonuses are required to be paid for each such year), with the annual bonuses due the Executive in respect of the balance of the term of employment being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) received by the Executive from the Company (whether or not deferred) for the two calendar years immediately preceding the year of termination; provided, however, that for purposes of this Section 4.2.2, the term of employment shall be deemed to end on the later of (a) the date set forth in Section 1 or (b) the date which is one year from the date of such termination. Any payments required to be made to the Executive upon such termination in respect of Sections 3.1 and 3.2 and the credit to the Account provided for in the penultimate sentence of Section 3.3 shall be discounted to present value as of the date of payment from the times at which such amounts would have been paid absent any such termination at an annual discount rate for the relevant periods equal to 120% of the "applicable Federal rate" (within the meaning of Section 1274(d) of the Internal Revenue Code of 1986 (the "Code")), in effect on the date of such termination, compounded semi-annually, the use of which rate is hereby elected by the parties hereto pursuant to Treas. Reg. ss.1.280G-1 Q/A 32 (provided that, in the event such election is not permitted under Section 280G of the Code and the regulations thereunder, such other rate determined as of such other date as is applicable for determining present value under Section 280G of the Code shall be used).

4.2.3 In the event the Executive shall make the election provided in clause (B) above, the Executive shall remain an employee of the Company until the later of (a) the Term Date and (b) the date that is one year after the date of termination of the Executive's employment under this Section 4.2 and during such period the Executive shall be entitled to receive, whether or not he becomes disabled during such period, but subject to Section 5 hereof,
(i) Base Salary at an annual rate equal to his Base Salary in effect immediately prior to the notice of termination, (ii) an annual bonus (subject to deferral hereunder) in respect of each calendar year during such period equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) received by the Executive from the

Company (whether or not deferred) for the two calendar years immediately preceding the year of termination and (iii) deferred compensation as provided in
Section 3.3; provided, however, that if the Executive accepts full-time employment with any other corporation, partnership, trust, government agency or body or other entity during such period or notifies the Company in writing of his intention to terminate his employment during such period, the Executive shall cease to be an employee of the Company effective upon the commencement of such employment, or the effective date of such termination as specified by the Executive in such notice, and shall be entitled to receive as damages within 30 days after such commencement or effective date, a lump sum cash payment (discounted as provided in Section 4.2.2) for the balance of the Base Salary, deferred compensation (which shall be credited to the Account as provided in the penultimate sentence of Section 3.3) and annual bonuses (assuming no deferral) that the Executive would have been entitled to receive pursuant to this Section 4.2.3 had the Executive remained on the Company's payroll until the end of the period described in the first sentence of this Section 4.2.3. Notwithstanding the preceding sentence, if the Executive accepts employment with any not-for-profit entity, then the Executive shall be entitled to remain an employee of the Company and receive the payments as provided in the first sentence of this Section 4.2.3; and the Executive shall not be entitled to receive such lump sum cash payment if he accepts full-time employment with any subsidiary or affiliate of the Company. For purposes of this Agreement, the term "affiliates" shall mean any entity which, directly or indirectly, controls, is controlled by, or is under common control with, the Company.

4.2.4 In the event the Executive shall make the election provided in clause (B) above, then during the period the Executive remains on the payroll of the Company, the Executive will continue to be eligible to receive the benefits required to be provided to the Executive under this Agreement to the extent such benefits are maintained in effect by the Company for its senior executives; provided, however, the Executive shall not be entitled to any additional awards or grants under any stock option, restricted stock or other stock based incentive plan. In the event of a termination of this Agreement pursuant to the terms hereof, the Executive shall continue to be an employee of the Company for purposes of any stock option and restricted share agreements and any other incentive plan awards until such time as the Executive shall leave the payroll of the Company.

4.2.5 At the time the Executive shall terminate his employment and leave the payroll of the Company pursuant to the provisions of this Section 4.2, the Executive's rights to benefits and payments under any insurance or other death benefit plans or arrangements of the Company or under any stock option, restricted stock, stock appreciation right, bonus unit, management incentive or other plan of the Company shall be

determined, subject to the other terms and conditions of this Agreement, in accordance with the terms and provisions of such Plans and any agreements under which such stock options, restricted stock or other awards were granted; provided, however, that notwithstanding the foregoing or any more restrictive provisions of any such plan or agreement, if the Executive leaves the payroll of the Company as a result of a termination pursuant to Section 4.2, then all stock options granted to the Executive by the Company (i) shall become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2 and (ii) shall remain exercisable (but not beyond the expiration of the option term) until three months after the Term Date.

4.2.6 The Executive's rights to receive deferred compensation, and the Company's obligations with respect to the maintenance of the Account and the payment of such deferred compensation, shall be governed by the provisions of Section 3.3 and Annex A.

4.2.7 Any obligation of the Executive to mitigate his damages pursuant to Section 4.5 shall not be a defense or offset to the Company's obligation to pay the Executive in full the damages provided in Section 4 hereof, as the case may be, at the time provided therein or the timely and full performance of any of the Company's other obligations under this Agreement.

4.3 End of Term of Employment. At least 120 days prior to the Term Date, the Company and the Executive shall commence discussions regarding a renewal or extension of this Agreement on terms and conditions mutually agreeable to the parties. If at the Term Date, the parties have not agreed to an extension or renewal of this Agreement or on the terms of a new employment agreement and no Disability Period is in effect, then either party may terminate the Executive's employment on 60 days written notice to the other party, which notice may be delivered at any time on or after the November 1st immediately preceding the Term Date. If the Executive shall cause his employment with the Company to terminate on or after the Term Date, then the Executive shall receive Base Salary and deferred compensation through the effective date of termination and a pro rata bonus for the year in which such termination occurs calculated as provided in Section 4.2.1; provided, however, that if the Company has changed the terms or conditions of the Executive's employment from those provided for in this Agreement such that the Executive would have been able to terminate the term of employment pursuant to Section 4.2 if such Section 4.2 had been applicable at the time (without giving effect to any cure right of the Company), then the Executive shall be entitled to the additional benefits described in the next sentence. If the Company shall cause the Executive's employment to terminate on or after the Term Date for any reason (other than cause as defined in Section 4.1, in which case Section 4.1 shall apply, and other than for death or disability, in which case Section 5 or 6

shall apply), then in lieu of the provisions of Section 4.2, the Executive shall be entitled to receive Base Salary and deferred compensation through the effective date of such termination and a pro rata bonus for the year in which such termination occurs calculated as provided in Section 4.2.1 and shall be entitled to elect by delivery of written notice to the Company, within 30 days after such notice of termination is given, either (A) to cease being an employee of the Company and receive a lump sum payment (and credits) as provided in
Section 4.3.2 or (B) remain an employee of the Company for a period of twelve months pursuant to Section 4.3.3 and receive the payments (and credits) provided in Section 4.3.3. The payments described in this Section 4.3 are in addition to any annual bonus otherwise payable pursuant to Section 3.2 hereof with respect to the last calendar year of the term of employment, which bonus shall be paid in accordance with the Company's then current practices and policies with respect to other senior executives. After the Executive makes such election, the following provisions shall apply:

4.3.1 Regardless of the election made by the Executive, at the end of the 60-day notice period provided for in the first sentence of Section 4.3 the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 3.8, 4.4 and 4.5 and Sections 6 through 12 and Annex A shall survive such termination.

4.3.2 In the event the Executive shall make the election provided in clause (A) above, the Company shall pay the Executive (or credit to the Account with respect to Section 3.3) in a lump sum at the end of the 60-day notice period provided for in the first sentence of Section 4.3 an amount (discounted as provided in Section 4.2.2) equal to the sum of (i) one year's Base Salary, (ii) the annual amount of deferred compensation to be credited to the Account pursuant to Section 3.3, and (iii) an amount equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) received by the Executive from the Company (or credited to the Account) for the two calendar years immediately preceding the year of termination.

4.3.3 In the event the Executive shall make the election provided in clause (B) above, the Executive shall remain an employee of the Company until the date which is twelve months after the end of the 60-day period referred to in the first sentence of Section 4.3 and during such period the Executive shall be entitled to receive, whether or not he thereafter becomes disabled during such period but subject to Section 5, (i) salary at an annual rate equal to the Base Salary, (ii) credits to the Account of deferred compensation as provided in Section 3.3, and (iii) an annual bonus (all or any portion of which may be deferred by the Executive pursuant to Section 3.4) equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) received by the Executive from the Company

(or credited to the Account) for the two calendar years immediately preceding the year of termination. Except as provided in the next sentence, if the Executive accepts full-time employment with any other entity during such twelve-month period or notifies the Company in writing of his intention to leave the payroll of the Company during such period, the Executive shall cease to be an employee of the Company effective upon the commencement of such employment or the effective date of such termination as specified by the Executive in such notice, whichever is applicable, and shall be entitled to receive a lump sum payment within 30 days after such commencement or such effective date in an amount (discounted as provided in the second sentence of Section 4.2.2) equal to the balance of the Base Salary, deferred compensation (which shall be credited to the Account as provided in the penultimate sentence of Section 3.3.1) and regular annual bonuses the Executive would have been entitled to receive pursuant to this Section 4.3.3 had the Executive remained on the Company's payroll until the end of such twelve-month period. Notwithstanding the preceding sentence, if the Executive accepts employment with any not-for-profit entity, then the Executive shall be entitled to remain an employee of the Company and receive the payments as provided in the first sentence of this Section 4.3.3; and if the Executive accepts full-time employment with any affiliate of the Company, then the payments provided for in this Section 4.3.3 shall cease and the Executive shall not be entitled to any such lump sum payment.

4.4 Release. In partial consideration for and as an express condition of, the Company's obligation to make the payments described in Sections 4.2.2, 4.2.3 and 4.3, the Company shall be entitled to require the Executive to execute and deliver to the Company a release in substantially the form attached hereto as Annex B. If the Company so elects, it shall deliver such release to the Executive within 10 days after written notice of termination is delivered pursuant to Section 4.2 or 4.3, and the Executive shall execute and deliver such release to the Company within 21 days after receipt thereof. If the Executive elects not to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke the Executive's consent to such release as provided therein, the Executive's employment with the Company shall terminate as provided in Section 4.2 or 4.3, but the Executive shall receive, in lieu of the payments provided for in said Section 4.2 or 4.3, a lump sum cash payment in an amount determined in accordance with the personnel policies of the Company relating to notice and severance applicable to employees with the length of service and compensation level of the Executive.

4.5 Mitigation. In the event of the termination of this Agreement pursuant to Section 4.2 or 4.3, or in the event of the termination of this Agreement or the term of employment by the Company in breach of this Agreement, the Executive shall not be required to seek other employment in order to mitigate his damages

hereunder; provided, however, that, notwithstanding the foregoing, if there are any damages hereunder by reason of the events of termination described above which are "contingent on a change" (within the meaning of Section 280G(b)(2)(A)(i) of the Code), the Executive shall be required to mitigate such damages hereunder, including any such damages theretofore paid, but not in excess of the extent, if any, necessary to prevent the Company from losing any tax deductions to which it otherwise would be entitled in connection with such damages if they were not so "contingent on a change". In addition to any obligation under the preceding sentence, and without duplication of any amounts required to be paid to the Company thereunder, if any such termination occurs and the Executive, whether or not required to mitigate his damages under the preceding sentence, thereafter obtains other employment with any entity other than a not-for-profit organization or a governmental body or agency, the total cash salary and bonus received in connection with such other employment, whether paid to him or deferred for his benefit, for services through the Term Date or during the one-year period referred to in Section 4.2 or 4.3, whichever is later, in each case up to an amount equal to (x) the payment actually received by or for the account of the Executive with respect to Base Salary, annual bonus under Section 3.2 and deferred compensation under
Section 3.3 for such period, minus (y) the amount of severance the Executive would have received in accordance with the personnel policies of the Company if the Executive had been job eliminated, shall reduce, pro tanto, any amount which the Company would otherwise be required to pay to him as a result of such termination and, to the extent amounts have theretofore been paid to him by the Company as a result of such termination, such cash salary and bonus shall be paid over to the Company as received with respect to such period, but the provisions of this sentence shall not apply to any type of equity interest, bonus unit, phantom or restricted stock, stock option, stock appreciation right or similar benefit received as a result of such other employment. With respect to the preceding sentences, any payments or rights to which the Executive is entitled by reason of the termination of the Executive's employment pursuant to
Section 4.2 or 4.3 or in the event of the termination of this Agreement or the term of employment by the Company in breach of this Agreement shall be considered as damages hereunder. With respect to the second preceding sentence, the Executive shall in no event be required to pay the Company with respect to any calendar year more than the amount actually received by the Executive or credited to the Account with respect to Base Salary or annual bonus under
Section 3.2 and deferred compensation under Section 3.3 for such year.

4.6 Office Facilities. In the event the Executive shall make the election provided in clause (B) of Section 4.2 or 4.3, then for the period beginning on the day the Executive makes such election and ending one year thereafter, the Company shall, without charge to the Executive, make available to the Executive

office space at the Executive's principal job location immediately prior to his termination of employment, or other location reasonably close to such location, together with secretarial services, office facilities, services and furnishings, in each case reasonably appropriate to an employee of the Executive's position and responsibilities prior to such termination of employment.

5. Disability. If during the term of employment the Executive shall become physically or mentally disabled, whether totally or partially, so that he is prevented from performing his usual duties for a period of six consecutive months, or for shorter periods aggregating six months in any twelve-month period, the Company shall, nevertheless, continue to pay the Executive his full compensation and continue to credit the Account, when otherwise due, as provided in Section 3 and Annex A, through the last day of the sixth consecutive month of disability or the date on which the shorter periods of disability shall have equalled a total of six months in any twelve-month period (such last day or date being referred to herein as the "Disability Date"). If the Executive has not resumed his usual duties on or prior to the Disability Date, the Company shall pay the Executive a pro rata bonus for that portion of the calendar year preceding the Disability Date and shall pay the Executive disability benefits for the longer of (i) the balance of the term of employment or (ii) one year following the Disability Date (in the case of either
(i) or (ii), the "Disability Period") in an amount equal to 75% of (a) what the Base Salary otherwise would have been pursuant to this Agreement had the disability not occurred, and this reduced amount shall also be deemed to be the Base Salary for purposes of determining the amounts to be credited to his Account pursuant to Section 3.3 and Annex A as further disability benefits and
(b) the average of the regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years for which the annual bonus received by the Executive from the Company was the greatest (which may be deferred by the Executive pursuant to Section 3.4). If during the term of employment and subsequent to the Disability Date the Executive shall fully recover from a disability, the Company shall have the right (exercisable within sixty (60) days after notice from the Executive of such recovery), but not the obligation, to restore the Executive to full-time service at full compensation. If the Company elects to restore the Executive to full-time service, then this Agreement shall continue in full force and effect in all respects. If the Company elects not to restore the Executive to full-time service, the Company shall continue to pay the Executive the disability benefits provided for in this
Section 5 (notwithstanding any such recovery by the Executive) and the Executive shall be entitled to obtain other employment, subject, however, to the following: (i) the Executive shall be obligated to perform advisory services during any balance of the term of employment; and (ii) the provisions of Section 9 and the last sentence of Section 2 shall continue to apply to the Executive during the Disability Period. The advisory services referred to in

clause (i) of the immediately preceding sentence shall consist of rendering advice concerning the business, affairs and management of the Company as requested by the Company but the Executive shall not be required to devote more than five days (up to eight hours per day) each month to such services, which shall be performed at a time and place mutually convenient to both parties. Any income from such other employment shall not be applied to reduce the Company's obligations under this Agreement. The term of employment shall not be extended or be deemed suspended by reason of any period of disability. The Company shall be entitled to deduct from all payments to be made to the Executive during any Disability Period (whether or not there has been a reduction in amounts paid pursuant to this Section 5 and whether or not such payments are made in lieu of Base Salary, bonus or deferred compensation) an amount equal to all disability payments received by the Executive (but only with respect to that portion of the Disability Period occurring during the term of employment) from Workmen's Compensation, Social Security and disability insurance policies maintained by the Company; provided, however, that for so long as, and to the extent that, proceeds paid to the Executive from such disability insurance policies are not includible in his income for federal income tax purposes, the Company's deduction with respect to such payments shall be equal to the product of (i) such payments and (ii) a fraction, the numerator of which is one and the denominator of which is one less the maximum marginal rate of federal income taxes applicable to individuals at the time of receipt of such payments. All payments made under this Section 5 after the Disability Date are intended to be disability payments, regardless of the manner in which they are computed. Except as otherwise provided in this Section 5, the term of employment shall continue during the Disability Period and the Executive shall be entitled to all of the rights and benefits provided for in this Agreement except that, Sections 4.2 and 4.3 shall not apply during the Disability Period (unless the Company terminates this Agreement in breach hereof in which case Section 4.2 shall apply) and unless the Company has restored the Executive to full-time service at full compensation prior to the end of the Disability Period, the term of employment shall end and the Executive shall cease to be an employee of the Company at the end of the Disability Period.

6. Death. Upon the death of the Executive, this Agreement and all benefits hereunder shall terminate except that (i) the Executive's estate (or a designated beneficiary thereof) shall be entitled to receive the Base Salary and deferred compensation to the last day of the month in which his death occurs and shall be entitled to receive bonus compensation based on the average of the regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two years for which the annual bonus received by the Executive from the Company was the greatest, but prorated according to the number of whole or partial months the Executive was employed by the Company in such year, (ii) such termination shall not affect any vested rights which the

Executive may have at the time of his death pursuant to any insurance or other death benefit plans or arrangements of the Company or any subsidiary or the benefit plans described in Section 8, which vested rights shall continue to be governed by the provisions of such plans, and (iii) the Account shall be liquidated and revalued as provided in Annex A as of the date of the Executive's death (except that all taxes shall be computed and charged to the Account as of such date of death to the extent not theretofore so computed and charged) and the entire balance thereof (plus any amount due under the last paragraph of
Section A.6 of Annex A) shall be paid to the Executive's estate in a single payment not later than 75 days following such date of death.

7. Life Insurance. Subject to the Executive's satisfactory completion of any applications and other documentation and any physical examination that may be required by the insurer for any additional insurance on the Executive, the Company shall obtain $1,000,000 face amount of split ownership life insurance on the life of the Executive. The Company shall pay all premiums on such policy and shall maintain such policy (without reduction of the face amount of the coverage) during the term of employment, including during the period the Executive remains on the payroll of the Company following a termination pursuant to Section 4.2 or 4.3. The Executive shall be entitled to designate the beneficiary or beneficiaries of such policy which may include a trust. The Executive agrees that at the time of his death, his estate (or the owner of the policy if such owner is a trust as contemplated below) shall promptly pay to the Company an amount equal to the premiums on such policy paid by the Company (net of (i) tax benefits, if any, to the Company in respect of the payment of such premiums, (ii) any amounts payable by the Company which had been paid by or on behalf of the Executive with respect to such insurance, (iii) dividends received by the Company in respect of such premiums, but only to the extent such dividends are not used to purchase additional insurance for the benefit of the Executive, and (iv) any unpaid borrowings by the Company) but in no event shall such payment to the Company exceed the death benefit paid under the policy. Except as hereinafter provided, the Company shall own the policy and shall provide by endorsement or collateral assignment as it may deem appropriate for the payment of benefits on the death of the Executive. In the event that the Executive advises the Company in writing within 60 days of the date of this Agreement that the Executive desires to have such policy owned by the trustees of a trust for the benefit of the Executive's designees, the Company shall permit such ownership provided the trustees of the trust enter into a split dollar insurance agreement and collateral assignment in favor of the Company which in the Company's judgment satisfactorily protects the Company's investment in such policy. The provisions of this Section 7 shall be in addition to any other insurance hereafter provided by the Company on the life of the Executive under any group policy.

8. Other Benefits. To the extent that (a) he is eligible under the general provisions thereof and (b) the Company maintains such plan or program for the benefit of its senior executive officers, during the term of employment and so long as the Executive is an employee of the Company, the Executive shall be eligible to participate in any pension, profit-sharing, stock option or similar plan or program of the Company now existing or established hereafter.

To the extent maintained in effect by the Company for its senior executives, the Executive shall also be entitled to participate in any group insurance, hospitalization, medical, dental, accident, disability or similar plan or program of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof. In addition, during the term of employment and for so long as the Executive is an employee of the Company, the Executive shall be entitled to receive other benefits generally available to all senior executive officers of the Company to the extent that he is eligible under the general provisions thereof, including, without limitation, to the extent maintained in effect by the Company for its senior executives, an automobile allowance and financial services.

9. Protection of Confidential Information.

9.1 Covenant. The Executive acknowledges that his employment by the Company (which, for purposes of this Section 9 shall mean Time Warner Inc., its subsidiaries and affiliates) will, throughout the term of employment, bring him into close contact with many confidential affairs of the Company, including information about costs, profits, markets, sales, products, key personnel, pricing policies, operational methods, technical processes and other business affairs and methods and other information not readily available to the public, and plans for future development. The Executive further acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character. The Executive further acknowledges that the business of the Company is international in scope, that its products are marketed throughout the world, that the Company competes in nearly all of its business activities with other organizations that are or could be located in nearly any part of the world and that the nature of the Executive's services, position and expertise are such that he is capable of competing with the Company from nearly any location in the world. In recognition of the foregoing, the Executive covenants and agrees:

9.1.1 The Executive will keep secret all confidential matters of the Company and will not intentionally disclose such matters to anyone outside of the Company, either during or after the term of employment, except with the Company's written consent, provided that (i) the Executive shall have no such obligation to the extent such matters are or become publicly known

other than as a result of the Executive's breach of his obligations hereunder and (ii) the Executive may, after giving prior notice to the Company to the extent practicable under the circumstances, disclose such matters to the extent required by applicable laws or governmental regulations or judicial or regulatory process;

9.1.2 The Executive will deliver promptly to the Company on termination of his employment by the Company, or at any other time the Company may so request, at the Company's expense, all memoranda, notes, records, reports and other documents (and all copies thereof) relating to the Company's business, which he obtained while employed by, or otherwise serving or acting on behalf of, the Company and which he may then possess or have under his control (other than the Executive's personal tax and accounting records and publicly available documents); and

9.1.3 If the term of employment is terminated pursuant to
Section 4.1, or if the term of employment terminates as scheduled, for a period of one year after such termination, without the consent of the Company, the Executive shall not employ, and shall not cause any entity of which he is an affiliate to employ, any person who was a full-time executive employee of the Company or any of its affiliates at the date of such termination or within six months prior thereto.

9.2 Non-Compete. If this Agreement is terminated pursuant to
Section 4.1, 4.2 or 4.3 or by the Company in breach of this Agreement or if the Executive quits in breach of this Agreement, then for the time period specified in the second sentence of this Section 9.2, the Executive shall not (a) become an officer, director, partner or employee of or consultant to or act in any managerial capacity or own an equity interest in excess of one percent in The Walt Disney Company, The News Corporation, The Seagram Company, Ltd., Tele-Communications, Inc. or Viacom Inc. or any of their respective subsidiaries or affiliates (each of the foregoing companies is herein referred to as a "Prohibited Entity" but only if at the time such company is a Competitive Entity) or (b) provide consulting, lobbying or public relations services or activities (collectively "Lobbying Services") to or for any Prohibited Entity whether directly or indirectly through a separate firm or entity, provided that this clause (b) shall not prevent the Executive from becoming an officer, employee or partner of a firm or entity (or providing Lobbying Services to a firm or entity) that in turn provides Lobbying Services to a Prohibited Entity so long as the Executive is not directly or indirectly involved in providing such Lobbying Services to such Prohibited Entity. If the Executive's employment is terminated pursuant to Section 4.1, 4.2 or 4.3 of this Agreement or by the Company in breach of this Agreement or if the Executive quits in breach of this Agreement, then (i) so long as the Executive remains on the payroll of the Company, the last paragraph of Section 2 shall apply and (ii) if the Executive leaves the payroll of the Company within 12 months

after the effective date of any notice of termination delivered hereunder, then the provisions of this Section 9.2 shall apply for the remainder of such 12-month period.

9.3 Specific Remedy. In addition to the provisions of Section 9.4 and such other rights and remedies as the Company may have at equity or in law with respect to any breach of this Agreement, if the Executive commits a material breach of the last paragraph of Section 2 or any of the provisions of Sections 9.1 or 9.2, the Company shall have the right and remedy to have such provisions specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

9.4 Liquidated Damages. If the Executive breaches the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to the product of (i) the sum of (x) the monthly Base Salary and deferred compensation payable to the Executive immediately prior to his termination of employment with the Company, plus (y) one-twelfth of the average of the regular annual bonuses (excluding the amount of any special or spot bonuses) received by the Executive from the Company for the two calendar years immediately preceding the year of such termination, multiplied by (ii) the number of months remaining in the non-compete period applicable to the Executive under Section 9.2 at the time of such breach. The Company shall be entitled to offset any amounts owed by the Executive to the Company under this Section 9.4 against any amounts owed by the Company to the Executive under any provision of this Agreement or otherwise, including without limitation, amounts payable to the Executive under Sections 4.2 or 4.3. The Company and the Executive agree that it is impossible to determine with any reasonable accuracy the amount of prospective damages to the Company upon a breach of Section 9.2 by the Executive and further agree that the damages set forth in this Section 9.4 are reasonable, and not a penalty, based upon the facts and circumstances of the parties and with due regard to future expectations.

10. Ownership of Work Product. The Executive acknowledges that during the term of employment, he may conceive of, discover, invent or create inventions, improvements, new contributions, literary property, material, ideas and discoveries, whether patentable or copyrightable or not (all of the foregoing being collectively referred to herein as "Work Product"), and that various business opportunities shall be presented to him by reason of his employment by the Company. The Executive acknowledges that, unless the Company otherwise agrees in writing, all of the foregoing shall be owned by and belong exclusively to the Company and that he shall have no personal interest therein, provided that they are either related in any manner to the business (commercial

or experimental) of the Company, or are, in the case of Work Product, conceived or made on the Company's time or with the use of the Company's facilities or materials, or, in the case of business opportunities, are presented to him for the possible interest or participation of the Company. The Executive shall further, unless the Company otherwise agrees in writing, (i) promptly disclose any such Work Product and business opportunities to the Company; (ii) assign to the Company, upon request and without additional compensation, the entire rights to such Work Product and business opportunities; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of his inventorship or creation in any appropriate case. The Executive agrees that he will not assert any rights to any Work Product or business opportunity as having been made or acquired by him prior to the date of this Agreement except for Work Product or business opportunities, if any, disclosed to and acknowledged by the Company in writing prior to the date hereof.

11. Notices. All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given at the time personally delivered, the day after being sent by overnight courier, or three days after being mailed first-class, postage prepaid, by registered or certified mail, as follows (or to such other or additional address as either party shall designate by notice in writing to the other in accordance herewith):

11.1 If to the Company:

Time Warner Inc.
75 Rockefeller Plaza New York, New York 10019

Attention: General Counsel

(with a copy, similarly addressed but Attention: Vice President - Executive Compensation and Organization Development

11.2 If to the Executive, to the address set forth on the records of the Company.

12. General.

12.1 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely in New York.

12.2 Captions. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

12.3 Entire Agreement. This Agreement, including Annexes A and B, sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior agreements, arrangements and understandings, written or oral, between the parties, including without limitation, the Prior Agreement.

12.4 No Other Representations. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or be liable for any alleged representation, promise or inducement not so set forth.

12.5 Assignability. This Agreement and the Executive's rights and obligations hereunder may not be assigned by the Executive. The Company may assign its rights together with its obligations hereunder, in connection with any sale, transfer or other disposition of all or substantially all of its business and assets; and such rights and obligations shall inure to, and be binding upon, any successor to the business or substantially all of the assets of the Company, whether by merger, purchase of stock or assets or otherwise, and the Company shall cause such successor expressly to assume such obligations.

12.6 Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect such party's right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

12.7 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement may be referred by either party to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Any such proceedings shall take place in New York City before a single arbitrator (rather than a panel of arbitrators), pursuant to any streamlined or expedited (rather than a comprehensive) arbitration process, before a nonjudicial (rather than a judicial) arbitrator, and in accordance with an arbitration process which, in the judgment of such arbitrator, shall have the effect of reasonably limiting or reducing the cost of such arbitration. The resolution of any such dispute or controversy by the arbitrator appointed in accordance with the procedures of JAMS/ENDISPUTE shall be final and binding. Judgment upon the award rendered by such arbitrator

may be entered in any court having jurisdiction thereof, and the parties consent to the jurisdiction of the New York courts for this purpose. The prevailing party shall be entitled to recover the costs of arbitration (including reasonable attorneys fees and the fees of experts) from the losing party. If at the time any dispute or controversy arises with respect to this Agreement, JAMS/ENDISPUTE is not in business or is no longer providing arbitration services, then the American Arbitration Association shall be substituted for JAMS/ENDISPUTE for the purposes of the foregoing provisions of this Section
12.7. If the Executive shall be the prevailing party in such arbitration, the Company shall promptly pay, upon demand of the Executive, all legal fees, court costs and other costs and expenses incurred by the Executive in any legal action seeking to enforce the award in any court.

12.8 Beneficiaries. Whenever this Agreement provides for any payment to the Executive's estate, such payment may be made instead to such beneficiary or beneficiaries as the Executive may designate in writing filed with the Company. The Executive shall have the right to revoke any such designation and to redesignate a beneficiary or beneficiaries by written notice to the Company (and to any applicable insurance company) to such effect.

12.9 No Conflict. The Executive represents and warrants to the Company that this Agreement is legal, valid and binding upon the Executive and the execution of this Agreement and the performance of the Executive's obligations hereunder does not and will not constitute a breach of, or conflict with the terms or provisions of, any agreement or understanding to which the Executive is a party (including, without limitation, any other employment agreement). The Company represents and warrants to the Executive that this Agreement is legal, valid and binding upon the Company and the Company is not a party to any agreement or understanding which would prevent the fulfillment by the Company of the terms of this Agreement or pursuant to which performance by the Company of its obligations hereunder would constitute a breach or conflict.

12.10 Withholding Taxes. Payments made to the Executive pursuant to this Agreement shall be subject to withholding and social security taxes and other ordinary and customary payroll deductions.

12.11 Severability. If any provision of this Agreement shall be held invalid, the remainder of this Agreement shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to equitable modification of the provision or application thereof held to be invalid. To the extent that it may effectively do so under applicable law, each party hereby waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect.

12.12 No Offset. Except as set forth in Section 9.4, neither the Company nor the Executive shall have any right to offset any amounts owed by one party hereunder against amounts owed or claimed to be owed to such party, whether pursuant to this Agreement or otherwise, and the Company and the Executive shall make all the payments provided for in this Agreement in a timely manner.

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

TIME WARNER INC.

    /s/ Tod M. Hullin
By:_________________________________



   /s/ Timothy A. Boggs
   _________________________________
   Timothy A. Boggs

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Account, at the Company's option, shall either be actually invested and reinvested, or deemed invested and reinvested, in an account in securities selected from time to time by an investment advisor designated from time to time by the Company (the "Investment Advisor"), substantially all of which securities shall be "eligible securities". The designation from time to time by the Company of an Investment Advisor shall be subject to the approval of the Executive, which approval shall not be withheld unreasonably. "Eligible securities" are common and preferred stocks, warrants to purchase common or preferred stocks, put and call options, and corporate or governmental bonds, notes and debentures, either listed on a national securities exchange or for which price quotations are published in newspapers of general circulation, including The Wall Street Journal, and certificates of deposit. Eligible securities shall not include the common or preferred stock, any warrants, options or rights to purchase common or preferred stock or the notes or debentures of the Company or any corporation or other entity of which the Company owns directly or indirectly 5% or more of any class of outstanding equity securities. The Investment Advisor shall have the right, from time to time, to designate eligible securities which shall be either actually purchased and sold, or deemed to have been purchased or sold, for the Account on the date of reference. Such purchases may be made or deemed to be made on margin; provided that the Company may, from time to time, by written notice to the Executive and the Investment Advisor, limit or prohibit margin purchases in any manner it deems prudent and, upon three business days written notice to the Executive and the Investment Advisor, cause all eligible securities theretofore purchased or deemed purchased on margin to be sold or deemed sold. The Investment Advisor shall notify the Executive in writing of each transaction within five business days thereafter and shall render to the Executive written monthly reports as to the current status of the Executive's Account. In the case of any purchase, the Account shall be charged with a dollar amount equal to the quantity and kind of securities purchased or deemed to have been purchased multiplied by the fair market value of such securities on the date of reference and shall be credited with the quantity and kind of securities so purchased or deemed to have been purchased. In the case of any sale, the Account shall be charged with the quantity and kind of securities sold or deemed to have been sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold or deemed to have been sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Account shall take place immediately upon the consummation of the transactions to which they relate. As used herein "fair market value" means either (i) if the security is actually

purchased or sold by the Company on the date of reference, the actual purchase or sale price per security to the Company or (ii) if the security is not purchased or sold on the date of reference, in the case of a listed security, the closing price per security on the date of reference, or if there were no sales on such date, then the closing price per security on the nearest preceding day on which there were such sales, and, in the case of an unlisted security, the mean between the bid and asked prices per security on the date of reference, or if no such prices are available for such date, then the mean between the bid and asked prices per security on the nearest preceding day for which such prices are available. If no bid or asked price information is available with respect to a particular security, the price quoted to the Company as the value of such security on the date of reference (or the nearest preceding date for which such information is available) shall be used for purposes of administering the Account, including determining the fair market value of such security. The Account shall be charged currently with all interest paid or deemed payable by the Account with respect to any credit extended or deemed extended to the Account. Such interest shall be charged to the Account, for margin purchases actually made, at the rates and times actually paid by the Account and, for margin purchases deemed to have been made, at the rates and times then charged by an investment banking firm designated by the Company with which the Company does significant business. The Company may, in the Company's sole discretion, from time to time serve as the lender with respect to any margin transactions by notice to the then Investment Advisor and in such case interest shall be charged at the rate and times then charged by an investment banking firm designated by the Company with which the Company does significant business. Brokerage fees shall be charged to the Account, for transactions actually made, at the rates and times actually paid and, for transactions deemed to have been made, at the rates and times then charged for transactions of like size and kind by an investment banking firm designated by the Company with which the Company does significant business.

A.2 Dividends and Interest. The Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held or deemed to be held therein. Dividends shall be credited as of the payment date. The Account shall similarly be credited with interest payable on interest bearing securities held or deemed to be held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Account shall be charged with the dollar amount of interest accrued to the date of purchase, and in the case of sales of such interest-bearing securities the Account shall be credited with the dollar amount of interest accrued to the date of sale. All dollar amounts of dividends or interest credited to the Account pursuant to this Section A.2 shall be charged with all taxes thereon deemed payable

by the Company (as and when determined pursuant to Section A.5). The Investment Advisor shall have the same right with respect to the investment and reinvestment of net dividends and net interest as the Investment Advisor has with respect to the balance of the Account.

A.3 Adjustments. The Account shall be equitably adjusted to reflect stock dividends, stock splits, recapitalizations, mergers, consolidations, reorganizations and other changes affecting the securities held or deemed to be held therein.

A.4 Obligation of the Company. The Company shall not be required to purchase, hold or dispose of any of the securities designated by the Investment Advisor; however, whether or not it elects to purchase or sell any such securities, such transactions shall be deemed to have been made and the Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, deemed payable by the Company and attributable to such transactions (in all cases net after any tax benefits that the Company would be deemed to derive from the payment thereof, as and when determined pursuant to Section A.5), but no other costs of the Company. The only obligation of the Company is its contractual obligation to make payments to the Executive measured as set forth below. To the extent that the Company, in its discretion, purchases or holds any of the securities designated by the Investment Advisor, the same shall remain the sole property of the Company, subject to the claims of its general creditors, and shall not be deemed to form part of the Account. Neither the Executive nor his legal representative or any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company in respect of any portion of the Account.

A.5 Taxes. The Account shall be charged with all federal, state and local taxes deemed payable by the Company with respect to income recognized upon the dividends and interest received or deemed to have been received by the Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are deemed to have been sold pursuant to Section A.1 or A.6. The Account shall be credited with the amount of the tax benefit received by the Company as a result of any payment of interest actually made or deemed to be made pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made or deemed to be made pursuant to Section
A.1. If any of the sales of the securities which are deemed to have been sold pursuant to Section A.1 or A.6 results in a loss to the Account, such net loss shall be deemed to offset the income and gains referred to in the second preceding sentence (and

thus reduce the charge for taxes referred to therein) to the extent then permitted under the Internal Revenue Code of 1986, as amended from time to time, and under applicable state and local income and franchise tax laws (collectively referred to as "Applicable Tax Law"); provided, however, that for the purposes of this Section A.5 the Account shall, except as provided in the third following sentence, be deemed to be a separate corporate taxpayer and the losses referred to above shall be deemed to offset only the income and gains referred to in the second preceding sentence. Such losses shall be carried back and carried forward within the Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Account. For the purposes of this Section A.5, all charges and credits to the Account for taxes shall be deemed to be made as of the end of the Company's taxable year during which the transactions, from which the liabilities for such taxes are deemed to have arisen, are deemed to have occurred. Notwithstanding the foregoing, if and to the extent that in any year there is a net loss in the Account that cannot be offset against income and gains in any prior year, then an amount equal to the tax benefit to the Company of such net loss (after such net loss is reduced by the amount of any net capital loss of the Account for such year) shall be credited to the Account on the last day of such year. If and to the extent that any such net loss of the Account shall be utilized to determine a credit to the Account pursuant to the preceding sentence, it shall not thereafter be carried forward under this Section A.5. For purposes of determining taxes payable by the Company under any provision of this Annex A it shall be assumed that the Company is a taxpayer and pays all taxes at the maximum marginal rate of federal income taxes and state and local income and franchise taxes (net of assumed federal income tax benefits) applicable to business corporations and that all of such dividends, interest, gains and losses are allocable to its corporate headquarters, which are currently located in New York City.

A.6 Payments. Payments of deferred compensation shall be made as provided in this Section A.6. Except as otherwise specifically provided in this
Section A.6, deferred compensation shall be paid monthly for a period of 60 months (the "Pay-Out Period") commencing on the first day of the month after the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason; provided, however, that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such payments shall commence on January 1st of the year following the year in which such event occurs. On each payment date, the Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held or deemed to be held in the Account shall be not less than the payment then due and the Company may select the securities to be sold or deemed sold to provide such

cash if the Investment Advisor shall fail to do so on a timely basis. The amount of any taxes payable with respect to any such sales shall be computed, as provided in Section A.5 above, and deducted from the Account, as of the end of the taxable year of the Company during which such sales are deemed to have occurred. Solely for the purpose of determining the amount of monthly payments during the Pay-Out Period, the Account shall be valued on the fifth trading day preceding the first monthly payment of each year of the Pay-Out Period, or more frequently at the Company's election (the "Valuation Date"), by adjusting all of the securities held or deemed to be held in the Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company) and by deducting from the Account the amount of all outstanding indebtedness. The extent, if any, by which the Account, valued as provided in the immediately preceding sentence exceeds the aggregate amount of credits to the Account pursuant to Sections 3.3, 3.4 and 3.5 of the Agreement as of each Valuation Date and not theretofore distributed or deemed distributed pursuant to this Section A.6 is herein called "Account Retained Income". The amount of each payment for the year, or such shorter period as may be determined by the Company, of the Pay-Out Period immediately succeeding such Valuation Date, including the payment then due, shall be determined by dividing the aggregate value of the Account, as valued and adjusted pursuant to the second preceding sentence, by the number of payments remaining to be paid in the Pay-Out Period, including the payment then due; provided that each payment made shall be deemed made first out of Account Retained Income (to the extent remaining after all prior distributions thereof since the last Valuation Date). The balance of the Account, after all the securities held or deemed to have been held therein have been sold or deemed to have been sold and all indebtedness liquidated, shall be paid to the Executive in the final payment, which shall be decreased by deducting therefrom the amount of all taxes attributable to the sale of any securities held or deemed to have been held in the Account since the end of the preceding taxable year of the Company, which taxes shall be computed as of the date of such payment.

If this Agreement is terminated by the Company pursuant to
Section 4.1, the Account shall be valued as of the later of (i) the date the Executive ceases to be an employee of the Company and leaves the Company's payroll or (ii) twelve months after the date the Agreement is terminated pursuant to Section 4.1 and, after the securities held or deemed to have been held therein have been sold or deemed to have been sold and all related indebtedness liquidated, shall be paid to the Executive as soon as practicable and in any event within 75 days following the later of such dates in a final lump sum payment, which shall be decreased by deducting therefrom the amount of all taxes attributable to the sale of any securities held or deemed to have been held in the Account since

the end of the preceding taxable year of the Company, which taxes shall be computed as of the date of such payment. Payments made pursuant to this paragraph shall be deemed made first out of Account Retained Income.

If the Executive becomes disabled within the meaning of Section 5 of the Agreement and is not thereafter returned to full-time employment with the Company as provided in said Section 5, then deferred compensation shall be paid monthly during the Pay-Out Period commencing on the first day of the month following the termination of the Executive's employment with the Company in accordance with the provisions of the first paragraph of this Section A.6.

If the Executive shall die at any time whether during or after the termination of the Agreement, the Account shall be valued as of the date of the Executive's death and the balance of the Account shall be paid to the Executive's estate or beneficiary within 75 days of such death in accordance with the provisions of the second preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Account and at the time of the final payment from the Account, the Company shall compute and shall credit to the Account, the amount of the tax benefit assumed to be received by it from the payment to the Executive of amounts of Account Retained Income during such taxable year or since the end of the last taxable year, as the case may be. No additional credits shall be made to the Account pursuant to the preceding sentence in respect of the amounts credited to the Account pursuant to the preceding sentence. Notwithstanding any provision of this Section A.6, the Executive shall not be entitled to receive pursuant to this Annex A an aggregate amount that shall exceed the sum of (i) all credits made to the Account pursuant to Sections 3.3, 3.4 and 3.5 of the Agreement to which this Annex is attached,
(ii) the net cumulative amount (positive or negative) of all income, gains, losses, interest and expenses charged or credited to the Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Account with respect to the tax benefits or burdens thereof, and (iii) an amount equal to the tax benefit to the Company from the payment of the amount (if positive) determined under clause (ii) above; and the final payment(s) otherwise due may be adjusted or eliminated accordingly. In determining the tax benefit to the Company under clause (iii) above, the Company shall be deemed to have made the payments under clause (ii) above with respect to the same taxable years and in the same proportions as payments of Account Retained Income were actually made from the Account. Except as otherwise provided in this paragraph, the computation of all taxes and tax benefits referred to in this

Section A.6 shall be determined in accordance with Section A.5 above.

A.7. Other Payment Methods. Notwithstanding the foregoing provisions of this Annex A, the Executive may, prior to the commencement of any calendar year elect by written notice to the Company to cause (i) all or any portion of the amounts otherwise to be credited to the Account in such year under Section 3.3 of the Agreement not to be so credited but to be paid to the Executive on the date(s) such credits otherwise would have been made thereunder and/or (ii) all or any portion of the amounts to be credited to the Account under Section 3.3 of the Agreement in such year (after giving effect to clause
(i) above) to be payable from the Account at times earlier than those provided in Section A.6 above but not earlier than the dates on which such amounts were to be credited to the Account.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of November , 1995, between TIME WARNER INC., a Delaware corporation (the "Company"), 75 Rockefeller Plaza, New York, New York 10019 and the undersigned (the "Agreement"), and in consideration of the payments made to me and other benefits to be received by me pursuant thereto, I, [NAME], being of lawful age, do hereby release and forever discharge the Company and its officers, shareholders, subsidiaries, agents, and employees, from any and all actions, causes of action, claims, or demands for general, special or punitive damages, attorney's fees, expenses, or other compensation, which in any way relate to or arise out of my employment with the Company or any of its subsidiaries or the termination of such employment, which I may now or hereafter have under any federal, state or local law, regulation or order, including without limitation, under the Age Discrimination in Employment Act, as amended, through and including the date of this Release; provided, however, that the execution of this Release shall not prevent the undersigned from bringing a lawsuit against the Company to enforce its obligations under the Agreement.

I acknowledge that I have been given at least 21 days from the day I received a copy of this Release to sign it and that I have been advised to consult an attorney. I understand that I have the right to revoke my consent to this Release for seven days following my signing. This Release shall not become effective or enforceable until the expiration of the seven-day period following the date it is signed by me.

I further state that I have read this document and the Agreement referred to herein, that I know the contents of both and that I have executed the same as my own free act.

WITNESS my hand this ____ day of ___________ , ____.

EXECUTION COPY

SSSI AGREEMENT

This SSSI Agreement (the "Agreement") is dated as of October 10, 1996, and is entered into between TW Inc. (which will be renamed Time Warner Inc.), a Delaware corporation ("Holdco"), Liberty Media Corporation, a Delaware corporation ("LMC"), and Southern Satellite Systems, Inc., a Georgia corporation ("SpinCo"), and, with respect to Section
11(d), Section 11(f) and Section 11(g) only, Satellite Services, Inc., a Delaware corporation ("Satellite"). For purposes of this Agreement, LMC, SpinCo and, with respect to the above referenced Sections, Satellite, on the one hand are, collectively, a "Party" and Holdco on the other hand, individually, is a "Party". References to "Parties" is a collective reference to LMC, SpinCo and with respect to the above referenced Sections, Satellite, on the one hand, and Holdco, on the other.

WHEREAS Holdco, LMC and certain subsidiaries of LMC have entered into a Second Amended and Restated LMC Agreement dated as of September 22, 1995 (the "LMC Agreement"), which contemplates the Parties entering into this Agreement;

WHEREAS Holdco desires to acquire (a) from SpinCo the Contract Option (as defined in Section 2) and (b) from LMC and its Affiliates (as defined in Section 24) the non-competition agreement contemplated in Section 11(b)(ix);

WHEREAS Tele-Communications, Inc., a Delaware corporation ("TCI"), is required pursuant to the FTC Consent Decree (including the FTC Agreement in Principle) (each, as

defined in Section 24) to seek from the Internal Revenue Service the Letter Ruling (as defined in Section 24) with respect to the Spin-off (as defined in
Section 24) of 100% of the shares of SpinCo;

WHEREAS as of the date hereof LMC directly owns all the outstanding common stock, par value $1.00 per share (the "Shares"), of SpinCo, which is engaged primarily in the Business;

WHEREAS, in connection with the Spin-off, LMC shall contribute all the capital stock of TCI Turner Preferred, Inc., a Colorado corporation ("TCITP"), to SpinCo, so that, as of immediately prior to the effectiveness of the Spin-off, TCITP will be a wholly owned subsidiary of SpinCo;

WHEREAS immediately prior to the Spin-off, TCITP will own, directly or indirectly, all voting securities of Holdco then owned beneficially or of record by LMC or any of its Controlled Affiliates (as defined in the LMC Agreement) and, if LMC is then a Controlled Affiliate of TCI, all voting securities of Holdco then owned beneficially or of record by TCI or any of its Controlled Affiliates, other than the Excluded Shares (as defined in the LMC Agreement);

WHEREAS this Agreement is being executed on the date of the closing of Holdco's acquisition of Turner Broadcasting System, Inc., but the Contract Option provided for in Section 2 will not be granted until the Grant Date (as defined in Section 2); and

WHEREAS capitalized terms used but not defined in any of the other Sections of this Agreement are defined in Section 24.

NOW, THEREFORE, it is agreed as follows:

1. Execution Date. (a) Holdco shall deliver to LMC (or its designee pursuant to Section 15) and SpinCo upon the execution of this Agreement (the "Execution Date"):

(i) An opinion of counsel to Holdco (which counsel may be an employee of Holdco), reasonably acceptable to LMC and SpinCo, addressed to LMC and SpinCo and dated the Execution Date, to the effect that:

(A) Holdco is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and in good standing to do business as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect. Holdco has all requisite corporate power and authority to execute and deliver this Agreement, the Distribution Contract and the Registration Rights Agreement (as defined in the LMC Agreement) (collectively, the "Relevant Agreements"), to perform its obligations thereunder and to consummate the transactions contemplated hereby and thereby.

(B) The execution and delivery by Holdco of the Relevant Agreements, the performance by Holdco of its obligations thereunder and the consummation by Holdco of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action on the part of Holdco. Each of the Relevant Agreements has been duly executed and delivered by a duly authorized

officer of Holdco and constitutes the legal, valid and binding obligation of Holdco enforceable against Holdco in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity, and except that the indemnification obligations set forth in Section 8 of the Registration Rights Agreement may be subject to considerations of public policy).

(C) The execution, delivery and performance by Holdco of the Relevant Agreements do not conflict with or result in a violation of the General Corporation Law of the State of Delaware, or the certificate of incorporation or by-laws of Holdco.

(ii) The duly executed Registration Rights Agreement.

(b) On the Execution Date, Holdco shall execute and deliver to SpinCo, and SpinCo shall execute and deliver to Holdco, the Distribution Contract (the "Distribution Contract") in substantially the form of Exhibit 1 hereto. The Distribution Contract shall not become effective until the Contract Option provided for in Section 2 is exercised and closed.

2. Contract Option; Non-Competition Agreement. (a) Subject to and on the terms and conditions set forth in this Agreement (including Section
15(b)), SpinCo hereby agrees to grant to Holdco on the Grant Date the right and option (the "Contract Option"), which may be exercised at any time during the Exercise Period (as defined in Section 2(d)), to cause the effectiveness of the Distribution Contract. The "Grant Date" shall be five business days after the earliest of (i) receipt of the

Letter Ruling, (ii) the date on which TCI shall have been advised by the Internal Revenue Service, or TCI shall have notified Holdco in writing that it has determined, that it will not obtain the Letter Ruling and (iii) May 31, 1997, subject however, in the case of clauses (ii) and (iii) to the provisions of Section 15(b).

(b) On the Grant Date, Holdco shall deliver:

(i) to SpinCo, in respect of the Contract Option, 4,166,667 fully paid and nonassessable shares of Series LMCN-V Common Stock of Holdco, having the terms set forth on Exhibit A to the LMC Agreement ("LMCN-V Common Stock");

(ii) to LMC (or its designee pursuant to Section 15), in respect of LMC's noncompetition agreement with respect to itself and its Affiliates set forth in Section 11(b)(ix), (A) 833,333 fully paid and nonassessable shares of the LMCN-V Common Stock, and (B) $66,666,700 payable, at Holdco's option, in cash or fully paid and nonassessable shares of LMCN-V Common Stock (if the $66,666,700 is paid in LMCN-V Common Stock, the number of shares to be delivered in respect of such amount shall be equal to the quotient obtained by dividing (x) $66,666,700 by (y) the product of the Formula Number (as defined in the terms of the LMCN-V Common Stock) and the Current Market Price of the common stock, par value $0.01 per share, of Holdco (the "Holdco Common Stock") on the Grant Date); and

(iii) to LMC and SpinCo an opinion of counsel to Holdco (which counsel may be an employee of Holdco), reasonably acceptable to LMC and SpinCo, addressed to LMC and SpinCo to the effect that the shares of LMCN-V Common Stock delivered by Holdco to LMC and SpinCo on such date have been

duly

authorized and are validly issued, fully paid, nonassessable and are not subject to any preemptive rights.

(c) Notwithstanding any other provision of this Agreement, the obligation of Holdco to deliver the consideration provided for in this Section 2 on the Grant Date is absolute, and not subject to any right of setoff or counterclaim that Holdco may have or claim, and no consideration paid or delivered in respect of the Contract Option pursuant to this Section 2 shall be refunded or refundable, nor may any claim be made for the return thereof, in whole or in part, unless Holdco proves in a court of law that LMC and SpinCo did not at the Execution Date have all requisite corporate power to execute, deliver and perform its obligations, as applicable, under this Agreement and the Distribution Contract and such lack of power has not been cured.

(d) Holdco may exercise the Contract Option at any time during the period (the "Exercise Period") commencing on and including the Grant Date and ending on and including the Termination Date (as defined in Section 10(a)), by giving written notice of exercise (the "Exercise Notice") to SpinCo pursuant to Section 16.

(e) If the Contract Option is exercised, the consideration therefor shall be the amounts payable pursuant to Section 2 of the Distribution Contract.

(f) Each Party agrees to be bound by and act in accordance with the payment allocation set forth in Section 2(b) in the preparation and filing of all tax returns and in any proceeding before any tax authority. In the event that such payment allocation is disputed by a taxing authority, the Party receiving notice of the dispute shall promptly notify the other Party hereto of such dispute and keep such other Party informed with respect to all matters concerning such dispute.

3. Closing. The closing (the "Closing") of the exercise of the Contract Option shall occur as soon as practicable after such exercise, but in no event more than five business days following the satisfaction or waiver (to the extent waived by the Party entitled to do so) of the conditions to the Closing described in Sections 5, 6, 7, 8 and 9 (such date for the Closing being referred to as the "Closing Date"). On the Closing Date, the Distribution Contract shall become effective.

4. Representations and Warranties as of Execution Date.

(a) Each of LMC and SpinCo represents and warrants to Holdco, and Holdco represents to LMC and SpinCo, as of the Execution Date that:

(i) Such party has all requisite corporate power to execute, deliver and perform its obligations under each of the Relevant Agreements to which it is a party and such execution, delivery and performance have been duly authorized by all corporate action on its part required to be taken.

(ii) Each of the Relevant Agreements to which it is a party is such party's legal, valid and binding obligation, enforceable in accordance with its terms, except as may be affected by bankruptcy, insolvency or similar laws affecting the rights of creditors generally and by equitable principles of general applicability.

(iii) Neither the execution and delivery by such party of any of the Relevant Agreements to which it is a party, nor the performance of its obligations thereunder: (A) will violate or conflict with, or constitute a breach or default under, (1) the certificate of incorporation or by-laws of such Party, (2) any law, statute, regulation, rule, order or other

enactment of any Governmental Entity (as defined in Section 24) applicable to such party, or (3) any agreement or instrument to which such party is a party or by which it is bound or affected, except for any violations, conflicts, breaches or defaults as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created by the Relevant Agreements, and except for any violations, conflicts, breaches or defaults as may be the result of actions taken by Holdco subsequent to effective date of the Distribution Contract, or (B) result in the creation or imposition of any lien or other encumbrance on any of its assets, except for liens or encumbrances as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other party to realize the material benefits intended to be created hereby and thereby. No authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Entity or other third party is required to be obtained or made in connection with, as applicable, such party's execution, delivery and performance of the Relevant Agreements to which it is a party, except any thereof the failure of which to be obtained, given or made would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created hereby and thereby.

(b) LMC and SpinCo represent and warrant to Holdco as of the Execution Date that:

(i) Consolidated Return. As of the Execution Date, (A) each of LMC and SpinCo (and, if LMC shall have designated another person to receive the Section 2 payment pursuant to Section 15, such designated person) is a member of the same group of corporations filing a consolidated return for federal income tax purposes as the Liberty Subsidiaries (the "LMC affiliated group") and (B) except in connection with the Spin-off, none of LMC, TCITP, SpinCo or their respective affiliates (other than the holders of the Excluded Shares, as such term is defined in the LMC Agreement) has any current plan or intention (1) to transfer any Holdco equity securities held directly or indirectly by it immediately following the Execution Date (or to be acquired by it pursuant to this Agreement) (any such holder or acquirer, a "Holder") to any person that is not a member of the LMC affiliated group or (2) to cause any Holder to cease to be a member of the LMC affiliated group.

(ii) Investment Intent. The shares of LMCN-V Common Stock to be acquired by each of LMC and SpinCo pursuant to Section 2 will be acquired for its own account, for investment and not with a view to the distribution or resale thereof other than as contemplated in connection with the Spin-off or as contemplated by the Registration Rights Agreement (and except that LMC currently intends to transfer the shares of LMCN-V Common Stock that it so acquires to TCITP or a wholly-owned subsidiary of TCITP). Each of LMC and SpinCo understands that such shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities or blue sky laws, by reason of their issuance in a transaction exempt from the registration requirements thereunder and may not be resold unless the subsequent

disposition thereof is registered thereunder or is exempt from registration thereunder.

(c) Holdco represents and warrants to LMC and SpinCo as of the Execution Date that:

(i) The shares of LMCN-V Common Stock to be delivered as payment for the Contract Option and the non-competition agreement in
Section 11(b)(ix) will as of their date of issuance be duly authorized and validly issued, fully paid, nonassessable and free of preemptive rights.

(ii) Neither the execution and delivery by Holdco of this Agreement, the Distribution Contract and the Registration Rights Agreement nor the performance of its obligations hereunder and thereunder will result in the creation or imposition of any lien or other encumbrance on the shares of LMCN-V Common Stock to delivered as payment for the Contract Option and the non-competition agreement in
Section 11(b)(ix).

(d) In addition to the representations and warranties of Holdco set forth in Section 4(c), the following representations and warranties of Time Warner Inc., a Delaware corporation ("Old TW"), are hereby incorporated by reference, with the same effect as if made in this Agreement by Holdco to LMC and SpinCo on and as of the Execution Date:

(i) the representations and warranties of Old TW contained in
Section 3.02(a) of the Amended and Restated Agreement and Plan of Merger, dated as of September 22, 1995, as amended as of August , 1996 (the "Merger Agreement"), among Old TW, Holdco, Time Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting System, Inc., under the heading entitled "Organization, Standing and Corporate Power";

(ii) the representations and warranties of Old TW contained in
Section 3.02(c) of the Merger Agreement under the heading entitled "Capital Structure";

(iii) the representations and warranties of Old TW contained in Section 3.02(e) of the Merger Agreement under the heading entitled "SEC Documents; Undisclosed Liabilities";

(iv) the representations and warranties of Old TW contained in
Section 3.02(g) of the Merger Agreement under the heading entitled "Absence of Certain Changes or Events";

(v) the representations and warranties of Old TW contained in
Section 3.02(h) of the Merger Agreement under the heading entitled "Litigation";

(vi) the representations and warranties of Old TW contained in
Section 3.02(j) of the Merger Agreement under the heading entitled "Brokers"; and

(vii) the representations and warranties of Old TW contained in Section 3.02(k) of the Merger Agreement under the heading entitled "Taxes".

5. Representations and Warranties of Both Parties as of the Closing Date. If the Contract Option is exercised, it shall be a condition to the Closing (for the benefit of SpinCo) that, on and as of the Closing Date, each of the following representations and warranties, if qualified by materiality, shall be true and complete, or, if not so qualified, shall be true and complete in all material respects, with respect to Holdco, and it shall be a condition to the Closing (for the benefit of Holdco) that, on and as of the Closing Date, each of the following representations and warranties, if qualified by materiality,

shall be true and complete, or, if not so qualified, shall be true and complete in all material respects, with respect to LMC and SpinCo:

(a) Such party is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and is duly qualified and in good standing to do business as a foreign corporation in each jurisdiction in which the conduct or nature of its business or the ownership, leasing or holding of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect.

(b) Such party has all requisite corporate power to execute, deliver and perform its obligations under each of the Relevant Agreements to which it is a party, and such execution, delivery and performance have been duly authorized by all corporate action on its part required to be taken.

(c) Each of the Relevant Agreements to which it is a party is such party's legal, valid and binding obligation, enforceable in accordance with its terms, except as may be affected by bankruptcy, insolvency or similar laws affecting the rights of creditors generally and by equitable principles of general applicability.

(d) Neither the execution and delivery by such party of each of the Relevant Agreements to which it is a party nor, except as set forth below the applicable party's name on Schedule 5(d) hereto, the performance of its obligations thereunder: (i) will violate or conflict with, or constitute a breach or default under, (A) the certificate of incorporation or by-laws of such party, (B) any law, statute, regulation, rule, order or other enactment of any Governmental Entity applicable to such party, or (C) any agreement or instrument to which such party is a party or by

which it is bound or affected, except for any violations, conflicts, breaches or defaults as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of any of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created by the Relevant Agreements or (ii) result in the creation or imposition of any lien or other encumbrance on any of its assets, except for liens or encumbrances as would not, individually or in the aggregate, have a material adverse effect on the legality, validity, binding effect or enforceability of the Relevant Agreements or on the material rights or ability of the other Party to realize the material benefits intended to be created hereby and thereby. No authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Entity or other third party is required to be obtained or made in connection with, as applicable, such party's execution, delivery and any of the Relevant Agreements to which it is a party, except as set forth below the applicable party's name on Schedule 5(d) hereto, performance of each of the Relevant Agreements to which it is a party, or on the material rights or ability of the other Party to realize the material benefits intended to be created hereby and thereby.

Without limiting the rights or obligations of either Party under any provision of this Agreement: (1) if the Contract Option is exercised, each Party shall promptly notify the other Party of any information that should be set forth below such Party's name on Schedule 5(c); (2) upon receipt of any such notice, Schedule 5(c) shall automatically be amended to incorporate such information under the name of such Party; and (3) it shall be a condition to the obligations of each Party to be performed hereunder on the Closing Date that such Party shall be reasonably satisfied with the contents of Schedule 5(c) (as so amended) set forth under the name of the other Party, to the extent such matters are materially different from the

matters set forth under the name of such other Party on Schedule 4(a)(iii).

6. (a) Representations and Warranties of SpinCo as of the Closing Date. If the Contract Option is exercised, it shall be a condition to Closing (for the benefit of Holdco) that, on and as of the Closing Date, each of the following representations and warranties of SpinCo, if qualified by materiality, shall be true and complete or, if not so qualified, shall be true and complete in all material respects, except in each case as shall be set forth in a letter (the "Disclosure Letter") from SpinCo to Holdco dated as of a date after the exercise of the Contract Option and not later than the date 10 days prior to the Closing Date:

(i) Consents. Except as set forth in Schedule 6(a)(i) to the Disclosure Letter, no consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any governmental entity is required to be obtained or made by or with respect to SpinCo in connection with (A) the execution, delivery and performance of this Agreement or the Distribution Contract by SpinCo or performance by SpinCo of its obligations hereunder or thereunder or (B) the conduct of the business of SpinCo following the Closing hereof, other than (1) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), if applicable, (2) those that may be required solely by reason of Holdco's (as opposed to any other third party's) participation in the transactions contemplated hereby, (3) those that will be obtained by the Closing and (4) those the failure of which to be obtained or made by the Closing would not, individually or in the aggregate, have a Material Adverse Effect.

(ii) Financial Statements. (A) Attached to the Disclosure Letter as Schedule 6(a)(ii) are (1) the

unaudited consolidated balance sheet of the Business (or, if prior to the Spin-off, of SpinCo) as of the end of the most recent fiscal period or calendar month prior to the date of the Disclosure Letter (the "Balance Sheet"), and (2) the unaudited consolidated statements of operating results and cash flows of the Business (or, if prior to the Spin-off, of SpinCo) for the period ended as of the end of the most recent fiscal period or calendar month prior to the date of the Disclosure Letter (the financial statements described above, the "Financial Statements").

(B) The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied and on that basis fairly present (subject to normal, recurring year-end adjustments) the consolidated financial condition and results of operations of the Business (or of SpinCo) as of the date thereof and for the periods indicated.

(C) To the knowledge of SpinCo and, if prior to the Spin-off, LMC, as of the Closing Date, the Business (or, if prior to the Spin-off, SpinCo) does not have any material liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise), that are required by generally accepted accounting principles to be reflected on a consolidated balance sheet, except (1) as disclosed, reflected or reserved against in the Balance Sheet, (2) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet and not in violation of this Agreement and (3) for Taxes.

(iii) Assets. Except as set forth in Schedule 6(a)(iii) to the Disclosure Letter, SpinCo owns or has sufficient rights to use under existing

leases and license agreements all material properties, rights and assets reasonably necessary for the conduct of the Business as then conducted.

(iv) Contracts. Except as set forth in Schedule 6(a)(iv) to the Disclosure Letter:

(A) all material agreements, contracts, leases, licenses, commitments or instruments of SpinCo, as of the Closing Date that are reasonably necessary for the conduct of the Business as then conducted (collectively, the "Contracts"), are valid, binding and in full force and effect and, as of the Closing Date, are enforceable by SpinCo in accordance with their terms, except as may be affected by bankruptcy, insolvency or similar laws affecting the rights of creditors generally and by equitable principles of general applicability; and

(B) SpinCo has, as of the Closing Date, performed in all material respects all material obligations required to be performed by it under the Contracts and, as of the Closing Date, is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and no other party to any of the Contracts is to the knowledge of SpinCo, as of the Closing Date (with or without the lapse of time or the giving of notice, or both), in breach or default in any material respect thereunder, except in either such case for any such breach or default resulting from any action or omission by Holdco, Turner Broadcasting System, Inc. ("TBS") or any of their respective Affiliates, including without limitation any change in the programming service known as WTBS on the date of execution of this Agreement.

(v) Litigation. Except as set forth in Schedule 6(a)(v) to the Disclosure Letter:

(A) there are not, as of the Closing Date, any pending lawsuits or claims with respect to the Business to which SpinCo or, if prior to the Spin- off, LMC has been contacted in writing by counsel for the plaintiff or claimant, against or affecting SpinCo or any of its properties, assets, operations or businesses as to which there is at least a reasonable possibility of adverse determination, that would have, if so determined, individually or in the aggregate, a Material Adverse Effect;

(B) to the knowledge of SpinCo and, if prior to the Spin-off, LMC, as of the Closing Date, SpinCo is not a party or subject to or in default under any material judgment, order, injunction or decree of any Governmental Entity applicable to it or any of its material properties or assets, which relates to the Business or could result in a Material Adverse Effect;

(C) there is not pending against any other person, as of the Closing Date, any material lawsuit or claim by SpinCo, which relates to the Business or which, if adversely determined, could result in a Material Adverse Effect; and

(D) as of the Closing Date, to the knowledge of SpinCo and, if prior to the Spin-off, LMC, there is not any pending investigation of or proceeding by any Governmental Entity which relates to the Business and which if determined adversely could result in a Material Adverse Effect with respect to the Business or SpinCo.

(vi) Insurance. SpinCo, through one or more Affiliates, maintains or has the benefit (through TCI, LMC or otherwise) of policies of fire and casualty, liability and other forms of insurance (including self-insurance) in such amounts, with such deductibles and against such risks and losses as are, in its judgment, reasonable for the Business under the circumstances in which it is being conducted. Except as set forth in Schedule 6(a)(vi) to the Disclosure Letter:

(A) all such policies are in full force and effect, all premiums due and payable thereon as of the Closing Date have been paid (other than retroactive or retrospective premium adjustments that may be required to be paid with respect to any period ending prior to the Closing Date under comprehensive general liability and workmen's compensation insurance policies), and no notice of cancelation or termination as of the Closing Date has been received with respect to any such policy which has not been replaced prior to the date of such cancelation; and

(B) to the knowledge of SpinCo and, if prior to the Spin-off, LMC, its activities and operations with respect to the Business, as of the Closing Date, have been conducted in a manner so as to conform in all material respects to all applicable provisions of such insurance policies, except for any failures so to conform that could not, individually or in the aggregate, have a Material Adverse Effect.

(vii) Compliance with Applicable Laws. Except as set forth in Schedule 6(a)(vii), as of the Closing Date, SpinCo has not received any written communication during the past two years from a Governmental Entity that alleges that it or the Business is not in compliance in any material respect with any applicable

statutes, laws, ordinances, rules, orders and regulations of any Government Entity, other than any such communications, alleging any failures to be in compliance that, if true, would not, individually or in the aggregate, have a Material Adverse Effect.

(viii) Licenses; Permits. Except as set forth in Schedule 6(a)(viii) to the Disclosure Letter, SpinCo possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets with respect to the Business and to carry on the Business as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, would not have a Material Adverse Effect.

(ix) Absence of Changes or Events. Except as set forth in Schedule 6(a)(ix) to the Disclosure Letter:

(A) since the date of the Balance Sheet, there has not been any material adverse change in the business, assets, condition (financial or otherwise) or results of operations of the Business (or, if prior to the Spin-off, SpinCo); and

(B) since the date of the Balance Sheet, the Business has been conducted in the ordinary course (in accordance with the Ordinary Course Guidelines) and in substantially the same manner as previously conducted except for such changes (in accordance with the Ordinary Course Guidelines) in the day-to-day operations of the Business as the management of SpinCo (or, if prior to the Spin-off, LMC and SpinCo), in the good faith exercise of their business judgment, shall from time to time determine to be in the best interests of the Business) and has made

commercially reasonable efforts consistent with past practices to preserve the Business' relationships with customers, suppliers and others with whom SpinCo deals in connection with the Business.

(b) Certain Representations and Warranties of Holdco as of Closing Date. If the Contract Option is exercised, it shall be a condition to the Closing (for the benefit of SpinCo) that, on and as of the Closing Date, each of the following representations and warranties of Holdco, if qualified by materiality, shall be true and complete, or, if not so qualified, shall be true and complete in all material respects:

(i) Neither the execution and delivery by Holdco of this Agreement, the Distribution Contract and the Registration Rights Agreement nor the performance of its obligations hereunder and thereunder resulted in the creation or imposition of any lien or other encumbrance on the shares of LMCN-V Common Stock delivered by Holdco pursuant to Section 2 as payment for the Contract Option and the non-competition agreement in Section 11(b)(ix).

(ii) Old TW and Holdco have, collectively, filed all required reports, schedules, forms, statements and other documents with the Securities and Exchange Commission ("SEC") since December 31, 1993 (as such documents have been amended prior to the Closing Date, the "TW SEC Documents"). As of their respective dates, the TW SEC Documents complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such TW SEC Documents, and none of the TW SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or

necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by a later TW SEC Document. Except to the extent that information contained in any TW SEC Document has been revised or superseded by a later TW SEC Document, neither Old TW's Annual Report on Form 10-K for the year ended December 31, 1995, nor any TW SEC Document filed after December 31, 1995, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of Old TW and Holdco included in TW SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Old TW or Holdco, as applicable, and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the TW SEC Documents, neither Holdco nor any subsidiary of Holdco has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by generally accepted accounting principles to be set forth on a consolidated balance sheet of Holdco and its consolidated subsidiaries or in the notes thereto and which, individually or in the aggregate,

could reasonably be expected to have a Parent Material Adverse Effect (as defined in the Merger Agreement).

(iii) Except as disclosed in any TW SEC Document, since the date of the most recent audited financial statements included in TW SEC Documents, Holdco has (or, if Holdco shall have not yet filed audited financial statements as part of the TW SEC Documents, each of Old TW and Holdco has) conducted its business only in the ordinary course, and there has not been:

(A) any change or effect (or any development that, insofar as can reasonably be foreseen, is likely to result in a change or effect) which, individually or in the aggregate, has had or is likely to have, a Parent Material Adverse Effect;

(B) except for regular quarterly dividends not in excess of $0.09 per share of Holdco Common Stock and the stated or required amount of dividends on any series of Parent Preferred Stock (as defined in the Merger Agreement), in each case with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to Holdco Common Stock or any series of Parent Preferred Stock;

(C) any split, combination or reclassification of Holdco Common Stock or any issuance or the authorization of any issuance of any other securities in exchange or in substitution for shares of Holdco Common Stock;

(D) any damage, destruction or loss, whether or not covered by insurance that has had or is likely to have a Parent Material Adverse Effect; or

(E) any change in accounting methods, principles or practices by Holdco or any Material Parent Subsidiary (as defined in the Merger Agreement) materially affecting its assets, liabilities or business, except insofar as may have been required by a change in generally accepted accounting principles.

(c) Representations and Warranties of Holdco Incorporated by Reference as of the Closing Date. In addition to the representations and warranties of Holdco set forth in Section 6(b), the following representations and warranties of Old TW are hereby incorporated by reference, with the same effect as if made in this Agreement by Holdco to SpinCo on and as of the Closing Date:

(i) the representations and warranties of Old TW contained in
Section 3.02(a) of the Merger Agreement under the heading entitled "Organization, Standing and Corporate Power"; and

(ii) the representations and warranties of Old TW contained in
Section 3.02(j) of the Merger Agreement under the heading entitled "Brokers".

and it shall be a condition to the Closing (for the benefit of SpinCo) that each of the representations and warranties so incorporated by reference, if qualified by materiality, shall be true and complete, or if not so qualified, shall be true and complete in all material respects, on and as of the Closing Date.

7. Conditions to the Obligations of Each Party. The obligations of SpinCo and Holdco to consummate the

Closing are conditioned upon the satisfaction, prior to or on the Closing Date, of the following conditions:

(a) on the Closing Date, no action, proceeding or investigation commenced or brought by any U.S. Federal Government Entity shall be pending, the purpose of which is to set aside or modify in any material respect the authorizations of any of the transactions provided for in this Agreement and the Distribution Contract or to enjoin or prevent consummation of any of such transactions, nor shall any restraining order or preliminary or permanent injunction or other order issued by any court of competent jurisdiction or any other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby be in effect; and

(b) the receipt of any required regulatory approvals and authorizations and the making of all filings and the termination of all waiting periods required in connection with the Closing, with the understanding that, if the Contract Option is exercised, SpinCo will use its (or, if prior to the Spin-off, LMC and SpinCo will use their) commercially reasonable efforts to secure any required regulatory approvals and authorizations prior to the Closing; provided, however, that nothing in this Agreement shall require, Holdco or SpinCo (or any of their respective Affiliates) (i) to agree to, approve or otherwise be bound by or satisfy any condition of any kind referred to in the second or third sentences of Section 2.1(d) of the LMC Agreement or (ii) to agree to or enter into or be bound by any settlement or judgment.

8. Conditions to Obligation of Holdco. The obligation of Holdco to consummate the Closing is also subject to the satisfaction, prior to or on the Closing

Date, of each of the following additional conditions (unless waived by Holdco):

(a) Each of the Parties (other than Holdco) shall have performed in all material respects all its obligations hereunder which are required to be performed prior to the Closing Date.

(b) If prior to the Spin-off, Holdco shall have received a certificate from an officer of LMC (i) to the effect that LMC has complied, in all material respects, with all its obligations under this Agreement to be performed on or before the Closing Date, (ii) as to the incumbency of certain officers of LMC, (iii) as to the satisfaction of the conditions to Closing set forth in Section 5 (with respect to the representations and warranties of LMC contained therein) and Section 6(a) and (iv) attaching certified copies of SpinCo's certificate of incorporation and by-laws, as amended through and in effect on the Closing Date, together with all resolutions of LMC's board authorizing the transactions contemplated by this Agreement and the Distribution Contract.

(c) If prior to the Spin-off, Holdco shall have received an opinion of counsel to LMC (which counsel may be an employee of LMC and which counsel may be counsel to SpinCo), reasonably acceptable to Holdco, addressed to Holdco and dated the Closing Date, to the effect that:

(i) LMC is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. LMC has all requisite corporate power and authority to execute and deliver the Agreement, to perform its obligations thereunder and to consummate the transactions contemplated thereby.

(ii) The execution and delivery by LMC of the Agreement, the performance by LMC of its obligations

thereunder and the consummation by LMC of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action on the part of LMC. The Agreement has been duly executed and delivered by a duly authorized officer of LMC and constitutes the legal, valid and binding obligation of LMC enforceable against LMC in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity).

(iii) The execution, delivery and performance of the Agreement by LMC in accordance therewith does not conflict with or result in a violation of the Delaware Corporation Law or the Certificate of Incorporation or By-laws of LMC.

(d) Holdco shall have received a certificate from an officer of SpinCo (i) to the effect that SpinCo has complied, in all material respects, with all its obligations under this Agreement to be performed on or before the Closing Date, (ii) as to the incumbency of certain officers of SpinCo, (iii) as to the satisfaction of the conditions to Closing set forth in Section 5 (with respect to the representations and warranties of SpinCo contained therein) and
Section 6(a), and (iv) attaching certified copies of SpinCo's certificate of incorporation and by-laws as amended through and in effect on the Closing Date, together with all resolutions of SpinCo's board of directors authorizing the transactions contemplated by this Agreement and the Distribution Contract.

(e) Holdco shall have received an opinion of counsel to SpinCo (which counsel may be an employee of

SpinCo and may also be counsel to LMC and/or an employee of LMC), reasonably acceptable to Holdco, addressed to Holdco and dated the Closing Date, to the effect that:

(i) SpinCo is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. SpinCo has all requisite corporate power and authority to execute and deliver this Agreement and the Distribution Contract and to perform its obligations hereunder and thereunder.

(ii) The execution and delivery by SpinCo of this Agreement and the Distribution Contract and the performance by SpinCo of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate action on the part of SpinCo. Each of this Agreement and the Distribution Contract has been duly executed and delivered by a duly authorized officer of SpinCo and constitutes the legal, valid and binding obligation of SpinCo enforceable against SpinCo in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity).

(iii) The execution and delivery of this Agreement and the Distribution Contract by SpinCo, and the performance by SpinCo of its obligations hereunder and thereunder, does not conflict with or result in a violation of the corporate laws of the State of Georgia, or the Certificate of Incorporation or by-laws of SpinCo.

(f) The Program and Digitization Agreement attached hereto as Exhibit 2 (the "Program and Digitization Agreement") shall be in full force and effect, subject to satisfaction of the conditions set forth therein.

(g) SpinCo shall have received any material third party consents, approvals and authorizations necessary to cause the effectiveness of the Distribution Contract.

(h) Subject to Section 15(b), if an Exercise Notice shall have been delivered on or prior to June 1, 1997, Holdco shall have received the Disclosure Letter from SpinCo at least 10 days prior to the scheduled Closing Date and shall be reasonably satisfied with the contents thereof and of all attachments thereto.

If an Exercise Notice shall have been delivered by Holdco after June 1, 1997, (i) Holdco shall have received, as contemplated by Section
11(b)(vii), the revised Disclosure Letter from SpinCo at least 10 days prior to the scheduled Closing Date and (ii) Holdco shall be reasonably satisfied with the contents of the revised Disclosure Letter and of all attachments thereto, to the extent (and only to the extent) that such contents and attachments differ in any material respect from the initial Disclosure Letter delivered to Holdco pursuant to Section 11(b)(vii), and provided that the incurrence by SpinCo, TCITP and/or any of their respective subsidiaries of indebtedness for borrowed money, whether or not secured (unless secured in contravention of Section
11(b)(vi)(C)), shall not be a reasonable basis for Holdco's dissatisfaction under this Section 8(h).

(i) Subject to Section 15(b), if an Exercise Notice shall have been delivered on or prior to June 1, 1997, Holdco shall be reasonably satisfied with the results of its due diligence investigation provided for in Section 11(b)(ii).

9. Conditions to Obligation of SpinCo. The obligation of SpinCo to consummate the Closing is also

subject to the satisfaction, prior to or on the Closing Date, of each of the following conditions (unless waived by SpinCo):

(a) Holdco shall have performed in all material respects all its obligations hereunder which are required to be performed prior to the Closing Date.

(b) No petition or similar document shall have been filed by or with respect to Holdco under any bankruptcy, insolvency or similar law.

(c) SpinCo shall have received an opinion of counsel to Holdco (which counsel may be an employee of Holdco), reasonably acceptable to SpinCo, addressed to SpinCo and dated the Closing Date, to the effect that:

(i) Holdco is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. Holdco has all requisite corporate power and authority to perform its obligations under this Agreement, the Distribution Contract and the Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby.

(ii) The performance by Holdco of its obligations under this Agreement, the Distribution Contract and the Registration Rights Agreement, and the consummation by Holdco of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Holdco. Each of this Agreement, the Distribution Contract and the Registration Rights Agreement constitutes the legal, valid and binding obligation of Holdco enforceable against Holdco in accordance with its terms (subject to all applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting creditors' rights generally and subject, as

to enforceability, to general principles of equity, and except that the indemnification obligations set forth in Section 8 of the Registration Rights Agreement may be subject to considerations of public policy).

(iii) The performance by Holdco of this Agreement, the Distribution Contract and the Registration Rights Agreement does not conflict with or result in a violation of the General Corporation Law of the State of Delaware, or the certificate of incorporation or by-laws of Holdco.

(d) SpinCo shall have received a certificate from an officer of Holdco (i) to the effect that Holdco has complied, in all material respects, with all its obligations under this Agreement, the Distribution Contract and the Registration Rights Agreement, (ii) as to the incumbency of certain officers of Holdco, (iii) as to the satisfaction of the conditions to Closing set forth in
Section 5 (with respect to the representations and warranties of Holdco contained therein), Section 6(b) and Section 6(c), (iv) attaching all resolutions of Holdco's board of directors authorizing the transactions contemplated by this Agreement, and (v) any other customary matters as may be reasonably requested by SpinCo.

10. Termination. (a) Subject to the last two sentences of
Section 14 with respect to the survival of certain provisions, each of LMC's, SpinCo's and Holdco's rights and obligations under this Agreement (including with respect to the option granted hereunder, whether or not exercised) will terminate on the earliest to occur of the following:

(i) if Holdco shall deliver an Exercise Notice on or before June 1, 1997 (subject to extension as provided in Section 15(b)), the earlier of (A) the sixth anniversary of the Execution Date and (B) the

conversion of WTBS to a copyright-paid programming service;

(ii) if Holdco shall deliver an Exercise Notice after June 1, 1997 (subject to extension as provided in Section 15(b)), but before the sixth anniversary of the Execution Date, 60 days after the date of such Exercise Notice; and

(iii) if Holdco shall not theretofore have delivered an Exercise Notice, the earlier of (A) the sixth anniversary of the Execution Date and (B) the conversion of WTBS to a copyright-paid programming service;

provided in each case that the Closing has not occurred on or prior to such earliest date (the "Termination Date"). Notwithstanding the foregoing, if (following the delivery of a timely Exercise Notice) as a result of any action or failure to act by any unrelated third party, including any Governmental Entity, the conditions to the Closing have not been satisfied in full on or prior to the Termination Date, the "Termination Date" shall be extended to the earlier of (i) five business days after the date as of which all such conditions have been satisfied in full and (y) the first anniversary of the date of such Exercise Notice.

(b) The termination of this Agreement will in no way limit any obligation or liability of any Party based on or arising from a breach or default by such Party prior to such termination with respect to any of its representations, warranties or agreements contained in this Agreement, the Distribution Contract or the Registration Rights Agreement.

11. Covenants. (a) Covenants of Each Party. If the Contract Option is exercised each of SpinCo (or, if prior to the Spin-off, LMC and SpinCo) and Holdco agree to use its commercially reasonable efforts to cause the conditions to the Closing described in Sections 7, 8 and 9

to be satisfied as promptly as practicable following such exercise.

(b) Covenants of LMC and SpinCo.

(i) Disposition of Shares. During the period from the Execution Date through the earlier to occur of the Grant Date or the Termination Date, LMC shall not transfer or otherwise dispose of any of the Shares (other than a transfer of all, but not less than all, the Shares to any member of the affiliated group (within the meaning of
Section 1504(a) of the Code) of which LMC is (at the time of such transfer or disposition) a member; provided that (A) such transferee is, at the time of such transfer or disposition, a Liberty Party (as defined in the LMC Agreement) and (B) the transferee agrees to be bound by this Agreement and the provisions of the Distribution Contract to the same effect as LMC); provided further that LMC shall be entitled to pledge or otherwise hypothecate the Shares in connection with the incurrence of bona fide indebtedness to the extent that the applicable pledgee of the Shares agrees to be bound by the terms of this Agreement.

(ii) Access. Subject to Section 15(b), (A) during the period from the Execution Date until and including June 1, 1997, and (B) during the sixty-day period following the delivery of any Exercise Notice (including an Exercise Notice delivered on or prior to June 1, 1997), LMC and SpinCo shall give Holdco and its representatives, employees, counsel and accountants reasonable access, during normal business hours and upon reasonable notice, and subject to, as applicable, LMC's and SpinCo's obligations under any then existing confidentiality or non-disclosure agreements, to the personnel, properties, books and records of the Business to the extent in their possession or control, so that Holdco may confirm the satisfaction of

all

conditions precedent to its obligations to be performed hereunder on the Closing Date; provided, however, that such access does not unreasonably disrupt the normal operations of LMC or SpinCo. As against Holdco and its representatives, employees, counsel and accountants, each of LMC and SpinCo hereby waives any confidentiality or non-disclosure covenants contained for its benefit in any agreement concerning the Business (including any WTBS service agreements or arrangements) and it agrees to execute any acknowledgements with respect to such waiver as Holdco may reasonably request. Each of LMC and SpinCo agree to use commercially reasonable efforts in good faith to obtain all waivers and consents necessary under any existing confidentiality or non-disclosure agreement to afford full access to Holdco with respect to the Business; provided, however, that nothing in this Agreement shall require LMC or SpinCo (or any of their respective Affiliates) (x) to agree to any material modification or amendment to any agreement between any of them or any such Affiliate and any third party, or any other onerous or burdensome condition or requirement or
(y) to make any payment of money or deliver any other consideration to any third party, as a condition to the receipt of any waiver or consent hereunder. On the Execution Date and upon Holdco's delivery of the Exercise Notice, SpinCo shall also give Holdco a list of the WTBS Distributors (as defined in Section 24). During the period from the Execution Date through the earlier to occur of the Closing Date or the Termination Date, if SpinCo proposes to enter into any agreement with a WTBS Distributor or other third party, which agreement will contain a confidentiality or non- disclosure covenant relating to the existence, terms and/or conditions of any material agreement to which it is or will be a party, or any other material matter relating to the Business, SpinCo shall use commercially reasonable efforts in good faith to negotiate a provision in such agreement or covenant to permit it to

disclose the matters subject to such confidentiality or non-disclosure agreement to Holdco and its representatives, employees, counsel and accountants; provided, however, that nothing in this Agreement shall require LMC or SpinCo (or any of their respective Affiliates) (x) to agree to any material concession, condition or other provision in any agreement that, in their good faith business judgment, is in any respect materially less favorable to it or the Business than the comparable provision that could have been negotiated by it if this sentence did not apply or (y) to make any payment of money or deliver any other consideration to any third party, as a condition to receipt of any provision permitting any disclosure to Holdco or any such other person.

(iii) Ordinary Conduct. During the period from the Execution Date through the earlier to occur of the Closing Date or the Termination Date, SpinCo shall operate the Business in the ordinary course in substantially the same manner as currently conducted except for such changes in the day-to-day operations of the Business as the management of SpinCo (or, if prior to the Spin-off, the management of LMC and SpinCo), in the good faith exercise of their business judgment, shall from time to time determine to be in the best interests of the Business. In that connection, SpinCo shall use its commercially reasonable efforts to preserve the Business' relationships with customers, suppliers and others with whom SpinCo deals with respect to the Business. In addition, SpinCo shall not take any action that could reasonably be expected to materially impair the business, assets and financial condition of the Business at the time of the effectiveness of the Distribution Contract (provided that SpinCo shall be permitted to discontinue the operations of the Business if because of an act of God, significant change in law or other occurrence, it would not be commercially reasonable to continue such

operations). In connection, with its obligation to operate in the ordinary course, SpinCo shall not cease to be a private carrier with respect to the Business, as conducted domestically in the U.S., without the prior written consent of Holdco, which shall not unreasonably be withheld or delayed; provided, however, that such consent may be withheld by Holdco in its sole discretion if it determines that such action impairs the availability of the exception under 17 U.S.C. ss.111(a)(3). Holdco agrees that it and its Affiliates will not assist any third party in competing against SpinCo in uplinking the WTBS broadcast signal.

(iv) [Reserved.]

(v) Insurance. At all times during the period from the Execution Date through the earlier of the Closing Date and the Termination Date, SpinCo shall maintain in full force and effect (through one or more Affiliates or otherwise), insurance policies meeting the requirements of Section 6(a)(vi).

(vi) Mergers; Business Transfer; Security Arrangements. (A) SpinCo shall not merge with another corporation or other entity unless SpinCo is the surviving entity in such merger or the surviving entity delivers to Holdco prior to such merger an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement and the Distribution Contract.

(B) SpinCo shall not sell, transfer or otherwise dispose of the Business (other than any security interest granted in connection with a SpinCo financing covered by clause (C) below) unless (1) Spinco sells, transfers or otherwise disposes of the Business in its entirety and (2) the entity or person so acquiring the Business

prior to such acquisition delivers to Holdco an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement and the Distribution Contract.

(C) SpinCo shall not grant or permit to exist any lien or other security interest on the assets of the Business (including the Distribution Contract and its WTBS service agreements) in connection with any SpinCo financing unless the secured party or parties prior to any such grant agree in writing, for the benefit of Holdco, that (1) any foreclosure or sale of the Business shall involve the foreclosure or sale of the Business in its entirety and (2) as a condition to such foreclosure or sale, the entity or person so acquiring the Business shall be required to deliver to Holdco, prior to such acquisition, an agreement (in form and substance reasonably satisfactory to Holdco and its counsel) pursuant to which it agrees to be bound by the terms of this Agreement and the Distribution Contract.

(D) In the event that SpinCo or, prior to the Spin-off, LMC receives any proposal with respect to, or determines to enter into any transaction involving, any of the events described in this paragraph (vi), SpinCo and LMC shall promptly notify Holdco thereof.

(vii) Disclosure Letter and Closing Schedules. If, subject to
Section 15(b), Holdco delivers an Exercise Notice on or prior to June 1, 1997, SpinCo shall as soon as practicable after such delivery (and in any event not later than 10 days prior to the Closing Date) prepare and deliver to Holdco the Disclosure Letter and all required schedules to this Agreement that have not previously been delivered. If Holdco shall have not

delivered an Exercise Notice on or prior to June 1, 1997, SpinCo shall as soon as practicable after such date (but in any event not later than June 16, 1997) deliver to Holdco the Disclosure Letter and all required schedules to this Agreement as of such date. If thereafter Holdco delivers an Exercise Notice, Spinco shall as soon as practicable after such delivery (and in any event not later than ten days prior to the Closing Date) prepare and deliver to Holdco a revised Disclosure Letter and all required schedules to this Agreement that have not previously been delivered.

(viii) Supplemental Disclosure. SpinCo shall promptly notify Holdco of, and furnish Holdco any information it may reasonably request with respect to, the occurrence to its knowledge of any event or condition or the existence to its knowledge of any fact that causes any of the conditions to Holdco's obligation to cause the effectiveness of the Distribution Contract not to occur; provided, however, that no such notification shall be required with respect to any representation or warranty of LMC or SpinCo hereunder prior to delivery of the Disclosure Letter.

(ix) Restricted Activities; SpinCo Obligations. Each of LMC and SpinCo covenants and agrees with Holdco as follows:

(A) During the period from the Execution Date through the earlier of the Closing Date and the Termination Date, each of LMC and SpinCo shall not (and each shall cause its Affiliates not to) engage in the Business, other than through SpinCo.

(B) If the Closing Date occurs, during the period from the Closing Date through the fifth anniversary of the termination of the last service agreement between SpinCo and any MVPD (as defined in
Section 24), LMC

shall not, and shall cause its Affiliates not to, engage in the Business (other than through SpinCo). If the Closing Date occurs, during the period from the Closing Date through the Termination Date (as defined in the Distribution Contract) LMC shall not, directly or indirectly (including through any Affiliate), solicit any MVPD to terminate carriage of the WTBS programming service (including the programming of the broadcast television SuperStation known on the Execution Date as WTBS and any cable programming network established as the successor thereto) or, except as contemplated by the Distribution Contract, to terminate any service agreement with SpinCo with respect to such programming service; provided, however, that the provisions of this sentence shall not apply with respect to any MVPD that enters into a WTBS programming agreement with Holdco. By way of example, and without limiting the generality of the foregoing, it is understood that the offering of WTBS as a distant broadcast signal (other than through SpinCo) violates the restrictions of this subparagraph (B).

Anything contained herein to the contrary notwithstanding, Holdco acknowledges (I) that LMC and its Affiliates represent numerous programming services that are marketed, distributed and sold to MVPDs on a continuous basis, in competition with WTBS and other programming services, (II) that due to limited channel capacity, an MVPD must often terminate an existing programming service carried by such MVPD in order to carry a new programming service, and (III) that activities conducted by LMC and its Affiliates in connection with the marketing of programming services that compete with WTBS shall not be construed to violate LMC's covenant in this Section, even if an MVPD terminates carriage of WTBS to carry a programming service marketed by LMC or any of its Affiliates, unless LMC or such Affiliate shall have urged or induced such MVPD to drop WTBS.

(C) If the Closing Date occurs prior to the consummation of the Spin-off, then, so long as SpinCo is LMC's Controlled Affiliate (as defined in the LMC Agreement), LMC shall cause SpinCo to comply with its obligations under this Agreement and the Distribution Contract, including the provisions of Section 3 thereof.

(D) If the Closing Date occurs, then prior to and after consummation of the Spin-off, LMC shall provide Holdco and its representatives reasonable access, on a basis comparable to the access provided by SpinCo pursuant to Section 2(d) of the Distribution Contract, to any records of LMC relating to the Business prior to the Spin-off to confirm amounts payable to SpinCo after the Closing Date pursuant to the Distribution Contract.

(c) Confidentiality. Until the Closing Date (or if the Closing does not occur, until the second anniversary of the Termination Date) Holdco agrees to use the same efforts that it uses with respect to its own confidential and proprietary information to retain in strict confidence all proprietary and confidential information concerning the Business or SpinCo which is conveyed to it by LMC, SpinCo or any of their Affiliates, or any representative of LMC, SpinCo or any of their Affiliates ("Confidential Information"). Notwithstanding the foregoing, the term "Confidential Information" does not include: (i) information which is, at the time of its disclosure to Holdco or any Affiliate of Holdco or their respective representatives, already in Holdco's, its Affiliates' or their representatives' possession (without violation, to Holdco's knowledge, of any legally enforceable confidentiality agreement with LMC, SpinCo or any of their Affiliates relating to such information), (ii) information which is or becomes available to the public other than as a result of a disclosure by Holdco or any Affiliate of Holdco or their respective representatives, (iii) information which was or becomes available to Holdco or any Affiliate of

Holdco or their respective representatives on a non-confidential basis from a source other than LMC, SpinCo, any of their Affiliates or their respective representatives (provided that information contained in any agreement with respect to the Business obtained solely as a result of the confidentiality waiver in Section 11(b)(ii) shall not be considered to be obtained on a non-confidential basis); provided that such source was not known by Holdco to be bound by the terms of a legally enforceable confidentiality agreement with LMC, SpinCo or any of their Affiliates relating to such information, (iv) information which is information that is independently developed by Holdco or its Affiliates or their respective representatives or (v) any oral information, unless such information is stated to be proprietary and confidential at the time of disclosure and such statement and information is summarized in writing within 30 days after such disclosure. In the event that Holdco, any of its Affiliates or any of their respective representatives is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other process) to disclose any Confidential Information, it is agreed that Holdco will provide SpinCo and, prior to the Spin-off, LMC with prompt notice of any such request or requirement (written if practical) so that LMC and/or SpinCo may seek at its own expense an appropriate protective order or waive Holdco's compliance with the provisions of this
Section 11(c). If, failing the entry of a protective order or the receipt of a waiver hereunder, Holdco, any of its Affiliates or any of their respective representatives is, in the opinion of its counsel, compelled to disclose any Confidential Information, Holdco or such Affiliate or representative may disclose that portion of any Confidential Information which its counsel advises that it is compelled to disclose and will upon written request and at the expense of LMC and/or SpinCo use reasonable efforts to cooperate in LMC's and/or SpinCo's efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded to that portion of such Confidential

Information which is being disclosed. Holdco will use the Confidential Information only in connection with its due diligence review of the Business and SpinCo, as contemplated by this Agreement and will not otherwise use it in its business or disclose it to others, except to its employees, representatives and Affiliates (and their employees and representatives) who require such Confidential Information to perform their duties in connection with, or exercise Holdco's rights under, this Agreement and agree not to disclose or use such Confidential Information except as provided herein. Holdco agrees that it shall be responsible for any breach of this Section 11(c) by such persons. In the event that the Closing does not occur under this Agreement, Holdco shall, at its option, either (i) return all Confidential Information provided or made available to it hereunder relating to the Business and SpinCo, whether in written, computer-readable or other form, together with all copies thereof in the possession of Holdco or (ii) destroy all such Confidential Information and certify such destruction to LMC and SpinCo; provided, however, that Holdco's sole obligation with respect to the disposition of any internal notes, memoranda or other materials prepared by it that incorporate any Confidential Information shall be to redact or otherwise expunge all such Confidential Information from such materials.

(d) Covenant by Satellite Relating to Carriage of WTBS. During the period from the Execution Date through the earlier of the Closing Date and the Termination Date, provided that Holdco or any Managed Subsidiary of Holdco then owns the programming service currently known as "WTBS" (as it may be renamed in the future) ("WTBS"), Satellite shall cause each of its affiliates (as such term is defined in Section 1(a) of Satellite's existing affiliation agreement, dated as of July 15, 1992, with The Cartoon Network, Inc., a copy of the pertinent provisions of which was attached to a letter dated as of October 2, 1995, from Baker & Botts, L.L.P., counsel to LMC, to Peter R. Haje, the general counsel of Holdco) (and each affiliate of any other

intermediary (as contemplated by the second sentence of the definition of "Business" in Section 24(b))) that carries WTBS, and each other entity to which Satellite (or such other intermediary) provides (or arranges for the provision of) the WTBS signal, to carry the WTBS signal transmitted by SpinCo (provided that SpinCo is able to transmit such signal), it being understood that nothing in this Agreement shall prohibit any such affiliate or other person or entity from deleting carriage of the WTBS signal transmitted by SpinCo, provided that upon such deletion such affiliate or other person or entity does not carry the WTBS signal from any other source (it being understood that nothing in this
Section 11(d) shall limit the effects of the "HITS" provisions of the Program and Digitization Agreement with respect to the carriage of the WTBS signal, or the rights and obligations of the parties thereunder, when those provisions become effective in accordance with their terms).

(e) Acknowledgement by SpinCo and LMC. Each of SpinCo and LMC acknowledges and agrees for itself and each of its Affiliates that, from and after the closing of the Mergers (as defined in the LMC Agreement), (i) Holdco intends to (and may) communicate directly with MVPDs (including MVPDs that are WTBS Distributors) regarding the transformation of WTBS into a copyright-paid, satellite delivered, twenty-four-hour-per-day cable television programming service and (ii) Holdco intends to (and may) communicate with WTBS Distributors about (x) the terms of a new WTBS distribution contract or arrangement directly with Holdco or any of its Managed Subsidiaries (conditioned on transformation of WTBS to such a copyright-paid service) and (y) the possible termination of their existing contracts or arrangements with SpinCo (upon transformation of WTBS to a copyright-paid service), and Holdco intends to (and may) enter into agreements with WTBS Distributors with respect to the foregoing (conditioned upon the transformation of WTBS to a copyright-paid service), all without creating any liability to SpinCo, LMC or any of their respective Affiliates. Neither Spinco, LMC nor any of their respective

Affiliates will discourage any MVPD from engaging in any such conversations or negotiations with Holdco or its Affiliates with respect to the converted WTBS program service or discourage any MVPD from entering into any such contracts or arrangements with respect to the converted WTBS program service.

(f) Holdco's Right to Assign Program and Digitization Agreement to Managed Subsidiaries. LMC, SpinCo and Satellite hereby acknowledge and agree that, from and after the closing of the Mergers (as defined in the LMC Agreement), the rights (but not the obligations) of TBS under the Program and Digitization Agreement with respect to the carriage of the copyright-paid WTBS service may be assigned to any Managed Subsidiary, provided that any such assignment shall terminate if the assignee ceases to be a Managed Subsidiary. This Section 11(f) shall survive the exercise of the Contract Option and any termination of this Agreement.

(g) Non-Exclusive Right to Digitize, Compress and Reuplink. Reference is made to the "HITS" provisions of the Program and Digitization Agreement. The Parties hereby consent to any action taken by Satellite during the term of this Agreement that would be permitted by such provisions of the Program and Digitization Agreement, as if such agreement were then in effect with respect to WTBS prior to its conversion to a copyright-paid service and (i) all references therein to "TBS" referred to SpinCo, (ii) all references therein to "TBS services" referred to WTBS, and (iii) the reference in the third line to "licensed by TBS" meant "authorized by SpinCo pursuant to contractual relationships". In that connection, and on the same basis, Satellite shall comply with the obligations required to be performed by Satellite in such "HITS" provisions.

12. [Reserved.]

13. [Reserved.]

14. Survival. The representations, warranties and agreements of the Parties in this Agreement and in the other documents and instruments to be delivered by any Party pursuant to this Agreement will continue in full force and effect from the time made or deemed to have been made until the Closing, whereupon such representations, warranties and agreements shall terminate. Notwithstanding any other provision of this Agreement, the tax representations and warranties in Section 4(b)(i), and the representations and warranties of Holdco contained in Sections 4(c)(i) and (ii) and Sections 6(b)(i) and (ii) shall survive the Execution Date, the Closing and the termination of this Agreement pursuant to Section 10 and shall continue in full force and effect indefinitely. In addition, the provisions of Section 2(f) and Section 11(b)(ix) shall survive the Execution Date, the Closing and the termination of this Agreement pursuant to Section 10 and shall survive in accordance with their terms.

15. Parties Obligated and Benefited; LMC's Right to Designate Recipient; Other Transaction. (a) Subject to the limitations set forth below, this Agreement will be binding upon the Parties and their respective assigns and successors in interest and will inure solely to the benefit of the Parties and their respective assigns and successors in interest, and no other person will be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party will assign any of its rights or delegate any of its duties under this Agreement or the Distribution Contract, except: (i) LMC may assign (without the consent of Holdco) any of its rights (including, without limitation, the right to receive the Section 2 payment for the non-competition agreement in Section 11(b)(ix) to any person that, at the time of such assignment (and, in the case of any such person designated to receive such payment, at the payment date), is (A) a Liberty Party (as defined in the LMC Agreement) and (B) a member of the affiliated group (within the meaning of Section 1504(a) of the Code) of which LMC is (at such time)

a member; (ii) by operation of law; and (iii) with respect to any merger of SpinCo or sale or disposition of the Business, in each case, permitted under
Section 11(b)(vi).

(b) If, as contemplated by Section 2, the Letter Ruling shall have not been obtained by May 31, 1997 or TCI shall have been advised or have determined that it will not obtain the Letter Ruling (or, that it will not obtain the Letter Ruling unless TCI and the other parties thereto agree to changes in the transactions contemplated by the LMC Agreement and the Additional Agreements (as defined in the LMC Agreement) or any other conditions imposed as a prerequisite by the Internal Revenue Service), the Parties agree that (i) notwithstanding the provisions of Section 2, the Grant Date shall be postponed for 30 days during which period the Parties shall mutually endeavor in good faith to negotiate the consummation of a transaction that is more tax efficient to both Parties and (ii) the references to June 1, 1997, in this Agreement (including as they relate to the definition of the Termination Date, Holdco's delivery of an Exercise Notice, Holdco's conditions to Closing, Holdco's access to the Business and SpinCo's delivery of the Disclosure Letter and related schedules) shall be automatically extended to the date, if later than June 1, 1997, that is five days after the termination of the discussions contemplated by this Section 15(b).

16. Notices. Any notice, request, demand, waiver or other communication required or permitted to be given under this Agreement will be in writing and will be deemed to have been duly given only if delivered in person or by

first class, postage prepaid, registered or certified mail, or sent by courier or, if receipt is confirmed, by telecopier:

If to Holdco:

Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019

Attention: President

with a copy similarly addressed to the attention of General Counsel

with a copy (which shall not constitute notice) to:

Cravath, Swaine & Moore Worldwide Plaza
825 Eighth Avenue
New York, New York 10019

Attention: William P. Rogers, Jr., Esq.

If to LMC:

Liberty Media Corporation

8101 East Prentice Avenue Suite 500
Englewood, Colorado 80111

Attention: President

with copies (which shall not constitute notice) to:

Stephen M. Brett, Esq.

General Counsel

Tele-Communications, Inc. Terrace Towers II
5619 DTC Parkway
Englewood, Colorado 80111-3000

and

Baker & Botts, L.L.P.

599 Lexington Avenue

Suite 2800
New York, New York 10022

Attention: Elizabeth Markowski, Esq.

If to SpinCo:

Southern Satellite Systems, Inc.

8101 East Prentice Avenue Suite 500
Englewood, Colorado 80111

Attention: President

with copies (which shall not constitute notice) to:

Stephen M. Brett, Esq.

General Counsel

Tele-Communications, Inc. Terrace Towers II
5619 DTC Parkway
Englewood, Colorado 80111-3000

(but only prior to the Spin-off)

and

Baker & Botts, L.L.P.

599 Lexington Avenue

Suite 2800
New York, New York 10022

Attention: Elizabeth Markowski, Esq.

Any party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section 16. All notices will be deemed to have been received on the date of delivery or on the fifth business day after mailing in accordance with this Section, except that any notice of a change of address will be effective only upon actual receipt.

17. Waiver. This Agreement or any of its provisions may not be waived except in writing. The failure of any Party to enforce any right arising under this Agreement on one or more occasions will not operate as a waiver of that or any other right on that or any other occasion.

18. Interpretation. The section captions of this Agreement are for convenience only and do not constitute a part of this Agreement. When a reference is made in this Agreement to a Section or Exhibit such reference shall be to

a Section of, or an Exhibit to, this Agreement, unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation".

19. Choice of Law. This Agreement and the rights of the Parties under it will be governed by and construed in all respects in accordance with the laws of the State of New York applicable to contracts made and performed wholly therein.

20. Time. If the last day permitted for the timing of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a business day, the time for the giving of such notice or the performance of such act will be extended to the next succeeding business day.

21. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together shall constitute a single instrument.

22. Entire Agreement. This Agreement (including all Exhibits and Schedules attached to this Agreement, the Distribution Contract, the Registration Rights Agreement, the LMC Agreement and the agreements referenced herein and therein, each of which shall be deemed to constitute a part of this Agreement) contains the entire agreement of the Parties, and supersedes all prior oral or written agreements and understandings with respect to the subject matter hereof. This Agreement may not be amended or modified except by a writing signed by the Parties.

23. Severability. Any term or provision of this Agreement which is held to be invalid or unenforceable in any jurisdiction, as to such jurisdiction, will be ineffective only to the extent of such invalidity or

unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of the Agreement in any other jurisdiction, and in the event any provision of this Agreement is held to be invalid or unenforceable in any jurisdiction, such provision will be reformed with respect to, and enforced as fully as possible in, such jurisdiction, consistent (to the extent possible) with the purposes and intents of the parties expressed herein.

24. Certain Definitions. As used in this Agreement, the following terms have the corresponding meanings:

(a) An "Affiliate" of a person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person;

(b) "Business" means the business of uplinking and distributing to MVPDs the signal of the television station broadcasting on the date hereof in Atlanta, Georgia under the call letters WTBS, and any successor over-the-air television station in Atlanta, Georgia that broadcasts substantially similar programming as WTBS following its conversion to a copyright-paid programming service (as such converted service may be renamed); provided that the Business shall refer to the business of uplinking and distributing only one such broadcast television station at any one time. Anything contained herein to the contrary notwithstanding, neither (i) the existence of an agreement between SpinCo or any unrelated third party and any intermediary (such as Satellite and/or Netlink USA) pursuant to which such intermediary arranges for the WTBS signal transmitted by SpinCo or such unrelated third party to be received by an "affiliate" of such intermediary as defined in Section 11(d) of this Agreement (or an analogous definition, if the intermediary is not Satellite), and any

other person to whom such intermediary is authorized to arrange for the transmission of such signal, as contemplated by Section 11(d), nor (ii) any activities by any intermediary of the type contemplated by Section 11(g) hereof, shall in itself (A) cause such an intermediary to be construed as engaging in the "Business" as defined herein or (B) cause such an intermediary to be in violation of the restrictions of Section 4 pursuant to the last sentence of the first paragraph thereof;

(c) "Current Market Price", as of any date, means the average of the daily closing prices for the shares of the Holdco Common Stock for the 20 trading day period ending on the full trading day immediately prior to the date in question, appropriately adjusted to take into account any stock dividends, splits, reverse splits, combinations and the like, the ex-dividend date or effective date for which occurs during (but after the first day of) such 20 trading day period. The closing price for each trading day shall be the last reported sale price on such day (or if no such reported sale takes place on such day, the average of the reported closing bid and asked prices) of the Holdco Common Stock (regular way) as shown on the Composite Tape of the New York Stock Exchange;

(d) "FTC Agreement in Principle" means the Agreement in Principle with FTC Staff re: Consent Order dated July 16, 1996, entered into by the Federal Trade Commission, Holdco and TCI;

(e) "FTC Consent Decree" means the Agreement Containing Consent Order (including the FTC Agreement in Principle, the "ACCO") dated as of August , 1996, with the Federal Trade Commission, together with the Order issued in connection with the ACCO;

(f) "Governmental Entity" means a court, administrative agency or commission or other governmental authority or instrumentality;

(g) "Holdco Common Stock" means the Common Stock, $.01 par value, of Holdco;

(h) "Letter Ruling" means a letter ruling from the Internal Revenue Service (i) to the effect that, at the time thereof, the Spin-off shall constitute a tax free distribution under Section 355 of the Internal Revenue Code of 1986, as amended, and (ii) that is otherwise acceptable to Holdco and TCI;

(i) "Liberty Subsidiaries" means TCI Turner Preferred, Inc., Liberty Broadcasting, Inc., United Cable Turner Investment, Inc. and Communication Capital Corp.;

(j) "Managed Subsidiary" means, as to Holdco, an Affiliate of Holdco (i) in which Holdco has, directly or indirectly, a majority ownership interest and (ii) as to which Holdco has day-to-day management control, specifically including, without limitation, as of the date hereof, Time Warner Entertainment Company L.P. and Time Warner Entertainment/ Advance Newhouse Partnership;

(k) "Material Adverse Effect" means, as to any person, a material adverse effect on the business, assets, financial condition or results of operations of such person and its consolidated subsidiaries, taken as a whole, or on the ability of such person to perform its obligations under any of the Relevant Agreements to which it is a party;

(l) "MVPDs" means all cable, MMDS, LMDS, TVRO, DBS, video dial tone and/or other distributors of multichannel video programming by any means;

(m) "Ordinary Course Guidelines" means the general guidelines with respect to the operation of the Business of SpinCo as set forth on Exhibit 3 hereto;

(n) "Spin-off" means the distribution by TCI of 100% of the capital stock of SpinCo to holders of record of

TCI's Tele-Communications, Inc. Series A Liberty Media Group Common Stock and Tele-Communications, Inc. Series B Liberty Media Group Common Stock;

(o) "Taxing Authority" shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

(p) "Tax" shall mean any Federal, state, local and foreign taxes and assessments, including all interest penalties and additions imposed with respect to such amounts; and

(q) "WTBS Distributors" means those persons and entities with whom SpinCo has an affiliate agreement or other arrangement or agreement for the distribution of WTBS.

25. Enforcement. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement, and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the States of Colorado, Delaware or New York, or in Delaware or Colorado state court (in addition to any other remedy to which they are entitled at law or in equity). In addition, each of the Parties hereto (a) hereby consents and submits itself to the non-exclusive personal jurisdiction of any Federal court located in the States of Colorado, Delaware and New York or any Delaware or Colorado state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.

26. No Unauthorized Transfer of Control. Nothing in this Agreement or the Distribution Contract shall, nor shall be construed to, constitute a transfer of control of the licenses held by SpinCo and its subsidiaries without prior approval by the Federal Communications Commission ("FCC") of the transfer of all such licenses issued by the FCC to SpinCo and its subsidiaries. SpinCo shall at all times retain full, exclusive and absolute control of the licensed facilities as well as ultimate responsibility for the operation of the FCC licensed facilities pursuant to all applicable rules and policies of the FCC and the Communications Act of 1934, as the foregoing may be superseded or amended.

27. Continuation as Passive Carrier. SpinCo is and will continue to be a passive carrier, and nothing in this Agreement or the Distribution Contract shall, nor shall be construed to, require SpinCo to operate with respect to carriage of the WTBS signal other than as a passive carrier pursuant to 17 U.S.C. ss. 111(a)(3) and as a satellite carrier pursuant to 17 U.S.C. ss. 119(a), prior to the Converted WTBS, as defined in Section 18 of the Distribution Contract.

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

TW INC.,

By /s/ Thomas W. McEnerney
   ---------------------------
   Name:  Thomas W. McEnerney
   Title: Vice President

LIBERTY MEDIA CORPORATION,

By /s/ Robert R. Bennett
   --------------------------
   Name:  Robert R. Bennett
   Title: Executive Vice
          President

SOUTHERN SATELLITE SYSTEMS,
INC.

By /s/ Robert R. Bennett
   --------------------------
   Name:  Robert R. Bennett
   Title: Executive Vice
          President

With respect to Section 11(d),
Section 11(f) and
Section 11(g) only:

SATELLITE SERVICES, INC.,

By /s/ Stephen M. Brett
   --------------------------
   Name:  Stephen M. Brett
   Title: Vice President

EXHIBIT 3 TO
THE SSSI AGREEMENT

ORDINARY COURSE GUIDELINES

Under Section 6(a)(ix) of the SSSI Agreement to which this Exhibit 3 is attached, SpinCo is required to represent on the Closing Date that, except as set forth in the Disclosure Letter, the Business has been operated in the ordinary course consistent with past practices and the following guidelines.

Capitalized terms used, but not defined herein, have the meanings assigned thereto in the SSSI Agreement.

In operating the Business:

(i) SpinCo distributes WTBS only pursuant to service agreements;

(ii) SpinCo requires that all WTBS Distributors make all required payments to the Copyright Tribunal;

(iii) SpinCo requires in its service agreements that its WTBS Distributors receive the WTBS signal from no other source other than (A) SpinCo or (B) Holdco and its Managed Subsidiaries;

(iv) SpinCo requires mandatory carriage of WTBS on all the systems covered under its service agreements on all tiers of service other than the lifeline tier, subject to (A) SpinCo's ability to provide the WTBS signal and (B) customary termination provisions; and

(v) SpinCo enforces the Copyright Tribunal, exclusivity, carriage and tiering provisions described in (ii), (iii) and (iv) above.

STOCKHOLDERS' AGREEMENT

Stockholders' Agreement, dated October 10, 1996, by and among TCI Turner Preferred, Inc., a Colorado corporation ("TCITP"), Liberty Broadcasting, Inc. ("LBI") and Communication Capital Corp. ("CCC" and, together with LBI and TCITP, the "TCITP Stockholders"), R.E. Turner, III ("Turner"), Turner Outdoor, Inc. ("TOI") and Turner Partners, L.P., a Georgia limited partnership ("TP" and, together with Turner, the "Turner Stockholders"), and TW Inc., a Delaware corporation, which promptly following the date hereof will change its name to Time Warner Inc. ("Holdco").

Each of the TCITP Stockholders and the Turner Stockholders is or may become a beneficial owner of shares of capital stock of Holdco. The Turner Stockholders, Holdco and the TCITP Stockholders desire to enter into the arrangements set forth in this Agreement regarding future dispositions of shares of Holdco capital stock which the Turner Stockholders or the TCITP Stockholders now or may in the future beneficially own.

Therefore, in consideration of the premises and the mutual benefits to be derived hereunder and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Definitions: The following terms in this Agreement shall have the respective meanings listed below:

Affiliate: With respect to any Person, any other Person which directly or indirectly Controls, is under common Control with or is Controlled by such first Person. The term "affiliated" (whether or not capitalized) shall have a correlative meaning. For purposes of this Agreement (i) the Turner Foundation, Inc. (the "Turner Foundation"), the R.E. Turner Charitable Remainder Unitrust No. 2 (the "Turner Unitrust") and any other Charitable Transferee or Qualified Trust

shall be deemed not to be Affiliates of any Turner Stockholder and (ii)(A) no TCITP Affiliate shall be deemed to be an Affiliate of any Turner Affiliate, or vice versa, and (B) no TCITP Affiliate or Turner Affiliate shall be deemed to be an Affiliate of any Holdco Affiliate, or vice versa.

Affiliated Group: With respect to any Stockholder, the group consisting of such Stockholder and all Controlled Affiliates of such Stockholder.

Agreement: This Agreement as the same may be amended from time to time in accordance with its terms.

Appraised Value: As defined in Section 4.1 hereof.

The "beneficial owner" of any security means a direct or indirect beneficial owner of such security within the meaning of Rule 13d-3 under the Exchange Act, as in effect on and as interpreted by the Commission through the date of this Agreement, and the terms (whether or not capitalized) "beneficially own," "beneficially owned" and "owned beneficially" shall have correlative meanings; provided, however, that any Person who at any time beneficially owns any Option or Convertible Security shall also be deemed to beneficially own the Underlying Securities, whether or not such Option or Convertible Security then is or within 60 days will be exercisable, exchangeable or convertible.

Board of Directors: The Board of Directors of Holdco.

Bona Fide Offer: As defined in Section 3.1 hereof.

Broker Transactions: "Broker's transactions" within the meaning of paragraph (g) of Rule 144 of the General Rules and Regulations under the Securities Act.

Charitable Transfer: Any Disposition of Covered Securities by a Turner Stockholder to the Turner Foundation, any other Charitable Transferee, the Turner Unitrust or any other Qualified Trust that is not an Exempt Transfer pursuant to clause (vii) of the definition of Exempt Transfer; provided, however, that any such transferee shall, by a written instrument in form and substance reasonably satisfactory to TCITP, agree to be bound by the provisions of this Agreement with respect to the Covered Securities that are the subject of such Charitable Transfer to the same extent as the Turner Stockholder making such Disposition.

Charitable Transferee: Any charitable organization described in Section 501(c)(3) of the Code.

Code: The Internal Revenue Code of 1986, as amended.

Commission: The Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act or the Exchange Act.

Common Stock: The common stock, par value $.01 per share, of Holdco or any other shares of capital stock of Holdco into which the Common Stock may be reclassified or changed.

Contract: Any agreement, contract, commitment, indenture, lease, license, instrument, note, bond or security.

Control: As to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person (whether through ownership of securities, partnership interests or other ownership interests, by contract, or otherwise). The terms "Controlled," "Controlling" and similar variations shall have correlative meanings.

Controlled Affiliate: When used with respect to a specified Person, means each Affiliate of such Person which is Controlled by such Person and which is not Controlled by or under common Control with any other Person (except one or more other Controlled Affiliates of such specified Person); provided, however, that for purposes of any provision of this Agreement which requires any Stockholder to cause one or more of its Controlled Affiliates to take or refrain from taking any action (including any action relating to the Disposition of any Covered Securities) or which otherwise purports to be applicable to any Covered Securities owned or held by one or more Controlled Affiliates of such Stockholder, no Affiliate of such Stockholder which otherwise would be a Controlled Affiliate of such Stockholder shall be deemed to be a Controlled Affiliate of such Stockholder unless such Stockholder possesses, directly or indirectly, the power to direct decisions regarding such action or the Disposition of such Covered Securities.

Convertible Securities: Evidences of indebtedness, shares of stock or other securities or obligations which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for any Holdco Shares, either immediately or upon the occurrence of a specified date or a specified event, the satisfaction of or failure to satisfy any condition or the happening or failure to happen of any other contingency.

Covered Securities: Any and all Holdco Shares, Convertible Securities and Options.

Current Market Price: As to any share of Common Stock at any date, the average of the daily closing prices for shares of the Common Stock for the 5 consecutive trading days ending on the trading day immediately before the day in question. The closing price for such shares for each day shall be the last reported sale price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case on the principal United States securities exchange on which such shares are listed or admitted to trading, or if they are not listed or admitted to trading on any such exchange, the last reported sale price (or the average of the quoted closing bid and asked prices if no sale is reported) as reported on the Nasdaq Stock Market, or any comparable system, or if such shares are not quoted on the Nasdaq Stock Market, or any comparable system, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected by Holdco.

Defensive Provision: (i) any control share acquisition, interested stockholder, business combination or other similar antitakeover statute (including the Delaware Statute) applicable to Holdco, (ii) any provision of the Restated Certificate of Incorporation or Bylaws of Holdco
(including Article V of such Restated Certificate of Incorporation), and (iii)
any plan or agreement to which Holdco is a party, whether now or hereafter existing, which would constitute a "poison pill" or similar antitakeover device (including any Rights Plan).

Delaware Statute: Section 203 of the Delaware General Corporation Law or any successor statutory provision.

Disadvantageous Result: (i) The breach or violation of any Restriction applicable to any member of the Group of such Stockholder or its Affiliates, (ii) any member of the Group of such Stockholder or its Affiliates becoming subject to any Restriction to which it was not previously subject, or
(iii) the occurrence of any Rights Plan Triggering Event.

Disposition: When used with respect to any Covered Security, any sale, assignment, alienation, gift, exchange, conveyance, transfer, hypothecation or other disposition whatsoever, whether voluntary or involuntary and whether direct or indirect, of such Covered Security or of dispositive control over such Covered Security. "Disposition" shall not include (i) a transfer of voting control of a Covered Security to the extent required to avoid imposition of any prohibition, restriction, limitation or condition on or requirement under any Requirement of Law or Defensive Provision having any of the effects described in clauses (A) and (B) of the definition of Restriction herein, or (ii) delivery of a revocable proxy in the ordinary course of business. The term "dispose" (whether or not capitalized) shall mean to make a Disposition. Without limiting the generality of the foregoing:

(i) any redemption, purchase or other acquisition in any manner (whether or not for any consideration) by Holdco of any Covered Securities shall be deemed to be a Disposition of such Covered Securities; and

(ii) none of the conversion or exchange of a Convertible Security, the exercise of any Option or the failure to convert or exchange a Convertible Security or to exercise any Option prior to the expiration of the right of conversion, exchange or exercise shall be deemed to be a Disposition of such Convertible Security or such Option.

For purposes of this Agreement any Disposition of any Option or Convertible Security shall also constitute a Disposition of the Underlying Securities.

Effective Time: "Effective Time of the Merger", as defined in the Merger Agreement.

Encumbrance: As defined in Section 3.1(f) hereof.

Exchange Act: The Securities Exchange Act of 1934, as amended, or any successor Federal statute, and the rules and regulations of the Commission promulgated thereunder, as from time to time in effect.

Exempt Transfer: Any Disposition that falls within any one of the following clauses: (i) An exchange or conversion of Covered Securities which occurs by operation of law in connection with a merger, consolidation of Holdco with or into another corporation, or a recapitalization, reclassification or similar event that has been duly authorized and approved by the required vote of the Board of Directors and the stockholders of Holdco pursuant to the Restated Certificate of Incorporation of Holdco and the law of the jurisdiction of incorporation of Holdco; (ii) any surrender by a Stockholder to Holdco of Covered Securities upon redemption by Holdco of such Covered Securities pursuant to any right or obligation under the express terms of such Covered Securities that is made on a proportionate basis from all holders of such Covered Securities and is not at the option of such Stockholder; (iii) any Permitted Pledge and any transfer of such pledged Covered Securities to the Pledgee upon default of the obligations secured by such pledge; (iv) any transfer solely from one member of the Affiliated Group of a Stockholder to another member of the Affiliated Group of a Stockholder; (v) any transfer by a Stockholder who is an

individual to (A) a spouse, (B) any other member of his immediate family (i.e., parents, children, including those adopted before the age of 18, grandchildren, brothers, sisters, and the spouses or children of the foregoing), (C) Qualified Trust or (D) a custodian under the Uniform Gifts to Minors Act or similar fiduciary for the exclusive benefit of his children during their lives; (vi) subject to Section 4, any transfer to the legal representatives of a Stockholder who is an individual upon his death or adjudication of incompetency or by any such legal representatives to any Person to whom such Stockholder could have transferred such Covered Securities pursuant to any clause of this definition;
(vii) a transfer by the Turner Stockholders of up to an aggregate of 12 million shares (less the product of (A) the number of shares of Class A Common Stock and Class B Common Stock of TBS that are the subject of a Disposition (as such term is defined in the TBS Shareholders' Agreement) effected by Turner that is contemplated by Section 3(a) of the TBS Shareholders' Agreement after September 22, 1995, and (B) the Common Conversion Number (as defined in the Merger Agreement)) of Common Stock (appropriately adjusted to take into account any stock split, reverse stock split, reclassification, recapitalization, conversion, reorganization, merger or other change in such Common Stock) to any Charitable Transferee if, in the written opinion of legal counsel reasonably acceptable to TCITP, requiring such Charitable Transferee to become a party to this Agreement would limit by a material amount the amount of the deduction for federal income tax purposes that would be available to the applicable Turner Stockholder in the absence of such requirement, and any subsequent transfer by any such Charitable Transferee of any such shares; (viii) any exchange, conversion or transfer of Covered Securities pursuant to Section 4.1 of the LMC Agreement; and (ix) any sale or transfer permitted by and made in accordance with Section 3 or 4 hereof; provided, however, that no Disposition pursuant to clause (iii), (iv), (v) or (vi) shall be

an Exempt Transfer, unless each Person to whom any such Disposition is made, unless already a party to this Agreement and bound by such provisions or a Controlled Affiliate of a party to this Agreement who is bound by such provisions, shall by a written instrument become a party to this Agreement bound by all of the provisions hereof applicable to the Stockholder making such Disposition.

Exercise Notice: Either an Other Stockholder Exercise Notice or a Holdco Exercise Notice, as the context requires.

Fast-Track Offer Notice: As defined in Section 3.3(a) hereof.

Fast-Track Sale: Any sale of shares of Common Stock for the account of any Stockholder which meets all of the following requirements as of the date a Fast-Track Offer Notice is given with respect thereto pursuant to
Section 3.3:

(i) such Stockholder has a bona fide intention to sell such shares of Common Stock within a period of 115 days after such date and such sale is not being undertaken as a result of any offer to buy, bid or request, invitation or solicitation to sell made by any Person (other than any such offer, bid, request, invitation or solicitation from a registered broker-dealer or investment banker not intended to circumvent the provisions of Section 3.1);

(ii) the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act and is listed for trading on a national securities exchange registered under the Exchange Act or traded in the over-the-counter market and quoted in an automated quotation system of the National Association of Securities Dealers, Inc.;

(iii) such sale is to be effected through Broker Transactions or pursuant to a registration statement covering such shares in effect at the date of the Fast-Track Offer Notice; and

(iv) the following sum does not exceed $100 million:

(A) the aggregate Current Market Price of the shares of Common Stock to be sold (determined as of the date a Fast-Track Offer Notice with respect thereto is given pursuant to Section 3.3), plus

(B) the aggregate sale price of all shares of Common Stock sold pursuant to Section 3.3 by any member or former member of the same Group as such Stockholder during the 90 days immediately preceding the date of such Fast Track Offer Notice, plus

(C) without duplication, the aggregate Current Market Price, determined as of the date specified in subclause (A) of this clause (iv), of all shares of Common Stock as to which any Fast-Track Offer Notice is given by any other Stockholder who is a member of the same Group as such Stockholder within two business days before or two business days after such date.

Fast-Track Shares: As defined in Section 3.3(a) hereof.

Free to Sell Date: As defined in Section 3.1(j) hereof.

FTC: The Federal Trade Commission.

FTC Consent Decree: The Agreement Containing Consent Order (the "ACCO") dated as of August 14, 1996, as amended on September 4, 1996 among Old TW, TCI, TBS, LMC and the FTC which contemplates the issuance of an Order, together with such Order and the Interim Agreement attached as Exhibit I to the ACCO, in each case as the same may be amended from time to time hereafter.

Governmental Authority: Any nation or government, any state or other political subdivision thereof and any court, commission, agency or other body exercising executive, legislative, judicial or regulatory functions.

Group: Either the TCITP Stockholders considered collectively as a group or the Turner Stockholders considered collectively as a group, as the context requires.

Holdco: As defined in the opening paragraphs of this Agreement.

Holdco Affiliates: Holdco and Affiliates of Holdco.

Holdco Elected Shares: In the case of any Offer Notice, any Subject Shares covered thereby as to which Holdco exercises its right of purchase pursuant to Section 3.1(e).

Holdco Exercise Notice: As defined in Section 3.1(e).

Holdco Shares: Any and all shares of capital stock of Holdco of any class or series, whether now or hereafter authorized or existing.

Holdco Stockholders Agreement: Any stockholders' agreement between Holdco and any one or more of the Turner Stockholders in effect on the date hereof.

Initial Trigger: As of a given time, for either Stockholder, with respect to the Subject Shares covered by any Offer Notice or Tender Notice, the greatest number of such Subject Shares as may then be acquired by such Stockholder (or its Affiliates) without causing a Disadvantageous Result.

Involuntary Event: As defined in Section 4.1 hereof.

Judgment: Any order, judgment, writ, decree, award or other determination, decision or ruling of any court, judge, justice or magistrate, any other Governmental Authority or any arbitrator.

LMC Agreement: The Second Amended and Restated LMC Agreement dated as of September 22, 1995, among Old TW, Holdco, LMC Parent and certain subsidiaries of LMC Parent.

LMC Parent: Liberty Media Corporation, a Delaware corporation.

Merger Agreement: The Amended and Restated Agreement and Plan of Merger dated as of September 22, 1995, among Old TW, Holdco, TW Acquisition Corp., a Georgia corporation, Time Warner Acquisition Corp., a Delaware corporation, and TBS, as amended by Amendment No. 1 thereto dated as of August 8, 1996.

Offer Notice: As defined in Section 3.1(a) hereof.

Old TW: The Delaware corporation known on September 22, 1995 as Time Warner Inc.

Old TW Rights Plan: The Rights Agreement dated as of January 20, 1994, between Old TW and Chemical Bank, as Rights Agent.

Options: Any options, warrants or other rights (except Convertible Securities), however denominated, to subscribe for, purchase or otherwise acquire any Holdco Shares or Convertible Securities, with or without payment of additional consideration in cash or property, either immediately or upon the occurrence of a specified date or a specified event or the satisfaction or failure to satisfy any condition or the happening or failure to happen of any other contingency.

Other Stockholder: With respect to a Turner Stockholder, the "Other Stockholder" shall be TCITP, and with respect to a TCITP Stockholder, the "Other Stockholder" shall be Turner.

Other Stockholder Elected Shares: As defined in Section 3.1(e) hereof.

Other Stockholder Exercise Notice: As defined in Section 3.1(e) hereof.

Other Stockholder Group: With respect to any Other Stockholder, the Group of which such Other Stockholder is a member.

Permitted Pledge: A bona fide pledge of Covered Securities by a Stockholder to a financial institution to secure borrowings permitted by applicable law; provided that such financial institution agrees in writing to be bound by the provisions of Sections 2, 3 and 4 of this Agreement to the same extent and with the same effect as such Stockholder and the

borrowings so secured are with full recourse against other assets of such Stockholder or other collateral.

Per-Share Offer Consideration: As defined in Section 3.1(a) hereof.

Person: Any individual, corporation, limited liability company, general or limited partnership, joint venture, association, joint stock company, trust, unincorporated business or organization, governmental authority or other legal entity or legal person, whether acting in an individual, fiduciary or other capacity. The term "Person" also includes any group of two or more Persons formed for any purpose.

Prospective Purchaser: As defined in Section 3.1 hereof.

Public Sale: Any sale to the public for the account of any Stockholder, (i) in Broker Transactions, (ii) otherwise pursuant to Rule 144 or
(iii) through a registered offering pursuant to an effective registration statement under the Securities Act which in any case meets both of the following requirements (to the extent applicable) as of the date an Offer Notice is given:

(A) such Stockholder has a bona fide intention to sell such shares of Common Stock as promptly as practicable after all applicable requirements of the Securities Act are satisfied, and such sale is not being undertaken as a result of any offer to buy, bid or request, invitation or solicitation to sell made by any Person (other than any such offer, bid, request, invitation or solicitation from a registered broker-dealer or investment banker not intended to circumvent the provisions of Section 3.1); and

(B) in the case of a registered offering, such shares either have been registered under the Securities Act or such Stockholder has the immediate right to require Holdco to register such shares under the Securities Act.

Purchase Price: As defined in Section 3.1(a) hereof.

Purchase Right: As defined in Section 3.1(c) hereof.

Purchased Shares: When used with reference to a Purchaser which is the Other Stockholder, the Other Stockholder Elected Shares, and when used with respect to a Purchaser which is a Holdco Affiliate, the Holdco Elected Shares.

Purchaser: The term "Purchaser" means TCITP, in the case of any purchase of TCITP Elected Shares pursuant to any Other Stockholder Exercise Notice, Turner, in the case of any purchase of Turner Elected Shares pursuant to any Other Stockholder Exercise Notice, and Holdco, in the case of any purchase of Holdco Elected Shares pursuant to any Holdco Exercise Notice.

Qualified Trust: Any trust described in Section 664 of the Code of which a Stockholder, members of his family or a Charitable Transferee (and no other persons) are income beneficiaries.

Related Party: As to any Person, any Affiliate of such Person and, if such Person is a natural person, such Person's parents, children, siblings and spouse, the parents and siblings of such Person's spouse and the spouses of such Person's children who become parties to this Agreement.

Requirement of Law: With respect to any Person, all federal, state and local laws, rules, regulations, Judgments, injunctions and orders of a court or other Governmental Authority or an arbitrator, applicable to or binding upon such Person, any of its property or any business conducted by it or to which such Person, any of its assets or any business conducted by it is subject.

Restriction: Any prohibition, restriction, limitation or condition on or requirement under any Defensive Provision or Requirement of Law, including the FTC Consent Decree, (A) that (i) limits the ability of any Stockholder to acquire additional Holdco Shares or hold or dispose of any Holdco Shares or to participate in any material right or benefit otherwise available or to be distributed to security holders of the same class as the Holdco Shares, generally, or requires such Stockholder to Dispose of any Holdco Shares, (ii) reduces or otherwise limits the ability to exercise the voting or other rights of all or a portion of the Holdco Shares beneficially owned by such Stockholder below that applicable to Holdco Shares generally, or (iii) limits the ability of any Stockholder to consummate any merger, consolidation, business combination or other transaction with, Holdco or any of its subsidiaries or other Affiliates or substantially increases the cost of consummation or (B) under which the acquisition or ownership of additional Holdco Shares (i) would result in a material violation of applicable law, (ii) would require the discontinuance of any material business or activity or the divestiture of any material portion of any business or property, or (iii) would make the continuation of any such business or activity or the ownership of such property illegal or subject to material damages or penalties.

Rights: The rights issued to the holders of record of the Common Stock pursuant to any Rights Plan, having the rights

and privileges, and subject to the terms and conditions, set forth in such Rights Plan, and any other security or right which may be issued or granted in exchange or substitution therefor or in replacement or upon exercise thereof.

Rights Plan: Any stockholder rights plan or other form of "poison pill" adopted by Holdco and in effect at any time during the term of this Agreement, as amended or modified from time to time.

Rights Plan Trigger: As of a given time, for either Stockholder, with respect to the Subject Shares covered by any Offer Notice or Tender Notice, the greatest number of such Subject Shares as may then be acquired by such Stockholder (or its Affiliates) without causing a Rights Plan Triggering Event; provided, however, that if at such time there shall be no Rights Plan in effect, the Rights Plan Trigger shall be equal to the total number of Subject Shares covered by such Offer Notice or Tender Notice.

Rights Plan Triggering Event: Any event under any Rights Plan analogous (in terms of its effects under such Rights Plan) to one of the following events under the Old TW Rights Plan:

(i) any member of either Group becoming an "Acquiring Person" within the meaning of the Old TW Rights Plan or

(ii) the Rights becoming transferable separately from shares of the Common Stock;

in any such case, in the event of a dispute, as determined in accordance with Section 3.1(d).

Sale Agreement: As defined in Section 3.1(f) hereof.

Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, as from time to time in effect.

Selling Stockholder: As defined in Section 3.1 hereof.

Stockholder: Any TCITP Stockholder or Turner Stockholder.

Subject Shares: As defined in Section 3.1 hereof.

TBS: Turner Broadcasting System, Inc.

TBS Shareholders' Agreement: The Shareholders' Agreement dated as of June 3, 1987, among TBS, Turner and the Original Investors named therein.

TCITP: As defined in the opening paragraphs of this Agreement.

TCITP Affiliates: TCITP and the Affiliates of TCITP.

TCITP Stockholders: TCITP and all Controlled Affiliates of TCITP, in each case so long as such Person is or is required to be a party to this Agreement or is the beneficial owner of any TCITP Holdco Shares.

TCITP Holdco Shares: Any and all Covered Securities of which any TCITP Stockholder becomes the direct or indirect beneficial owner at the Effective Time or thereafter.

Tendering Stockholder: As defined in Section 3.4(a) hereof.

Tender Notice: As defined in Section 3.4(a) hereof.

Tender Shares: As defined in Section 3.4(a) hereof.

TOI: As defined in the opening paragraphs of this Agreement.

TP: As defined in the opening paragraphs of this Agreement.

Turner: As defined in the opening paragraphs of this Agreement.

Turner Affiliates: The Turner Stockholders and the Affiliates of the Turner Stockholders.

Turner Stockholders: Turner and all Affiliates of Turner, in each case so long as such Person is the beneficial owner of any Covered Securities, the Turner Foundation, the Turner Unitrust or any other Charitable Transferee if such entity is required to become a party to this Agreement as a result of a Charitable Transfer (provided, however, that any such entity shall be deemed a Turner Stockholder only with respect to Turner Holdco Shares acquired by such entity in a Charitable Transfer) and any Turner Related Party who is required to become a party to this Agreement pursuant to the terms hereof.

Turner Holdco Shares: Any and all Covered Securities of which any Turner Stockholder becomes the direct or indirect beneficial owner at the Effective Time or thereafter; provided, however, that Covered Securities beneficially owned by the Turner

Foundation or the Turner Unitrust immediately after the Effective Time shall not be Turner Holdco Shares.

Underlying Securities: When used with reference to any Option or Convertible Security as of any time, the Covered Securities issuable or deliverable upon exercise, exchange or conversion of such Option or Convertible Security (whether or not such Option or Convertible Security is then exercisable, exchangeable or convertible). In the case of an Option to acquire a Convertible Security, the Underlying Securities of such Option shall include the Underlying Securities of such Convertible Security.

2. Restrictions on Dispositions of Covered Securities. No Turner Stockholder shall Dispose of any Turner Holdco Shares, except in an Exempt Transfer or a Charitable Transfer. No TCITP Stockholder shall Dispose of any TCITP Holdco Shares, except in an Exempt Transfer. Any purported Disposition of Covered Securities in violation of this Agreement shall be null and void and of no force or effect, and, if Holdco has actual knowledge of such violation, Holdco shall (and shall direct each registrar and transfer agent, if any, for the Covered Securities to) refuse to register or record any such purported Disposition on its transfer and registration books and records or to otherwise recognize such purported Disposition. Subject to Section 4, if any Involuntary Event affecting any Stockholder shall occur, such Stockholder's legal representatives, heirs, successors or transferees, as the case may be, and all Covered Securities beneficially owned by them shall be bound by all the terms and provisions of this Agreement. The Turner Stockholders shall, and shall cause each Related Party of Turner to, comply with the provisions of this Agreement intended to be applicable to the Turner Stockholders or any Turner Holdco Shares. The TCITP Stockholders shall, and shall cause each Related Party of

each TCITP Stockholder to, comply with the provisions of this Agreement intended to be applicable to the TCITP Stockholders or any TCITP Holdco Shares.

3. Right of First Refusal:

3.1 If any Stockholder (the "Selling Stockholder") desires to accept an offer (other than with respect to a Public Sale or a Fast-Track Sale, consistent with the definitions thereof, or a tender or exchange offer to which
Section 3.4 is applicable) (a "Bona Fide Offer") from a Person which is not a Related Party of such Selling Stockholder (the "Prospective Purchaser") to purchase any or all of the Covered Securities beneficially owned by such Selling Stockholder (the "Subject Shares"), such Selling Stockholder shall, in accordance with the following procedures, terms and conditions, first offer to sell the Subject Shares to the Other Stockholder for consideration (subject to subsections (g) and (h) of this Section 3.1) and on terms no more favorable to the Selling Stockholder than those which would apply if the Selling Stockholder accepted the Bona Fide Offer:

(a) The Selling Stockholder shall deliver to the Other Stockholder a written notice (the "Offer Notice", which term shall include any Offer Notice delivered pursuant to Section 3.2(a)) which shall (i) state the number of shares or other appropriate unit of Covered Securities of each class, series or other type that comprise the Subject Shares; (ii) identify the Prospective Purchaser; and (iii) state the aggregate purchase price to be paid by the Prospective Purchaser for the Subject Shares (the "Purchase Price") and the kind and amount of consideration proposed to be paid or delivered by the Prospective Purchaser for the Subject Shares of each class, series or other type and the amount thereof allocable to each

share or other appropriate unit of the Subject Shares of that class, series or other type (the "Per-Share Offer Consideration" for the Covered Securities of that class, series or other type), the timing and manner of the payment or other delivery thereof and any other material terms of such Bona Fide Offer. The Selling Stockholder shall deliver a copy of the Offer Notice to Holdco at the same time it is delivered to the Other Stockholder.

(b) The Offer Notice shall be accompanied by a true and complete copy of the Bona Fide Offer.

(c) If an Offer Notice is given by a Selling Stockholder, the Other Stockholder shall have the right (the "Purchase Right"), exercisable in the manner hereinafter provided, to require the Selling Stockholder to sell to the Other Stockholder the number or other amount of the Subject Shares determined in accordance with this Section 3.1(c). If there is no Defensive Provision or Requirement of Law in effect at the time any Offer Notice is given that imposes any Restriction on the Other Stockholder (or that would impose a Restriction if the Other Stockholder were to exercise the Purchase Right as to all the Subject Shares), the Other Stockholder may exercise the Purchase Right only as to all, but not less than all of the Subject Shares. If there are one or more Defensive Provisions or Requirements of Law in effect at the time such Offer Notice is given that impose any Restriction on the Other Stockholder (or that would impose such a Restriction if the Other Stockholder were to exercise the Purchase Right as to all the Subject Shares), the Other Stockholder may exercise the Purchase Right only as to a number of Subject Shares that is greater than or equal to the Initial Trigger relating to the Other Stockholder at such time and less than or equal to the Rights Plan Trigger relating to the Other Stockholder at such time. For purposes of

this Section 3.1(c), the Initial Trigger and the Rights Plan Trigger will be determined as provided in Section 3.1(d).

(d) Commencing not later than the second business day after an Offer Notice is given if there are one or more Defensive Provisions in effect at such time, the Selling Stockholder and the Other Stockholder shall consult with each other and Holdco in an effort to agree with respect to the Initial Trigger and the Rights Plan Trigger, and upon request Holdco will provide the Stockholders with information relating thereto pursuant to Section
3.5. If agreement is not reached by the Selling Stockholder and the Other Stockholder on or prior to the fifth business day after the Offer Notice was given, then, within two business days after such fifth business day, the Selling Stockholder and the Other Stockholder shall jointly designate an independent law firm of recognized national standing, which firm will be directed to submit a written report regarding its conclusions as to the Initial Trigger and the Rights Plan Trigger within 5 business days (which report shall include, if requested, such law firm's conclusion as to whether any specified event under a Rights Plan constitutes a Rights Plan Triggering Event). The number of Subject Shares as to which the Other Stockholder may exercise the Purchase Right shall be determined as follows:

(i) upon such law firm rendering a written report within such 5 business day period as to the Initial Trigger and the Rights Plan Trigger, if the Other Stockholder elects to exercise its Purchase Right, the Other Stockholder may exercise such Purchase Right only as to a number of Subject Shares equal to or greater than the Initial Trigger and less than or equal to the Rights Plan Trigger, as such amounts shall be specified in such report; and

(ii) if such law firm does not render a written report as to the Initial Trigger and the Rights Plan Trigger within such 5 business day period, if the Other Stockholder elects to exercise its Purchase Right, the Other Stockholder may exercise such Purchase Right only as to a number of Subject Shares equal to or greater than the Initial Trigger and less than or equal to the Rights Plan Trigger, as determined by such Other Stockholder.

If any law firm is so retained, Holdco, the Other Stockholder and the Selling Stockholder shall provide such law firm with such information as may be reasonably requested in connection with the preparation of such report and shall otherwise cooperate with each other and such law firm with the goal of allowing such law firm to render such report as promptly as reasonably practicable. Each of Holdco, the Other Stockholder and the Selling Stockholder shall be responsible for the payment of one-third of the fees and disbursements of such law firm, except that if, at the time such law firm is retained, Holdco waives its right to purchase any Subject Shares covered by the current Offer Notice, Holdco shall not be responsible for any such fees and disbursements, which shall in such case be borne equally by the Selling Stockholder and the Other Stockholder. If the Selling Stockholder and the Other Stockholder are unable to agree upon the selection of an independent law firm within the two business day period provided for in this Section 3.1(d), either such Stockholder may apply to the American Arbitration Association (or another nationally-recognized organization that provides alternative dispute resolution services) to appoint an independent law firm to prepare and submit the report provided for in this
Section 3.1(d), and any law firm so appointed shall constitute the law firm contemplated by this Section 3.1(d). Anything contained herein to the contrary notwithstanding, no

determination relating to the Initial Trigger, the Rights Plan Trigger or any Rights Plan Triggering Event pursuant to this Section 3.1(d) shall be binding upon Holdco in the absence of a written instrument signed by Holdco agreeing to such determination (it being understood that Holdco has no obligation to provide the Stockholders with any such written instrument).

(e) If the Other Stockholder desires to exercise the Purchase Right with respect to any Subject Shares covered by any Offer Notice, it shall do so by a written notice (an "Other Stockholder Exercise Notice") delivered to the Selling Stockholder by the Other Stockholder prior to 5:00 P.M., New York City time, on the eighth business day following the receipt of an Offer Notice or, if there is any dispute as to the Initial Trigger or the Rights Plan Trigger, within 3 business days after the resolution of such dispute. The Other Stockholder Exercise Notice shall state the aggregate number or other appropriate amount of each class, series or other type of the Subject Shares to be purchased (the "Other Stockholder Elected Shares"). A copy of the Other Stockholder Exercise Notice shall be sent to Holdco at the same time it is given to the Selling Stockholder. If an Other Stockholder Exercise Notice is given within such period but, in accordance with Sections 3.1(c) and 3.1(d), such Other Stockholder Exercise Notice specifies that only a portion of the Subject Shares are elected to be purchased (a "Partial Exercise Notice), then the Selling Stockholder shall have the right, exercisable by written notice to each of the Other Stockholder and Holdco given within five business days after the Partial Exercise Notice was given, to terminate the Offer Notice and abandon the proposed sale pursuant to the Bona Fide Offer, in which case the provisions of this Section 3.1 shall be reinstated with respect to any and all proposed future Dispositions of the same or any Subject Shares pursuant to any subsequent Bona Fide Offer by the same or any other Prospective Purchaser. If no

Other Stockholder Exercise Notice is delivered within the applicable number of business days, or if an Other Stockholder Exercise Notice is delivered but the number of Other Stockholder Elected Shares is less than the number of Covered Securities that are the subject of such Offer Notice and the Selling Stockholder does not exercise its right to terminate the Offer Notice and abandon the proposed sale pursuant to the preceding sentence, Holdco shall have the right, exercisable by a written notice (a "Holdco Exercise Notice") given to the Selling Stockholder by Holdco prior to 5:00 P.M., New York City time, on the second business day following the expiration of such period of 8 or 3 business days, as the case may be, to elect to purchase all, but not less than all of the Subject Shares which are not Other Stockholder Elected Shares, in accordance with the procedures, terms and conditions set forth below in this Section 3.1 and for a consideration (subject to subsections (g) and (h) of this Section 3.1) and on terms no more favorable to the Selling Stockholder than those which would apply if the Selling Stockholder accepted the Bona Fide Offer with respect to the Holdco Elected Shares. A copy of the Holdco Exercise Notice shall be sent to the Other Stockholder at the same time it is given to the Selling Stockholder. The Selling Stockholder shall have the right to condition the closing of the sale of the Other Stockholder Elected Shares to the Other Stockholder upon the closing of the sale of any Holdco Elected Shares and the closing of the sale of any Holdco Elected Shares on the closing of the sale of the Other Stockholder Elected Shares.

(f) If an Exercise Notice is given in accordance with Section 3.1(e), within 5 business days thereafter the Purchaser and the Selling Stockholder shall enter into a binding agreement (the "Sale Agreement") for the sale of the Purchased Shares to the Purchaser, which agreement shall contain such representations, warranties, covenants and conditions no less

favorable to the Selling Stockholder than the terms contemplated by the Bona Fide Offer, except with respect to the kind and number or other amount of Subject Shares to be purchased and the aggregate purchase price payable in the event that the Purchased Shares constitute fewer than all the Subject Shares. The Sale Agreement shall provide for the closing of the purchase and sale of the Purchased Shares to be held at the offices of the Selling Stockholder at 11:00
a.m. local time on the 60th day after the Offer Notice was given (subject to extension in accordance with Sections 3.1(i) and 5.1) or at such other place or on such earlier date as the parties to the Sale Agreement may agree. At such closing, the Purchaser shall (subject to subsections (e), (g) and (h) of this
Section 3.1) purchase the Purchased Shares for cash by wire transfer of immediately available funds in an account at a bank designated by the Selling Stockholder, such designation to be made no less than three days prior to closing. At the closing, the Selling Stockholder shall deliver the certificates and other evidences of the Purchased Shares to the Purchaser, against payment in full for the Purchased Shares, free and clear of any pledge, claim, lien, option, restriction, charge, shareholders' agreement, voting trust or other encumbrance of any nature whatsoever to which the Purchased Shares are subject in the hands of the Selling Stockholder other than restrictions on transfer arising under federal and state securities laws and claims, restrictions, options and encumbrances arising under this Agreement (an "Encumbrance"). Without limiting the generality of the immediately preceding sentence, if such Purchased Shares are Other Stockholder Elected Shares and if the Other Stockholder is TCITP, such Purchased Shares shall be free and clear of all Encumbrances existing or arising under any Holdco Stockholders Agreement, and Holdco shall release all such Encumbrances upon the closing of the purchase and sale of such Purchased Shares pursuant hereto. The certificates evidencing the Purchased Shares will be in proper

form for transfer, with appropriate stock powers executed in blank attached and documentary or transfer tax stamps affixed. The Selling Stockholder shall execute such other documents as shall be necessary to effectuate the sale of the Purchased Shares and such additional documents as may be contemplated by the Bona Fide Offer or as may reasonably be requested by any purchaser. The Other Stockholder may assign any or all of its rights, and delegate any or all of its obligations, under any Sale Agreement to which it is a party with respect to the purchase and sale of any or all of the Other Stockholder Elected Shares to any Controlled Affiliate of the Other Stockholder, provided that no such assignment or delegation shall release the Other Stockholder from its obligations thereunder without the written consent of the Selling Stockholder. Holdco may assign any or all of its rights, and delegate any or all of its obligations, under any Sale Agreement to which it is a party or otherwise with respect to the purchase and sale of any or all of the Holdco Elected Shares to any Controlled Affiliate of Holdco, provided that no such assignment or delegation shall release Holdco from its obligations thereunder without the written consent of the Selling Stockholder.

(g) Subject to Section 3.1(h), if the Bona Fide Offer contemplated that the Purchase Price for the Subject Shares proposed to be Disposed of by the Selling Stockholder would be paid, in whole or in part, other than in cash, then the Purchaser shall pay for its Purchased Shares in cash in lieu of such other consideration in an amount equal to the fair market value of such other consideration as agreed by the Selling Stockholder and the Other Stockholder. In the event of any disagreement between the Other Stockholder and the Selling Stockholder as to the fair market value of any noncash consideration payable to the Selling Stockholder, then at the request of either such party given within 5 business days following the delivery of the Offer Notice

such determination shall be conclusively made by a panel of appraisers, one of whom shall be selected by the Other Stockholder, the second of whom shall be selected by the Selling Stockholder and the third of whom shall be selected by the first two appraisers. The Other Stockholder and the Selling Stockholder shall each designate their appraiser within 3 business days after receipt of any request for appraisal, and such appraisers shall designate the third appraiser within 3 business days thereafter. Each appraiser shall submit its determination of the fair market value of such noncash consideration to the Other Stockholder, Holdco and the Selling Stockholder within 5 business days after the panel is empaneled and such fair market value shall be the average of the two closest valuations (or the middle valuation, if the highest and lowest valuation differ from the middle valuation by an equal amount). Each appraiser appointed shall be a nationally recognized investment banking, appraisal or accounting firm which is not directly or indirectly a Related Party of any party to this Agreement or any Prospective Purchaser and which has no interest (other than the receipt of customary fees) in the event giving rise to the need for the appraisal. Each of the Other Stockholder and the Selling Stockholder shall be responsible for the payment of one-half of the costs of such appraisal.

(h) If the Bona Fide Offer contemplated that any part of the Purchase Price for any Subject Shares would be paid in debt securities, each purchaser of any of such Subject Shares may, in its discretion, elect to pay the equivalent portion of its allocable share of the Purchase Price for the Purchased Shares through the issuance of debt securities with substantially similar terms in an amount the fair market value of which is equal to the fair market value of the equivalent portion of the debt securities specified in the Bona Fide Offer, in each case as agreed by such purchaser and the Selling Stockholder or, failing

such agreement, as determined in accordance with the appraisal procedures specified in Section 3.1(g), taking into consideration relevant credit factors relating to the Prospective Purchaser and such purchaser and the marketability and liquidity of such debt securities.

(i) All time periods specified in subsection (e) or (f) of this Section 3.1 shall be extended for a number of days equal to the number of days in the period from the date the request for appraisal is made pursuant to subsection (g) or (h) of this Section 3.1 or Section 4 (as the case may be) through and including the date of submission of the last to be submitted of the required appraisals. Each of the Other Stockholder, the Selling Stockholder and Holdco shall be responsible for the payment of one-third of the costs of each appraisal pursuant to subsection (h) of this Section 3.1 (including the fees of all appraisers appointed in accordance with subsection
(h) of this Section 3.1), except that, if, at the time such appraisal is requested, Holdco waives its right to purchase any Subject Shares covered by the current Offer Notice, Holdco shall not be responsible for any such fees and disbursements, which shall in such case be borne equally by the Selling Stockholder and the Other Stockholder.

(j) The Selling Stockholder shall have the right to sell Subject Shares to the Prospective Purchaser only in the following circumstances:

(i) If neither an Other Stockholder Exercise Notice nor a Holdco Exercise Notice is given in accordance with Section 3.1(e) within the applicable time period specified therein (as such period may be extended pursuant to subsection (i) of this Section 3.1), the Selling Stockholder shall have the right (within the period specified below in

this subsection) to sell all but not less than all of the Subject Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day following the expiration of the last to expire of all time periods provided for in Section 3.1(e).

(ii) If an Other Stockholder Exercise Notice is given but the number of Other Stockholder Elected Shares is less than the number of Covered Securities that are subject to the relevant Offer Notice, and if no Holdco Exercise Notice is given in accordance with Section 3.1(e) within the applicable time period specified therein (as such period may be extended pursuant to subsection (i) of this Section 3.1), then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of the Subject Shares which are not Other Stockholder Elected Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the earlier of the fifth business day following the date the Other Stockholder Exercise Notice was given and the date that Holdco notifies the Selling Stockholder that it has determined not to purchase any such Subject Shares.

(iii) If an Other Stockholder Exercise Notice is given but a Sale Agreement for the Other Stockholder Elected Shares is not executed by the Purchaser and tendered to the Selling Stockholder for execution within the 5 business day period specified in the first sentence of
Section 3.1(f) (as such period may be extended pursuant to subsection
(i) of this Section 3.1), then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of the Subject Shares to the Prospective Purchaser, and in such case the "Free to

Sell Date" shall be the business day after expiration of such 5 business day period.

(iv) If a Holdco Exercise Notice is given but a Sale Agreement for the Holdco Elected Shares is not executed by the Purchaser and tendered to the Selling Stockholder for execution within the 5 business day period specified in the first sentence of Section 3.1(f) (as such period may be extended pursuant to subsection (i) of this Section 3.1), then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of the Holdco Elected Shares to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day after the expiration of such 5 business day period.

(v) If a Sale Agreement for either Other Stockholder Elected Shares or Holdco Elected Shares is executed by the Purchaser and the Selling Stockholder, but the closing of the purchase and sale thereunder shall not occur by the latest date for such closing determined in accordance with Sections 3.1(f), 3.1(i) and 5.1 for any reason other than a breach or violation by the Selling Stockholder of any of such Selling Stockholder's representations, warranties, covenants or agreements that are a condition to such closing, then the Selling Stockholder shall have the right (within the period specified below in this subsection) to sell all, but not less than all of such Other Stockholder Elected Shares or the Holdco Elected Shares covered by such Sale Agreement to the Prospective Purchaser, and in such case the "Free to Sell Date" shall be the business day after such latest date for such closing as so determined.

(vi) If between the date an Other Stockholder Election Notice is given with respect to any Other Stockholder Elected Shares and the closing of the purchase and sale of such Other Stockholder Elected Shares, there shall be any amendment or modification adverse to the Other Stockholder of any Defensive Provision in effect on the date the Other Stockholder Election Notice was given, adoption of any other Defensive Provision adverse to the Other Stockholder, waiver adverse to the Other Stockholder of any term or provision of or exercise adverse to the Other Stockholder of any other discretionary right or power under any Defensive Provision (whether then or thereafter in effect), any reorganization, transfer of assets, consolidation, merger, share exchange, dissolution, issue or sale of securities or any other action or event which in the opinion of the Other Stockholder would, if such purchase and sale were consummated, have a Disadvantageous Result, then notwithstanding any other provision of this Agreement or any provision of any Sale Agreement to which any member of the Other Stockholder Group may be a party and without any liability or obligation to the Selling Stockholder, Holdco, any other party to this Agreement or any Prospective Purchaser, the Other Stockholder may, by written notice given to the Selling Stockholder and Holdco within five business days after the Other Stockholder acquires actual knowledge of such action or event, rescind the Other Stockholder Election Notice and any Sale Agreement to which any member of the Other Stockholder Group may be a party and abandon the purchase and sale of the Other Stockholder Elected Shares pursuant thereto. In such event, the Selling Stockholder shall have the right to sell all or any portion of the Subject Shares to the Prospective Purchaser and the "Free to Sell Date" shall be the business day following receipt by the Selling Stockholder of such written notice of abandonment.

Any sale of Subject Shares to the Prospective Purchaser permitted by this
Section shall be for the Purchase Price (or a greater price), payable in the manner specified in the Bona Fide Offer, and otherwise on terms and conditions no more favorable to the Prospective Purchaser than those contained in the Bona Fide Offer; provided, however, that if such Subject Shares constitute fewer than all the Subject Shares, the purchase price therefor shall be equal to or greater than the portion of the Purchase Price allocable to such Subject Shares (determined by multiplying each share or other appropriate unit of such Subject Shares of each class, series or other type by the Per-Share Offer Consideration for the Subject Shares of that class, series or other type). In the event that
(i) the Prospective Purchaser has not entered into a binding agreement with the Selling Stockholder for the purchase of such Subject Shares within the 30-day period following the Free to Sell Date or (ii) the Prospective Purchaser has not purchased such Subject Shares within the time period which would be applicable to a purchase thereof by a Purchaser under the second sentence of Section 3.1(f) as if calculated from the Free to Sell Date (except that the 60-day period referred to therein shall be construed as a 120-day period for this purpose), then, in either such case, the Selling Stockholder's right to sell Subject Shares to the Prospective Purchaser pursuant to this Section 3.1(j) shall expire and the provisions of this Section 3.1 shall be reinstated with respect to any and all proposed future Dispositions of the same or any other Subject Shares pursuant to any subsequent Bona Fide Offer by the same or any other Prospective Purchaser.

3.2 Public Sales.

(a) If any Stockholder at any time intends to effect a Public Sale of Covered Securities (other than a Fast-Track Sale), such Stockholder may deliver to the Other

Stockholder an Offer Notice pursuant to Section 3.1 offering to sell such Covered Securities to the Other Stockholder at a price equal to the aggregate Current Market Price thereof on the date on which such Offer Notice is given. A copy of such Offer Notice shall be sent to Holdco at the same time it is given to the Other Stockholder. If any such Offer Notice with respect to any Covered Securities is given, the Stockholder giving the Offer Notice shall have all rights and obligations of a "Selling Stockholder" under Section 3.1 and each of the Other Stockholder and Holdco shall have all of their respective rights and obligations provided for in Section 3.1, in each case with the same effect as if such Covered Securities were "Subject Shares" proposed to be sold by the Selling Stockholder to a Prospective Purchaser for "Per-Share Offer Consideration" consisting of cash in an amount equal to the Current Market Price of the Covered Securities on the date such Offer Notice is given and for a "Purchase Price" equal to the total Current Market Price on such date of all such Subject Shares, and as if the other terms of the Public Sale were the terms of the "Bona Fide Offer" made by such assumed Prospective Purchaser, except that subsections (g),
(h) and (i) of Section 3.1 shall not apply and the provisions of subsection (j) of Section 3.1 shall apply only as modified by subsection (b) of this Section 3.2.

(b) Subject Shares covered by any Offer Notice given pursuant to this Section 3.2 may be sold (after full compliance with this
Section 3.2 and the applicable provisions of Section 3.1) by the Selling Stockholder at any available price in a Public Sale of the type described in such Offer Notice, provided that such sale or sales are completed within the period of 120 days after the applicable Free to Sell Date; provided, however, that if the issuer of any Covered Securities exercises any right to delay the filing or effectiveness of a registration statement relating to such Covered Securities or to suspend sales

under such registration statement, then the period shall be extended by the number of days in any such delay or suspension period. If any Subject Shares covered by such Offer Notice which such Selling Stockholder becomes obligated under this Section 3.2 to sell to one or more purchasers or their permitted assignees are not, for any reason, sold to such Persons within any applicable period determined pursuant to Section 3.1, or if any such Subject Shares which such Selling Stockholder is entitled, pursuant to the first sentence of this
Section 3.2(b), to sell in the Public Sale are not so sold within the period provided in such sentence, then in each case the right of such Selling Stockholder to sell such unsold Subject Shares shall terminate and such Subject Shares shall thereafter continue to be subject to the restriction on Dispositions of Covered Securities contained in Section 2.

3.3 Fast-Track Sales.

(a) Any Stockholder who proposes to make a Fast-Track Sale may deliver to each of the Other Stockholder and Holdco a written notice (the "Fast-Track Offer Notice") to such effect which states the number of shares of Common Stock proposed to be sold (the "Fast-Track Shares"). The delivery of any such notice shall constitute the offer by such Stockholder to sell to the Other Stockholder, Holdco or both all or such portion of the Fast-Track Shares as it or they may have the right to purchase in accordance with this Section 3.3 at a price payable in cash equal to the aggregate Current Market Price thereof on the date on which such Fast-Track Offer Notice is given.

(b) The Other Stockholder shall have the right to elect to purchase (or to designate any one or more of the members of the Other Stockholder Group as purchasers of) all or any number of the Fast-Track Shares. The Other Stockholder and

Holdco shall consult with each other in an effort to resolve any questions as to the Initial Trigger and the Rights Plan Trigger; provided, that if the Other Stockholder and Holdco cannot resolve such issue, then the Other Stockholder shall have the right to purchase only the number of Fast-Track Shares that Holdco shall specify. Anything contained herein to the contrary notwithstanding, no determination relating to the Initial Trigger or the Rights Plan Trigger pursuant to this Section 3.3(b) shall be binding upon Holdco in the absence of a written instrument signed by Holdco agreeing to such determination (it being understood that Holdco has no obligation to provide the Other Stockholder with any such written instrument). If the Other Stockholder desires to exercise its purchase right under this Section 3.3, it shall do so by a written notice specifying the number of the Fast-Track Shares to be purchased and identifying the purchasers thereof, given to the Stockholder who gave the Fast-Track Offer Notice prior to 5:00 P.M., New York City time, on the third business day following the receipt by the Other Stockholder of the Fast-Track Offer Notice (provided that any Fast-Track Offer Notice received on a day that is not a business day or after 12 noon, New York City time, on a business day, shall be deemed to have been received on the next following business day). Holdco shall have the right to elect to purchase any or all of the Fast-Track Shares that the Other Stockholder does not elect to purchase or have one or more other members of the Other Stockholder Group purchase in accordance with the immediately preceding sentence, which right shall be exercisable by a written notice specifying the number of such Fast-Track Shares to be purchased, which notice shall be given by Holdco to the Stockholder proposing to sell such Fast-Track Shares and the Other Stockholder prior to 5:00 P.M., New York City time, on the fifth business day following the receipt by the Other Stockholder and Holdco of the Fast-Track Offer Notice. If any such notice is given by either the Other Stockholder or Holdco, the closing of

the purchase and sale of the Fast-Track Shares covered thereby shall be held at the offices in the continental United States of the Other Stockholder or Holdco (as the case may be) specified in such notice, 11:00 A.M., New York City time, on the fourth business day after such notice was given or at such other place or date as the Stockholder selling the Fast-Track Shares and the purchasers thereof may agree, and such closing date shall not be subject to extension pursuant to
Section 5.1 or otherwise unless such selling Stockholder and such purchasers agree to such extension. At such closing, the purchasers shall purchase such Fast-Track Shares for cash by wire transfer of immediately available funds in an account at a bank designated by the selling Stockholder, such designation to be made no less than three business days prior to closing, against delivery at the closing by the selling Stockholder of the certificates evidencing the Fast-Track Shares to be sold to such purchasers, in proper form for transfer, with appropriate stock powers executed in blank attached and documentary or transfer tax stamps affixed. Such delivery of such certificates shall constitute the representation and warranty of such selling Stockholder that upon such delivery, such selling Stockholder duly transferred good and marketable title to the shares evidenced thereby, clear of any Encumbrance. Without limiting the generality of the immediately preceding sentence, if the Other Stockholder is TCITP, such purchased Fast-Track Shares shall be free and clear of all Encumbrances existing or arising under any Holdco Stockholders Agreement, and Holdco shall release all such Encumbrances upon the closing of the purchase and sale thereof. The purchase price payable for each Fast-Track Share purchased pursuant to this Section 3.3 shall be the Current Market Price determined as of the date the Fast-Track Offer Notice was given.

(c) Any Fast-Track Shares not purchased pursuant to Section 3.3(b) may be sold by the selling Stockholder at any

available price in one or more Fast-Track Sales within the 90-day period following the twelfth business day after the receipt by both Holdco and the Other Stockholder of the Fast-Track Offer Notice, and if all Fast-Track Shares for any reason are not sold within such period either pursuant to Section 3.3(b) or in one or more Fast-Track Sales, then the right to sell such Fast-Track Shares shall terminate and such Fast-Track Shares shall thereafter continue to be subject to the restrictions on Dispositions of Covered Securities contained in Section 2.

3.4 Tender or Exchange Offer Sales.

(a) If any Person shall make a tender or exchange offer to acquire any Covered Securities, and if any Stockholder (a "Tendering Stockholder") intends to tender any Covered Securities, such Tendering Stockholder shall give the Other Stockholder written notice (the "Tender Notice") of such intention not later than ten calendar days prior to the latest time by which securities must be tendered in order to be accepted pursuant to such offer as such date may from time to time be extended (the "Tender Date"), specifying the Covered Securities proposed to be tendered (the "Tender Shares"), together with copies of all written materials by which such offer is being made. A copy of such Tender Notice shall be sent to Holdco at the same time it is given to the Other Stockholder.

(b) Any Tender Notice given by any Tendering Stockholder shall constitute an offer by such Tendering Stockholder to sell to the Other Stockholder the Tender Shares. The Other Stockholder shall have the right to elect to purchase (or to designate any one or more of the members of the Other Stockholder Group as purchasers of) all or any number of the Tender Shares in accordance with this Section 3.4. The Other Stockholder and Holdco shall consult with each other in an effort

to resolve any questions as to the Initial Trigger and the Rights Plan Trigger, but the rights of the Other Stockholder under this Section 3.4 shall not be affected by the failure of Holdco to concur in any conclusion of the Other Stockholder with respect to any such matter. Anything contained herein to the contrary notwithstanding, no determination relating to the Initial Trigger or the Rights Plan Trigger pursuant to this Section 3.4(b) shall be binding upon Holdco in the absence of a written instrument signed by Holdco agreeing to such determination (it being understood that Holdco has no obligation to provide the Other Stockholder with any such written instrument). If the Other Stockholder desires to exercise its purchase right under this Section 3.4, it shall do so by a written notice specifying the number of the Tender Shares to be purchased and identifying the purchasers thereof, given to the Tendering Stockholder at least three business days prior to the Tender Date. If any such notice is given by the Other Stockholder, the closing of the purchase and sale of the Tender Shares covered thereby shall be held at the offices of the Other Stockholder within the continental United States specified in such notice at 11:00 A.M., New York City time, on a date specified in such notice that is not later than two business days prior to the Tender Date, or at such other place or date as the Tendering Stockholder and the Other Stockholder may agree, and such closing date shall not be subject to extension pursuant to Section 5.1 or otherwise unless the Tendering Stockholder and the Other Stockholder agree to such extension. At such closing, the purchasers identified by the Other Stockholder shall purchase such Tender Shares for cash by wire transfer of immediately available funds to an account at a bank designated by the Tendering Stockholder in the Tender Notice, against delivery at the closing by the Tendering Stockholder of the certificates or other instruments evidencing the Tender Shares to be sold to such purchasers, in proper form for transfer, with appropriate stock powers executed in blank

attached and documentary or transfer tax stamps affixed. Such delivery of such certificates shall constitute the representation and warranty of such Tendering Stockholder that upon such delivery, such Tendering Stockholder duly transferred good and marketable title to the shares evidenced thereby, free and clear of any Encumbrance. Without limiting the generality of the immediately preceding sentence, such purchased Tender Shares shall be free and clear of all Encumbrances existing or arising under any Holdco Stockholders Agreement, and Holdco shall release all such Encumbrances upon the closing of the purchase and sale thereof. The total purchase price to be paid by such purchasers for such Tender Shares shall be (i) if such tender or exchange offer is consummated, the purchase price that the Tendering Stockholder would have received if it had tendered such Tender Shares and all such Tender Shares had been purchased in such tender or exchange offer, including any increases in the price paid by the offeror after exercise by the Other Stockholder of its right of first refusal under this Section 3.4 or after the closing of the purchase of Tender Shares pursuant to such exercise, (ii) if such tender or exchange offer is not consummated, the highest price offered pursuant thereto, or (iii) if any other tender or exchange offer is commenced prior to the expiration or termination of such tender or exchange offer, the highest price offered in either such tender or exchange offers in each case with any offered securities or other property except cash to be valued as provided in Section 3.4(c).

(c) If the consideration offered in such tender or exchange offer consists, in whole or in part, of securities or other property except cash, then the purchasers identified by the Other Stockholder shall pay for the Tender Shares cash in lieu of such other consideration in an amount equal to the fair market value of such other consideration as agreed by the Tendering Stockholder and the Other Stockholder. In the event the

Tendering Stockholder and the Other Stockholder do not agree as to the fair market value of any such noncash consideration by the beginning of the second business day after the Offer Notice is given, then such determination shall be conclusively made by a panel of appraisers, one of whom shall be selected by the Other Stockholder, the second of whom shall be selected by the Tendering Stockholder and the third of whom shall be selected by the first two appraisers. The Other Stockholder and the Tendering Stockholder shall each designate their appraiser within three business days after such Offer Notice is given, and such appraisers shall designate the third appraiser within three business days thereafter. Each appraiser shall submit its determination of the fair market value of such noncash consideration within three business days after the panel is empaneled and such fair market value shall be the average of the two closest valuations (or the middle valuation, if the highest and lowest valuation differ from the middle valuation by an equal amount). Each appraiser appointed shall be a nationally recognized investment banking, appraisal or accounting firm which is not directly or indirectly a Related Party of any party to this Agreement or the Person making the tender or exchange offer and which has no interest (other than the receipt of customary fees) in the event giving rise to the need for the appraisal. Each of the Other Stockholder and the Tendering Stockholder shall be responsible for the payment of one-half of the costs of such appraisal.

(d) If the Other Stockholder does not exercise its right of first refusal under this Section 3.4 by giving a notice of exercise in accordance with Section 3.4(b) or, having given such notice, fails to purchase and pay for (or have one or more of its designees purchase and pay for) such Tender Shares on or prior to the business day prior to the Tender Date, then the Tendering Stockholder shall be free to accept the tender or

exchange offer with respect to which the Tender Notice was given or any other tender or exchange offer commenced during the pendency of the tender or exchange offer with respect to which the Tender Notice was given.

3.5 Holdco to Provide Certain Information. If requested at any time or from time to time by any Stockholder, Holdco shall promptly provide to such Stockholder in writing
(i) all information which such Stockholder reasonably may request for the purpose of determining whether, based on the facts set forth by such Stockholder in such request, any acquisition of beneficial ownership by such Stockholder or the Other Stockholder would result in the occurrence of a Disadvantageous Result under or in respect of any Defensive Provision and (ii) such other non-confidential information known to Holdco as such Stockholder may reasonably request regarding (A) the number of Covered Securities issued and outstanding at any time, (B) the number of Covered Securities owned of record by any person at any time, or
(C) the terms and conditions of any Defensive Provision.

3.6 Certain Actions by Holdco. In the event that Holdco shall
(i) amend or modify any Defensive Provision in effect on the date hereof, or
(ii) adopt any Defensive Provision after the date hereof, or (iii) purchase, redeem or otherwise acquire any outstanding Covered Securities, directly or indirectly through any Controlled Affiliate of Holdco, and the result of any such action is to reduce the Initial Trigger or the Rights Plan Trigger with respect to any Stockholder Group, then, in the case of any Offer Notice or Tender Notice delivered after such action, if such action shall have had the effect of reducing the number of Subject Shares covered by such Offer Notice that may then be purchased by the Other Stockholder pursuant to this Agreement, Holdco shall have no right under this Agreement to purchase any Subject Shares covered by such Offer Notice.

4. Involuntary Event; Death or Incapacity.

4.1 In the event that (i) any Stockholder shall be adjudicated bankrupt or insolvent or file a voluntary petition for bankruptcy (or an involuntary petition for bankruptcy shall have been filed against any Stockholder and the same shall not have been dismissed within 60 days after the date of filing), or file a pleading in any court of record admitting his inability to pay his debts as they become due, or make a general assignment for the benefit of creditors, or (ii) a receiver, administrator, guardian, legal committee or other legal custodian of any Stockholder's property shall be appointed (other than in connection with his death or incapacity) and not discharged within 60 days, or (iii) a writ of attachment or levy or other similar court order shall prevent any Stockholder from exercising his or its right to vote or Dispose of any of his or its Covered Securities and such writ or levy is not dismissed (or such court order is not reversed) within 60 days, then such Stockholder shall promptly notify the Other Stockholder of the occurrence of any such event (the "Involuntary Event"). Simultaneously with the delivery of any such notice required by this Section 4.1, such Stockholder shall deliver an Offer Notice to such Other Stockholder pursuant to Section 3.1, offering to sell all Covered Securities beneficially owned by such Stockholder to such Other Stockholder at the Appraised Value. Each Stockholder giving such an Offer Notice shall have, in respect of such Offer Notice, all rights and obligations under Section 3.1 of a Selling Stockholder, except that if such Stockholder is a Turner Stockholder, for so long as such Turner Stockholder is subject to the restrictions on transfer contained in the Holdco Stockholders' Agreement, it shall not be entitled to sell any Covered Securities to any Person other than the Purchasers, if any; each Other Stockholder and Holdco shall have, in respect of such Offer Notice, all rights and obligations under Section 3.1

which are provided for therein in the case of any Offer Notice given pursuant thereto. For the purpose hereof, the term "Appraised Value" means the fair market value of the Covered Securities to be sold as determined by appraisal in the same manner as provided in Section 3.1(h) with respect to appraisals of noncash consideration. Each of such Stockholder, the Other Stockholder and Holdco shall be responsible for the payment of one-third of the costs of such appraisal, except that, if, at the time such appraisal is requested, Holdco waives its right to purchase any Subject Shares covered by the current Offer Notice, Holdco shall not be responsible for any such fees and disbursements, which shall in such case be borne equally by such Stockholder and the Other Stockholder. All time periods specified in subsection (e) or (f) of Section 3.1 shall be extended for a number of days equal to the number of days in the period from the delivery of the Offer Notice pursuant to this Section 4.1 through and including the date of submission of the last to be submitted of the required appraisals.

4.2 Any Sale Agreement entered into by any Stockholder and the Purchaser pursuant to an Offer Notice required by Section 4.1 shall provide that the closing of the sale of the Covered Securities to be sold and purchased thereunder may be postponed for such period as may be necessary to effect the purchase of such Covered Securities free from any claims of a trustee in bankruptcy, any garnishee or any court order. In the event that any Covered Securities subject to such Offer Notice are not purchased for any reason, such Covered Securities shall continue to be subject to this Agreement.

4.3 In the event of Turner's incapacity or death, his legal representative or the executor or administrator of his estate, as the case may be, shall be bound by all the terms and provisions of this Agreement as fully as if such representative,

executor or administrator were a party hereto and his or its name were substituted for Turner's name herein and shall be entitled to exercise Turner's rights and required to perform his obligations hereunder.

5. Regulatory Approvals; Certain Representations, Warranties and Covenants.

5.1 Regulatory Approvals. If any sale of Covered Securities to any Stockholder, Holdco or any permitted assignee of any Stockholder or Holdco in accordance with Section 3.1, 3.2 or 4 requires, as a condition to the legal and valid transfer thereof to such Purchaser, any consent, approval, waiver, or authorization of, notice to or filing with, any Governmental Authority or the expiration of any waiting period imposed by applicable law and if Section 3.1, 3.2 or 4 (as the case may be) provides for the closing of such sale to be held before some fixed or ascertainable date, then such date shall be extended for the period of time during which efforts to obtain each such consent, approval, waiver, or authorization, to give such notice or make such filing and to obtain the termination of each such waiting period at the earliest reasonably practicable time are diligently being made; provided, however, that in no event shall the extension of any such closing date pursuant to this Section 5.1 exceed 90 days. Each party shall (and shall cause such party's Controlled Affiliates to) reasonably cooperate with the other parties in obtaining any such consent, approval, waiver, or authorization, to give any such notice or make any such filing and in obtaining the termination of any such waiting period at the earliest practicable time.

5.2 Representation and Warranty of Holdco. Holdco represents and warrants to each of TCITP and Turner that, other than the Old TW Rights Plan, the provisions of TW's Restated

Certificate of Incorporation and By-laws and the Delaware Statute, there were no Defensive Provisions in effect on September 22, 1995; provided, however, that no representation is made as to the laws of any jurisdiction other than Delaware.

6. Legend on Stock Certificates; No Recordation of Transfer.

6.1 Each certificate or instrument representing Covered Securities directly or indirectly beneficially owned by any Stockholder shall bear the following legend until such time as the shares represented thereby are no longer subject to this Agreement:

"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF OCTOBER 10, 1996, AMONG R.E. TURNER, III, TCI TURNER PREFERRED, INC., TURNER PARTNERS, L.P., TIME WARNER INC. AND CERTAIN OTHER PERSONS. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF TIME WARNER INC.

Holdco shall not be responsible for placing the above legend on any certificate representing Covered Securities, except to the extent that it has actual knowledge that such certificate has been issued in the name of any Stockholder.

6.2 Holdco agrees not to knowingly effect a transfer of any Covered Securities which to Holdco's actual knowledge are directly or indirectly beneficially owned by any Stockholder on its books except as permitted by the terms of this Agreement. A copy of this Agreement shall be filed with the Secretary of Holdco.

7. Representations and Warranties; Certain Additional Covenants.

7.1 Certain Representations and Covenants of the TCITP Stockholders. Each of the TCITP Stockholders represent and warrant to the Turner Stockholders and Holdco as follows:

(a) Neither such TCITP Stockholder nor any of its Controlled Affiliates that hold Holdco Shares is a party to or bound by, any Contract, Requirement of Law or Judgment, other than Requirements of Law referred to in Section 7.3(d), that does or may prevent, impede or delay the due and punctual performance by any such Person of its agreements, obligations and commitments contained in this Agreement, and such TCITP Stockholder will not enter into or permit any of its Controlled Affiliates to enter into any such Contract or take any other voluntary action or voluntarily omit to take any action that would have any such effect.

(b) Except for this Agreement and except for any Permitted Pledge in effect as of the date hereof, there is no option, warrant, right, call, proxy, or Contract that directly or indirectly provides for the sale, pledge or other Disposition of any of such TCITP Holdco Shares or any interest therein or any rights with respect thereto, relates to the voting, Disposition or control of any thereof or obligates or may obligate such TCITP Stockholder or any of its Controlled Affiliates to grant, offer or enter into any of the foregoing.

No breach or violation of any of the foregoing representations, warranties or covenants shall result or be deemed to result directly or indirectly from or by reason of any Contract between

TCITP and any of its Affiliates and Holdco and any of its Affiliates, directors or officers, whether now existing or hereafter entered into, nor from or by reason of the execution, delivery or performance of or action taken or omitted to be taken pursuant to the terms of any such Contract or the consummation of any transaction contemplated thereby, nor from or by reason of any option, warrant, right, call, proxy or other right granted, covenant made or obligation incurred under any such Contract that directly or indirectly provides for the sale, pledge or other Disposition of any of the TCITP Holdco Shares or any interest therein or any rights with respect thereto.

7.2 Certain Representations and Covenants of the Turner Stockholders. Each of the Turner Stockholders represents and warrants to the TCITP Stockholders and Holdco as follows:

(a) Neither such Turner Stockholder nor any of his or its Controlled Affiliates that hold Holdco Shares is a party to or bound by, any Contract, Requirement of Law or Judgment, other than any Requirements of Law referred to in Section 7.3(d), that does or may prevent, impede or delay the due and punctual performance by any such Person of his or its agreements, obligations and commitments contained in this Agreement, and such Turner Stockholder will not enter into or permit any of his or its Controlled Affiliates to enter into any such Contract or take any other voluntary action or voluntarily omit to take any action that would have any such effect.

(b) Except for this Agreement and any Holdco Stockholders Agreement and except for any Permitted Pledge in effect as of the date hereof, there is no option, warrant, right, call, proxy, or Contract that directly or indirectly provides for the sale, pledge or

other

Disposition of any of such Turner Holdco Shares or any interest therein or any rights with respect thereto, relates to the voting, Disposition or control of any thereof or obligates or may obligate such Turner Stockholder or any of his or its Controlled Affiliates to grant, offer or enter into any of the foregoing. Each of the Turner Stockholders has delivered to TCITP a true and complete copy of each Holdco Stockholders Agreement to which it is a party, if any, as amended through and in effect on the date of this Agreement.

No Turner Stockholder shall permit the amendment of any Holdco Stockholders Agreement to which it is a party in any manner that would have any effect referred to in Section 7.2(a).

7.3 Representations and Warranties of Each Party. Each party, severally and not jointly, represents and warrants to each of the other parties as follows:

(a) If such party is a corporation or partnership, such party has all requisite corporate power and authority or partnership power and authority (as the case may be) to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by such party of, and the consummation of the transactions contemplated by, this Agreement have been duly and validly authorized by all necessary corporate action or partnership action (as the case may be) on the part of such party.

(b) If such party is a natural person (whether acting individually or in a fiduciary capacity), such party has full legal capacity, right, power and authority to

execute, deliver and perform his or her obligations under this Agreement and to consummate the transactions contemplated hereby.

(c) This Agreement has been duly executed and delivered by such party. This Agreement constitutes a legal, valid and binding obligation of such party enforceable in accordance with its terms, except that (i) such enforceability may be subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and (ii) such enforceability may be subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

(d) The execution, delivery and performance of this Agreement by such party do not, either with or without the giving of notice or the passage of time or both, (i) assuming compliance with the requirements referred to in clause (ii) of this sentence, violate or conflict with any Requirement of Law or Judgment applicable to such party, (ii) except for (A) requirements, if any, arising out of any required pre-merger notification and related filings with the FTC and the Antitrust Division of the Department of Justice pursuant to the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, (B) requirements, if any, arising out of the rules and regulations adopted by the Federal Communications Commission, and (C) requirements, if any, arising out of the FTC Consent Decree, require the consent or authorization of or waiver by or filing with any Governmental Authority or (iii) conflict with, result in the breach of any provision of, result in the modification or termination of, require the consent or authorization of or

waiver by or filing with any other parties to, or result in the creation or imposition of any Encumbrance pursuant to, or constitute a default under, any material agreement, permit, indenture, note, lease, license or franchise or any other material instrument to which such party is a party or by which such party's properties or assets are bound or from which such party derives benefit. For purposes of this
Section 7.3(d), the word "party" includes (i) in the case of Holdco, Holdco and its Affiliates, and (ii) in the case of any Turner Stockholder, such Turner Stockholder and his or its Related Parties.

8. No Assignment.

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns and, in the event of the incapacity or death of any Turner Stockholder who is a natural person, his legal representatives, the executor or administrator of his estate, and his heirs and beneficiaries, as provided in
Section 4 hereof. Except as specifically provided herein, this Agreement and the rights and obligations of the parties hereunder may not be assigned or delegated, in whole or in part. Without prejudice to the rights of Holdco under any other provision of this Agreement, none of the provisions of Section 2 (other than the third sentence of Section 2) of this Agreement are intended to be for the benefit of or enforceable by Holdco, and Holdco shall not have any right, remedy or claim against any Stockholder by reason of any breach or violation thereof.

9. Specific Performance. The parties hereto acknowledge that the benefits to them under this Agreement are unique, that they are willing to enter into this Agreement only upon performance by each other of all of their obligations

hereunder and that monetary damage would not afford adequate remedy for failure to perform any such obligations hereunder. Accordingly, the parties hereby consent to specific performance of their obligations hereunder and waive any requirement for securing or posting of any bond in connection with the obtaining of any injunctive or other equitable relief to enforce their rights hereunder.

10. Termination, Amendment and Waiver. This Agreement shall terminate as to all parties on the first to occur of (i) the date on which no TCITP Stockholder beneficially owns any Covered Securities (otherwise than by reason of any Disposition made in violation of this Agreement), (ii) the date on which no Turner Stockholder beneficially owns any Covered Securities (otherwise than by reason of any Disposition made in violation of this Agreement) and (iii) any date of termination agreed to by TCITP and Turner. If, by reason of one or more Dispositions, the number of Holdco Shares directly or indirectly beneficially owned by the TCITP Stockholders, as a group, or the Turner Stockholders, as a group, is less than one-third of the number of the shares beneficially owned by such Group immediately after the Effective Time (which number, in the case of the TCITP Stockholders, shall be calculated after giving effect to the exchange required by Section 4.1 of the LMC Agreement and, as to each Group, shall be appropriately adjusted to take into account any stock split, reverse stock split, reclassification, recapitalization, conversion, reorganization, merger or other change in such Holdco Shares) then such group shall no longer have any right of first refusal under Section 3 or Section 4, but shall continue to be subject to all obligations and restrictions arising under this Agreement with respect to all Covered Securities which the members of that group continue to beneficially own. This Agreement may be amended by the parties hereto only by an instrument in writing signed by each party;

provided, however, that execution of any such amendment by or on behalf of Holdco shall not be required unless such amendment adversely affects the rights or obligations of Holdco hereunder. Any term or provisions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof.

11. General Provisions

11.1 All periods of time referred to in this Agreement (other than references to business days ) shall include all Saturdays, Sundays or State of New York holidays provided that if the date or last date to perform the act or give any notice with respect to this Agreement shall fall on a Saturday, Sunday or State of New York holiday, such act or notice may be timely performed or given if performed or given on the next succeeding day which is not a Saturday, Sunday or State of New York holiday.

11.2 All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given or delivered upon confirmed facsimile transmission, personal delivery or the day following delivery to a courier service which guarantees overnight delivery of such notice or five (5) days after deposit with the U.S. Post Office, by registered or certified mail, return receipt requested, postage prepaid, and, in the case of courier or mail delivery, addressed to the intended recipient at his or its address as shown on Schedule I attached hereto or such other address as a party may specify in writing.

11.3 This Agreement constitutes the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, whether oral or written, relating to the subject matter hereof (it being

understood that this Section 11.3 is not intended to obviate the respective rights and obligations of Turner, Holdco and the other parties thereto under the Investors Agreement (No. 1) dated as of the same date as this Agreement among Holdco, Turner, TOI and TP).

11.4 Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11.5 The headings of the articles and sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. The definitions in Section 1 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The words "herein", "hereof" and "hereunder" and words of similar import refer to this Agreement in its entirety and not to any part hereof unless the context shall otherwise require. All references herein to Sections, Exhibits and Schedules shall be deemed references to and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Unless otherwise expressly provided herein or unless the context shall otherwise require, any references as of any time to the "Certificate of Incorporation", "Restated Certification of Incorporation", "Articles of Incorporation", "charter",

"organizational or governing documents" or "By-laws" of any Entity, to any agreement (including this Agreement) or other Contract, instrument or document or to any statute or regulation or any specific section or other provision thereof are to it as amended and supplemented through such time (and, in the case of a statute or regulation or specific section or other provision thereof, to any successor of such statute, regulation, section or other provision). Unless otherwise expressly provided herein or unless the context shall otherwise require, any provision of this Agreement using a defined term (by way of example and without limitation, such as "Controlled Affiliate") which is based on a specified characteristic, qualification, feature, relationship or status shall, as of any time, refer only to such Persons who have the specified characteristic, qualification, feature, relationship or status as of that particular time.

11.6 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but which together shall constitute but one and the same instrument.

11.7 This Agreement and the validity, interpretation and performance of the terms and provisions hereof shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the provisions thereof relating to choice or conflict of laws, except to the extent that the laws of the jurisdiction of incorporation of Holdco shall be mandatorily applicable.

11.8 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY (I) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY (AND OF ANY APPELLATE COURT TO WHICH AN APPEAL OF ANY JUDGMENT, ORDER, DECREE OR DECISION OF ANY SUCH COURT MAY BE

TAKEN) IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH SUIT, ACTION OR PROCEEDING, (II) WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT, INCLUDING ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (III) WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.

IN WITNESS WHEREOF, the parties have executed this Stockholders' Agreement in two or more counterparts as of the day and year first above written.

TCI TURNER PREFERRED, INC.

By: /s/ Robert R. Bennett
   ---------------------------------
   Name:  Robert R. Bennett
   Title: Executive Vice President

LIBERTY BROADCASTING, INC.

By: /s/ Robert R. Bennett
   ---------------------------------
   Name:   Robert R. Bennett
   Title:  Executive Vice President

COMMUNICATION CAPITAL CORP.

By: /s/ Robert R. Bennett
   ---------------------------------
   Name:  Robert R. Bennett
   Title: Executive Vice President

             /s/ R. E. Turner
   ---------------------------------
             R.E. TURNER, III

TURNER OUTDOOR, INC.

By: /s/ R.E. Turner
   ---------------------------------
   Name:
   Title:

TURNER PARTNERS, L.P.

By: /s/ R. E. Turner
    ---------------------------------
    Name:  R.E. Turner, III
    Title: General Partner

TW INC. (which promptly following
the date hereof is changing its name
to Time Warner Inc.)

By: /s/ Thomas W. McEnerney
   ---------------------------------
   Name: Thomas W. McEnerney
  Title: Vice President

EXECUTION COPY

INVESTORS' AGREEMENT (NO. 1) dated as of
October 10, 1996, among TW INC. (to be
renamed TIME WARNER INC.), a Delaware
corporation ("Holdco"), and the other parties
signatory hereto (each an "Investor").

This Agreement is entered into pursuant to Section 6.02(f) of the Amended and Restated Agreement and Plan of Merger, dated as of September 22, 1995 (the "Amended and Restated Merger Agreement"), among Time Warner Inc., a Delaware corporation ("Parent"), Holdco, Time Warner Acquisition Corp., a Delaware corporation ("Delaware Sub") and a direct wholly owned subsidiary of Holdco, TW Acquisition Corp., a Georgia corporation ("Georgia Sub") and a direct wholly owned subsidiary of Holdco, and Turner Broadcasting System, Inc., a Georgia corporation (the "Company"). In connection with the TBS Merger (as defined in the Amended and Restated Merger Agreement), subject to certain exceptions, (a) each share of Class A Common Stock, par value $.0625 per share, of the Company and each share of Class B Common Stock, par value $.0625 per share, of the Company will be converted into the right to receive 0.75 shares of Common Stock, par value $0.01 per share, of Holdco ("Holdco Common Stock") and
(b) each share of Class C Convertible Preferred Stock, par value $.125 per share, of the Company will be converted into the right to receive 4.80 shares of Holdco Common Stock. As a condition to the obligations of Parent, Holdco, Delaware Sub and Georgia Sub to effect the Mergers (as defined in the Amended and Restated Merger Agreement), Parent, Holdco, Delaware Sub and Georgia Sub have required that each initial Investor enter into this Agreement.

Accordingly, it is hereby agreed as follows:

ARTICLE I

Definitions

SECTION 1.01. Definitions. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Amended and Restated Merger Agreement. For purposes of this Agreement, the following terms shall have the following meanings:

"Affiliate" and "Associate", when used with reference to any person, shall have the respective meanings ascribed to such terms in Rule 12b-2 of the Exchange Act, as in effect on the date of this Agreement. Neither Holdco nor any of its subsidiaries or controlled Affiliates, on the one hand, nor the Principal Investor, on the other hand, shall be an "Affiliate" or an "Associate" of the other. The Turner Foundation, Inc. and the Robert E. Turner Charitable Foundation Unitrust No. 2 shall be deemed not to be Affiliate or Associates of any Investor.

A person shall be deemed the "beneficial owner" of, and shall be deemed to "beneficially own", and shall be deemed to have "beneficial ownership" of:

(i) any securities that such person or any of such person's Affiliates or Associates is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of this Agreement; and

(ii) any securities (the "underlying securities") that such person or any of such person's Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise (it being understood that such

person shall also be deemed to be the beneficial owner of the securities convertible into or exchangeable for the underlying securities).

"Board" shall mean the board of directors of Holdco.

"Charitable Transferee" shall mean any charitable organization described in Section 501(c)(3) of the Code.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as in effect on the date in question, unless otherwise specifically provided.

"Investor" shall mean each person that executes this Agreement in such capacity and each successor, assign and other person that pursuant to the terms hereof is required to become a party hereto as an Investor.

"Investors' Agreement (No. 2)" shall mean an Investors' Agreement (No. 2), substantially in the form of Exhibit C-2 to the Amended and Restated Merger Agreement.

"permitted transferee" of any natural person shall mean (i) in the case of the death of such person, such person's executors, administrators, testamentary trustees, heirs, devisees and legatees and (ii) such person's current or future spouse, parents, siblings or descendants or such parents', siblings' or descendants' spouses (the "Family Members").

"person" shall have the meaning given such term in the Amended and Restated Merger Agreement.

"Principal Investor" shall mean R.E. Turner.

"Qualified Stockholder" shall mean any Charitable Transferee or Qualified Trust from time to time bound as an "Investor" under an Investors' Agreement (No. 2).

"Qualified Trust" shall mean any trust described in Section 664 of the Code of which the Principal Investor or members of his family are income beneficiaries.

"Voting Power", when used with reference to any class or series of securities of Holdco, or any classes or series of securities of Holdco entitled to vote together as a single class or series, shall mean the power of such class or series (or such classes or series) to vote for the election of directors. For purposes of determining the percentage of Voting Power of any class or series (or classes or series) beneficially owned by any person, any securities not outstanding which are subject to conversion rights, exchange rights, rights, warrants, options or similar securities held by such person shall be deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class or series (or classes or series) beneficially owned by such person, but shall not be deemed to be outstanding for the purpose of computing the percentage of the class or series (or classes or series) beneficially owned by any other person.

"Voting Securities", when used with reference to any person, shall mean any securities of such person having Voting Power or any securities convertible into or exchangeable for any securities having Voting Power.

ARTICLE II

Securities Act; Legend

SECTION 2.01. Transfers of Holdco Common Stock. None of the Investors may offer for sale or sell any shares of Holdco Common Stock acquired pursuant to the Amended and Restated Merger Agreement, or any interest therein, except (a) pursuant to a registration of such shares under the Securities Act and applicable state securities laws or (b) in a transaction as to which such Investor has delivered an opinion of counsel or other evidence reasonably satisfactory to Holdco, to the effect that such transaction is exempt from, or not subject to, the registration

requirements of, the Securities Act and applicable state securities laws.

SECTION 2.02. Legends on Certificates. Each Investor shall hold in certificate form all shares of Holdco Common Stock owned by such Investor. Each certificate for shares of Holdco Common Stock issued to or beneficially owned by a person that is subject to the provisions of this Agreement shall bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN INVESTORS' AGREEMENT (NO. 1) DATED AS OF OCTOBER 10, 1996 (THE "INVESTORS' AGREEMENT"), AMONG THE CORPORATION, THE ORIGINAL HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND CERTAIN OTHER STOCKHOLDERS OF THE CORPORATION. A COPY OF THE INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS' AGREEMENT.

ARTICLE III

Covenants of the Parties

SECTION 3.01. Standstill. None of the Investors may (and each Investor shall cause its Affiliates and Associates that it controls, and use reasonable efforts to cause its other Affiliates and Associates, not to), without the prior written consent of the Board:

(a) publicly propose that any Investor or Qualified Stockholder or any Affiliate or Associate of any Investor or Qualified Stockholder enter into, directly or indirectly, any merger or other business combination involving Holdco or propose to purchase, directly or indirectly, a material portion of the assets of Holdco or any material subsidiary of Holdco, or make any such proposal privately if it would

reasonably be expected to require Holdco to make a public announcement regarding such proposal;

(b) make, or in any way participate in, directly or indirectly, any "solicitation" of "proxies" (as such terms are used in Regulation 14A promulgated under the Exchange Act) to vote or consent with respect to any Voting Securities of Holdco or become a "participant" in any "election contest" (as such terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to Holdco;

(c) form, join or participate in or encourage the formation of a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting Securities of Holdco, other than a group consisting solely of Investors and Qualified Stockholders;

(d) deposit any Voting Securities of Holdco into a voting trust or subject any such Voting Securities to any arrangement or agreement with respect to the voting thereof, other than any such trust, arrangement or agreement (i) the only parties to, or beneficiaries of, which are Investors and Qualified Stockholders and
(ii) the terms of which do not require or expressly permit any party thereto to act in a manner inconsistent with this Agreement;

(e) initiate, propose or otherwise solicit stockholders of Holdco for the approval of one or more stockholder proposals with respect to Holdco as described in Rule 14a-8 under the Exchange Act, or induce or attempt to induce any other person to initiate any stockholder proposal with respect to Holdco;

(f) except in accordance with Section 3.04, seek election to or seek to place a representative on the Board or seek the removal of any member of the Board;

(g) call or seek to have called any meeting of the stockholders of Holdco;

(h)(A) solicit, seek to effect, negotiate with or provide non-public information to any other person with respect to, (B) make any statement or proposal, whether written or oral, to the Board or any director or officer of Holdco with respect to, or (C) otherwise make any public announcement or proposal whatsoever with respect to any form of business combination transaction (with any person) involving a change of control of Holdco or the acquisition of a substantial portion of the equity securities or assets of Holdco or any material subsidiary of Holdco, including a merger, consolidation, tender offer, exchange offer or liquidation of Holdco's assets, or any restructuring, recapitalization or similar transaction with respect to Holdco or any material subsidiary of Holdco; provided, however, that the foregoing shall not (x) apply to any discussion between or among the Investors and the Qualified Stockholders or any of their respective officers, employees, agents or representatives or (y) in the case of clause (B) above, be interpreted to limit the ability of any Investor or Qualified Stockholder, or any designee of any Investor or Qualified Stockholder, on the Board to make any such statement or proposal or to discuss any such proposal with any officer or director of or advisor to Holdco or advisor to the Board unless, in either case, it would reasonably be expected to require Holdco to make a public announcement regarding such discussion, statement or proposal;

(i) otherwise act, alone or in concert with others, to seek to control or influence the management or policies of Holdco (except for (A) voting as a holder of Voting Securities in accordance with the terms of such Voting Securities and (B) actions taken as a director or officer of Holdco);

(j) publicly disclose any intention, plan or arrangement inconsistent with the foregoing, or make

any such disclosure privately if it would reasonably be expected to require Holdco to make a public announcement regarding such intention, plan or arrangement; or

(k) advise, assist (including by knowingly providing or arranging financing for that purpose) or knowingly encourage any other person in connection with any of the foregoing.

SECTION 3.02. Transfer Restrictions. None of the Investors may, without the prior written consent of Holdco, sell, transfer, pledge, encumber or otherwise dispose of, or agree to sell, transfer, pledge, encumber or otherwise dispose of, any Voting Securities of Holdco, or any rights or options to acquire such Voting Securities, except in a transaction complying with any of the following clauses:

(a) to the underwriters in connection with an underwritten public offering of shares of such securities on a firm commitment basis registered under the Securities Act, pursuant to which the sale of such securities is in a manner that is intended to effect a broad distribution;

(b) to any wholly owned subsidiary of such Investor or any partnership of which such Investor is the sole general partner; provided, however, that such transferee becomes a party to this Agreement as an Investor;

(c) to any person in a transaction that complies with the volume and manner of sale provisions contained in Rule 144(e) and Rule 144(f) as in effect on the date hereof under the Securities Act (whether or not Rule 144 is in effect on the date of such transaction); provided, however, that dispositions pursuant to this clause (c) may not be made during any period that a person has made and not withdrawn or terminated a tender or exchange offer for Voting Securities of Holdco or announced its intention to make such an offer;

(d) to any person (including any pledgee of shares of Voting Securities), other than a person that such Investor, or any of its Affiliates or Associates, knows or, after commercially reasonable inquiry should have known, beneficially owns or, after giving effect to such sale, will beneficially own more than 5% of the aggregate Voting Power of the Voting Securities of Holdco;

(e) in the case of a natural person, to any permitted transferee of such person; provided, however, that such transferee becomes a party to this Agreement as an Investor;

(f) in a bona fide pledge of shares of Voting Securities of Holdco to a financial institution to secure borrowings as permitted by applicable laws, rules and regulations; provided, however, that (i) such financial institution agrees to be bound by this Section 3.02 and
(ii) the borrowings so secured are full recourse obligations of the pledgor and are entered into substantially simultaneously with such pledge;

(g) upon five Business Days' prior notice to Holdco, pursuant to the terms of any tender or exchange offer for Voting Securities of Holdco made pursuant to the applicable provisions of the Exchange Act or pursuant to any merger or consolidation of Holdco (but in the case of any tender or exchange offer, only so long as each Investor and Qualified Stockholder is at the time in substantial compliance with the provisions of Sections 3.01 and 3.05(c), whether or not bound by such provisions, and such tender or exchange offer is not materially related to any past noncompliance with such provisions by any Investor or Qualified Stockholder (whether or not bound by such provisions));

(h) a gift to a Charitable Transferee or Qualified Trust; provided, however, that (i) at the time of such gift, the Principal Investor and his Family Members constitute a sufficient number of the directors or

trustees, as appropriate, of such Charitable Transferee or Qualified Trust to permit approval of matters by such Charitable Transferee or Qualified Trust without the approval of any other director or trustee of such Charitable Transferee or Qualified Trust and (ii) such Charitable Transferee or Qualified Trust is or simultaneously becomes a Qualified Stockholder (and Holdco agrees upon request to enter into an Investors' Agreement (No. 2) with such Charitable Transferee or Qualified Trust);

(i) to TCI Turner Preferred, Inc. ("TCITP") or its designee in accordance with the Stockholders' Agreement dated as of the same date as this Agreement among TCITP, Holdco and certain stockholders of Holdco; or

(j) to Holdco.

SECTION 3.03. Additional Agreements. None of the Investors may (and each Investor shall cause its Affiliates and Associates that it controls, and use reasonable efforts to cause its other Affiliates and Associates, not to)
(a) publicly request Holdco or any of its agents, directly or indirectly, to amend or waive any provision of this Agreement or (b) knowingly take any action that would reasonably be expected to require Holdco to make a public announcement regarding the possibility of a transaction with such Investor.

SECTION 3.04. Board Representation. (a) Upon execution of this Agreement, Holdco shall use reasonable efforts to cause to be elected to the Board two persons designated by the Principal Investor who are Eligible Persons. "Eligible Person" means (i) the Principal Investor and (ii) any other individual (A) who is reasonably acceptable to the Board, (B) whose election to the Board would not, in the opinion of counsel for Holdco, violate or be in conflict with, or result in any material limitation on the ownership or operation of any business or assets of Holdco or any of its subsidiaries under, any statute, law, ordinance, regulation, rule, judgment, decree or order of any Governmental Entity and (C) who has agreed in writing

with Holdco to comply with Section 3.01 and to resign as a director of Holdco if requested to do so pursuant to this Section 3.04. With respect to each meeting of stockholders of Holdco at which any designee of the Principal Investor on the Board comes up for reelection, Holdco shall use reasonable efforts to cause such designee (or another Eligible Person designated by the Principal Investor) to be included in the list of candidates recommended by the Board for election to the Board. Upon the death, resignation or removal of any designee of the Principal Investor on the Board, Holdco shall use reasonable efforts to have the vacancy thereby created filled with an Eligible Person designated by the Principal Investor.

(b) Upon the Investors and (subject to Section 3.06) the Qualified Stockholders, taken together, ceasing to own of record and beneficially at least 50% of the Voting Securities of Holdco owned by the Investors and the Qualified Stockholders, taken together, immediately following the Mergers (appropriately adjusted for stock dividends, stock splits, reverse stock splits and similar transactions), the number of persons that the Principal Investor shall be entitled to designate for election to the Board shall be reduced to one. If at such time there are two designees of the Principal Investor on the Board, the Principal Investor shall specify which of such designees shall continue to be entitled to the benefits of Section 3.04(a), and the other designee shall thereafter cease to constitute a designee of the Principal Investor for the purposes of Section 3.04(a) (and, if requested by Holdco, such other designee shall resign from the Board).

(c) Upon (i) (A) the Investors and (subject to Section 3.06) the Qualified Stockholders, taken together, ceasing to own of record and beneficially at least one-third of the Voting Securities of Holdco owned by the Investors and the Qualified Stockholders, taken together, immediately following the Mergers (appropriately adjusted for stock dividends, stock splits, reverse stock splits and similar transactions) and (B) the Principal Investor ceasing to be an employee of Holdco or any subsidiary of Holdco, (ii) the death or incapacity of the Principal Investor, (iii) the

wilful violation in any material respect of this Article by any Investor or (iv) five business days' prior written notice of termination from the Principal Investor, the number of persons that the Principal Investor shall be entitled to designate for election to the Board shall be reduced to zero. At such time, if requested by Holdco, each designee of the Principal Investor shall resign from the Board.

(d) The right of the Principal Investor to membership on the Board, as set forth in his employment agreement with Holdco to be entered into at the Effective Time of the Mergers, is not in addition to his rights under this Section 3.04.

(e) For the purposes of the calculations required by the first sentence of Section 3.04(b) and by Section 3.04(c)(i)(A), any Exempt Stock (as defined below) shall be excluded from the calculation of each of (i) the Voting Securities of Holdco owned of record and beneficially by the Qualified Stockholders on the date of such calculation and (ii) the Voting Securities of Holdco owned by the Qualified Stockholders immediately following the Mergers. "Exempt Stock" shall mean (A) any Holdco Common Stock acquired by any Qualified Stockholder pursuant to the TBS Merger in exchange for Company Capital Stock owned by such Qualified Stockholder on September 22, 1995, and (B) any Holdco Common Stock acquired after the Effective Time of the Mergers by any Qualified Stockholder other than pursuant to Section 3.02(h).

SECTION 3.05. Additional Covenants. (a) None of the Investors shall permit any other Investor that is at any time after the date hereof a wholly owned subsidiary of such Investor to cease to be a wholly owned subsidiary of such Investor for so long as such other Investor owns any Voting Securities of Holdco.

(b) None of the Investors shall permit any of its subsidiaries, other than any such subsidiaries that are Investors, to hold, directly or indirectly, any shares of Voting Securities of Holdco.

(c) Each Investor shall use reasonable efforts to cause each of its officers, employees, agents and representatives not to take any action that would be prohibited under Section 3.01 if taken by such Investor.

SECTION 3.06. Certain Special Provisions. If at any time the Principal Investor and his Family Members cease to constitute a sufficient number of the directors or trustees, as applicable, of any Qualified Stockholder to permit approval of matters by such Qualified Stockholder without the approval of any other director or trustee of such Qualified Stockholder, the Voting Securities of Holdco held by such Qualified Stockholder shall thereafter be deemed not to be owned of record and beneficially by such Qualified Stockholder (or any Investor) for the purposes of Sections 3.04(b) and 3.04(c). The Principal Investor shall be liable to Holdco under this Agreement for any actions taken by any Qualified Stockholder that would have been violations of
Section 3.01, 3.03 or 3.05(c) had such Qualified Stockholder been bound by such Sections.

ARTICLE IV

Miscellaneous

SECTION 4.01. Termination. (a) The covenants and agreements of the Investors in Sections 3.01, 3.03 and 3.05(c) shall terminate, except with respect to liability for prior breaches thereof, upon the last to occur of (i) the Principal Investor ceasing to be an employee of Holdco or any subsidiary of Holdco, (ii) the Principal Investor ceasing to be a member of the Board, and
(iii) the Principal Investor ceasing pursuant to Section 3.04(c) to be entitled to designate any Eligible Persons for election to the Board.

(b) The covenants and agreements of the Investors in Section 3.02 shall terminate, except with respect to liability for prior breaches thereof, on the fifth anniversary of the Effective Time of the Mergers.

(c) The covenants and agreements of Holdco in Section 3.04 shall terminate, except with respect to liability for prior breaches thereof, upon the Principal Investor ceasing pursuant to Section 3.04(c) to be entitled to designate any Eligible Persons for election to the Board.

(d) Without limiting Sections 4.01(a) and 4.01(b), the covenants and agreements of the Investors in Article III shall terminate, except with respect to liability for prior breaches thereof, if the Board does not (i) on the date of execution of this Agreement, elect to the Board the two Eligible Persons designated by the Principal Investor, (ii) recommend for election by the stockholders of Holdco to the Board any Eligible Person designated by the Principal Investor in accordance with Section 3.04 or (iii) reasonably promptly after request from the Principal Investor, fill any vacancy created on the Board upon the death, resignation or removal of any designee of the Principal Investor on the Board with another Eligible Person designated by the Principal Investor, in each case if the effect of such failure is that the Principal Investor does not have the representation on the Board to which he is entitled under Section 3.04.

(e) The other covenants and agreements set forth in this Agreement shall terminate, except with respect to liability for prior breaches thereof, upon the later of (i) the termination of Section 3.01 pursuant to
Section 4.01(a) or 4.01(d) and (ii) the termination of Section 3.02 pursuant to
Section 4.01(b) or 4.01(d).

SECTION 4.02. Entire Agreement; Assignment. This Agreement (i) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (ii) except as provided in Section 3.02, shall not be assigned by operation of law or otherwise without the prior written consent of the other parties. Any person who agrees pursuant to Section 3.02 to become a party to this Agreement as an Investor shall thereupon become, and have all the rights and obligations

of, an Investor hereunder. Any attempted assignment or transfer in violation of this Section 4.02 shall be void and of no effect. Subject to the foregoing, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective estates, heirs, successors and assigns.

SECTION 4.03. Amendments; Waivers. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. The waiver by any party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach thereof.

SECTION 4.04. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given
(i) on the first Business Day following the date received, if delivered personally or by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on the Business Day following timely deposit with an overnight courier service, if sent by overnight courier specifying next day delivery and
(iii) on the first Business Day that is at least five days following deposit in the mails, if sent by first class mail, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to any Investor, to:

R.E. Turner
In care of Turner Broadcasting System,
Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
Facsimile: (404) 827-3000

For Courier delivery:
One CNN Center
Atlanta, GA 30303

Attention: General Counsel

If to Holdco, to:

Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 956-7281

Attention: General Counsel

with a copy (which shall not constitute
notice) to:

Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700

Attention: Peter S. Wilson, Esq.

SECTION 4.05. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware.

SECTION 4.06. Specific Performance. Each party recognizes and acknowledges that a breach by it of Article III would cause the other parties to sustain damages for which they would not have an adequate remedy at law for money damages, and therefore each party agrees that in the event of any such breach any of the other parties shall be entitled to seek the remedy of specific performance of such Article III and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity.

SECTION 4.07. Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and

shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties.

SECTION 4.08. Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

SECTION 4.09. Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision, and this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. The parties shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provision with a valid provision the effects of which come as close as possible to those of such invalid, illegal or unenforceable provision.

SECTION 4.10. Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled.

IN WITNESS WHEREOF, Holdco and each Investor have caused this Agreement to be duly executed as of the day and year first above written.

TW INC.,

by /s/ Thomas W. McEnerney
   ------------------------------
   Name:  Thomas W. McEnerney
   Title: Vice President

  /s/ R. E. Turner
  --------------------------------
  R. E. Turner

TURNER OUTDOOR, INC.,

by /s/ R. E. Turner
   ------------------------------
   Name:  R. E. Turner
   Title: President

TURNER PARTNERS, L.P.,

by /s/ R. E. Turner
   ------------------------------
   Name:  R. E. Turner
   Title: General Partner

EXECUTION COPY

INVESTORS' AGREEMENT (NO. 2) dated as of
October 10, 1996, among TW INC. (to be
renamed TIME WARNER INC.), a Delaware
corporation ("Holdco"), and the other parties
signatory hereto (each an "Investor").

This Agreement is entered into pursuant to Section 6.02(f) of the Amended and Restated Agreement and Plan of Merger (the "Amended and Restated Merger A Agreement"), among Time Warner Inc., a Delaware corporation ("Parent"), Holdco, Time Warner Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary of Holdco, TW Acquisition Corp., a Georgia corporation and a direct wholly owned subsidiary of Holdco, and Turner Broadcasting System, Inc., a Georgia corporation (the "Company"). In connection with the TBS Merger (as defined in the Amended and Restated Merger Agreement), subject to certain exceptions, (a) each share of Class A Common Stock, par value $.0625 per share, of the Company and each share of Class B Common Stock, par value $.0625 per share, of the Company will be converted into the right to receive 0.75 shares of Common Stock, par value $0.01 per share, of Holdco ("Holdco Common Stock") and
(b) each share of Class C Convertible Preferred Stock, par value $.125 per share, of the Company will be converted into the right to receive 4.80 shares of Holdco Common Stock.

Accordingly, it is hereby agreed as follows:

ARTICLE I

Definitions

SECTION 1.01. Definitions. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Amended and Restated Merger Agreement. For purposes of this Agreement, the following terms shall have the following meanings:

"Affiliate" and "Associate", when used with reference to any person, shall have the respective meanings ascribed to such terms in Rule 12b-2 of the Exchange Act, as in effect on the date of this Agreement.

A person shall be deemed the "beneficial owner" of, and shall be deemed to "beneficially own", and shall be deemed to have "beneficial ownership" of:

(i) any securities that such person or any of such person's Affiliates or Associates is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of this Agreement; and

(ii) any securities (the "underlying securities") that such person or any of such person's Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise (it being understood that such person shall also be deemed to be the beneficial owner of the securities convertible into or exchangeable for the underlying securities).

"Covered Holdco Common Stock" shall mean (i) any shares of Holdco Common Stock transferred to an Investor

pursuant to Section 3.02(h) of the Investors' Agreement (No. 1) dated as of October 10, 1996, among Holdco and certain stockholders of Holdco and (ii) any shares of Holdco Common Stock acquired by any Investor pursuant to the TBS Merger otherwise than in exchange for Company Common Stock owned by such Investor on September 22, 1995.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as in effect on the date in question, unless otherwise specifically provided.

"Investor" shall mean each person that executes this Agreement in such capacity.

"person" shall have the meaning given such term in the Amended and Restated Merger Agreement.

"Voting Power", when used with reference to any class or series of securities of Holdco, or any classes or series of securities of Holdco entitled to vote together as a single class or series, shall mean the power of such class or series (or such classes or series) to vote for the election of directors. For purposes of determining the percentage of Voting Power of any class or series (or classes or series) beneficially owned by any person, any securities not outstanding which are subject to conversion rights, exchange rights, rights, warrants, options or similar securities held by such person shall be deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class or series (or classes or series) beneficially owned by such person, but shall not be deemed to be outstanding for the purpose of computing the percentage of the class or series (or classes or series) beneficially owned by any other person.

"Voting Securities", when used with reference to any person, shall mean any securities of such person having Voting Power or any securities convertible into or exchangeable for any securities having Voting Power.

ARTICLE II

Securities Act; Legend

SECTION 2.01. Transfers of Holdco Common Stock. None of the Investors may offer for sale or sell any shares of Holdco Common Stock acquired pursuant to the Amended and Restated Merger Agreement, or any interest therein, except (a) pursuant to a registration of such shares under the Securities Act and applicable state securities laws or (b) in a transaction as to which such Investor has delivered an opinion of counsel or other evidence reasonably satisfactory to Holdco, to the effect that such transaction is exempt from, or not subject to, the registration requirements of, the Securities Act and applicable state securities laws.

SECTION 2.02. Legends on Certificates. Each Investor shall hold in certificate form all shares of Covered Holdco Common Stock owned by such Investor. Each certificate for shares of Covered Holdco Common Stock issued to or beneficially owned by a person that is subject to the provisions of this Agreement shall bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN INVESTORS' AGREEMENT (NO. 2) DATED AS OF OCTOBER 10, 1996 (THE "INVESTORS' AGREEMENT"), BETWEEN THE CORPORATION AND THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. A COPY OF THE INVESTORS' AGREEMENT MAY BE OBTAINED FROM THE CORPORATION FREE OF CHARGE. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO COMPLY IN ALL RESPECTS WITH THE REQUIREMENTS OF THE INVESTORS' AGREEMENT.

ARTICLE III

Covenants of the Investors

SECTION 3.01. Transfer Restrictions. None of the Investors may, without the prior written consent of Holdco, sell, transfer, pledge, encumber or otherwise dispose of, or agree to sell, transfer, pledge, encumber or otherwise dispose of, any Covered Holdco Common Stock, or any rights or options to acquire Covered Holdco Common Stock, except in a transaction complying with any of the following clauses:

(a) to the underwriters in connection with an underwritten public offering of shares of such securities on a firm commitment basis registered under the Securities Act, pursuant to which the sale of such securities is in a manner that is intended to effect a broad distribution;

(b) to any person in a transaction that complies with the volume and manner of sale provisions contained in Rule 144(e) and Rule 144(f) as in effect on the date hereof under the Securities Act (whether or not Rule 144 is in effect on the date of such transaction); provided, however, that dispositions pursuant to this clause (b) may not be made during any period that a person has made and not withdrawn or terminated a tender or exchange offer for Voting Securities of Holdco or announced its intention to make such an offer;

(c) to any person (including any pledgee of Covered Holdco Common Stock), other than a person that such Investor, or any of its Affiliates, Associates, directors or trustees, knows or, after commercially reasonable inquiry should have known, beneficially owns or, after giving effect to such sale, will beneficially own more than 5% of the aggregate Voting Power of the Voting Securities of Holdco;

(d) in a bona fide pledge of shares of Covered Holdco Common Stock to a financial institution to secure borrowings as permitted by applicable laws, rules and regulations; provided, however, that (i) such financial institution agrees to be bound by this Section 3.01 and
(ii) the borrowings so secured are

full recourse obligations of the pledgor and are entered into substantially simultaneously with such pledge;

(e) upon five Business Days' prior notice to Holdco, pursuant to the terms of any tender or exchange offer for Covered Holdco Common Stock made pursuant to the applicable provisions of the Exchange Act or pursuant to any merger or consolidation of Holdco;

(f) to TCI Turner Preferred, Inc. ("TCITP") or its designee in accordance with the Stockholders' Agreement dated as of October 10, 1996, among TCITP, Holdco and certain stockholders of Holdco; or

(g) to Holdco.

ARTICLE IV

Miscellaneous

SECTION 4.01. Termination. The covenants and agreements of the Investors in Section 3.01 shall terminate, except with respect to liability for prior breaches thereof, on the earlier of (a) the fifth anniversary of the Effective Time of the Mergers and (b) the date on which the covenants and agreements contained in Section 3.02 of the Investors' Agreement (No. 1) dated as of October 10, 1996, among Holdco and certain of its other stockholders, have been terminated.

SECTION 4.02. Entire Agreement; Assignment. This Agreement (i) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (ii) shall not be assigned by operation of law or otherwise without the prior written consent of the other parties. Any attempted assignment or transfer in violation of this Section 4.02 shall be void and of no effect. Subject to the foregoing, the provisions of this Agreement shall be binding upon and inure to the

benefit of the parties hereto and their respective successors and assigns.

SECTION 4.03. Amendments; Waivers. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. The waiver by any party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach thereof.

SECTION 4.04. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given
(i) on the first Business Day following the date received, if delivered personally or by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on the Business Day following timely deposit with an overnight courier service, if sent by overnight courier specifying next day delivery and
(iii) on the first Business Day that is at least five days following deposit in the mails, if sent by first class mail, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to any Investor, to:

R.E. Turner
In care of Turner Broadcasting System, Inc.
One CNN Center
Box 105366
Atlanta, GA 30348-5366
Facsimile: (404) 827-3000

For Courier delivery:
One CNN Center
Atlanta, GA 30303

Attention: General Counsel

If to Holdco, to:

Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Facsimile: (212) 956-7281

Attention: General Counsel

with a copy (which shall not constitute notice) to:

Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Facsimile: (212) 474-3700

Attention: Peter S. Wilson, Esq.

SECTION 4.05. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware.

SECTION 4.06. Specific Performance. Each party recognizes and acknowledges that a breach by it of Article III would cause the other parties to sustain damages for which they would not have an adequate remedy at law for money damages, and therefore each party agrees that in the event of any such breach any of the other parties shall be entitled to seek the remedy of specific performance of such Article III and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity.

SECTION 4.07. Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties.

SECTION 4.08. Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

SECTION 4.09. Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision, and this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. The parties shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provision with a valid provision the effects of which come as close as possible to those of such invalid, illegal or unenforceable provision.

SECTION 4.10. Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled.

IN WITNESS WHEREOF, Holdco and each Investor have caused this Agreement to be duly executed as of the day and year first above written.

TW INC.,

by /s/ Thomas W. McEnerney
   ------------------------------
   Name:  Thomas W. McEnerney
   Title: Vice President

INITIAL INVESTORS:

TURNER FOUNDATION, INC.,

by /s/ R. E. Turner
   --------------------------
   Name:  R. E. Turner
   Title: President

ROBERT E. TURNER CHARITABLE
REMAINDER UNITRUST NO. 2,

by /s/ R. E. Turner
   --------------------------
   Name:  R. E. Turner
   Title: Trustee

AMENDMENT NO. 1

AMENDMENT NO. 1 ("Amendment"), dated as of October 30, 1995, to that certain Credit Agreement, dated as of June 30, 1995, among TIME WARNER ENTERTAINMENT COMPANY, L.P., TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE
PARTNERSHIP and TWI CABLE INC., as Borrowers, CHEMICAL BANK, as Administrative
Agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW
YORK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation and Syndication Agents, and the lenders party thereto (the "Credit Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to those terms in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Borrowers and the Lenders wish to amend the Credit Agreement as set forth herein;

NOW, THEREFORE, it is agreed:

SECTION 1. Amendments. The Credit Agreement shall be amended as follows:

1.01. Section 1.01 of the Credit Agreement shall be amended as follows:

(a) The definition of "Cash Balance" shall be amended by inserting the following language after the word "Borrower" in clause (i) thereof: "(and, in the case of TWI Cable, CVI)".

(b) The definition of "Consolidated Net Income" shall be amended by adding, after the words "the provisions of Section 6.06(a)" in clause (iii) thereof, ", and, in the case of CVI during the Applicable Period, any agreement or instrument governing the CVI Assumed Indebtedness".

(c) The definition of "Credit Documents" shall be amended by replacing the first "and" with "," and adding "and the CVI Guarantees" after the word "Guarantees".

(d) The definition of "CVI" shall be amended by deleting the words "and its Subsidiaries" and adding in its place "(including any successor thereto by merger)".

(e) The definition of "CVI Acquisition" shall be amended by adding the words "and its Subsidiaries" after the words "acquisition of CVI".

(f) The definition of "Gerry Acquisition" shall be amended by adding ", CVI" immediately following the word "TWEAN".

(g) The definition of "Restricted Payment" shall be amended by replacing the word "and" immediately before clause (d) thereof with "," and adding the following before the period thereof:

", (e) during the Applicable Period, loans by TWI Cable to CVI (the 'CVI Loans', the proceeds of which are to be used by CVI solely (x) to repay indebtedness assumed in connection with the CVI Acquisition and the Gerry Acquisition and to pay related fees and expenses and
(y) for general corporate purposes (as defined in Section 4.05(e)); and (f) any payments of principal and/or interest by CVI to TWI Cable with respect to the CVI Loans".

(h) The definition of "TWI Cable" shall be amended by deleting it in its entirety and replacing it with the following:

"TWI Cable" shall mean (i) before the Stock Contribution, the Person defined as such in the first paragraph hereof and (ii) from and after the Stock Contribution, the Person currently known as CVI, which shall assume, simultaneously with such contribution, on terms reasonably satisfactory to the Administrative Agent, all of the rights, obligations and liabilities of the Person described in clause (i) under the Credit Documents.

(i) The following definitions shall be added:

"Applicable Period" shall have the meaning provided in Section 9.15(d).

"CVI Guarantee" shall mean a guarantee, pursuant to Section 3.02(e), by CVI and certain of its Subsidiaries of all of TWI Cable's obligations under the Credit Documents, which guarantee is substantially in the form attached hereto as Exhibit G-6.

"CVI Loans" shall have the meaning provided in the definition of "Restricted Payments".

"Stock Contribution" shall mean the contribution by TWI of all of the outstanding Capital Stock of TWI Cable to CVI, which shall assume, simultaneously with such contribution, all of TWI Cable's rights, obligations and liabilities under the Credit Documents.

1.02. Section 3.02(a)(i) of the Credit Agreement shall be amended by adding, after the words "each Acquiring Borrower" in clause (2) thereof, "(or in the case of the CVI Acquisition, CVI)."

1.03. Section 3.02(e) of the Credit Agreement shall be amended by deleting it in its entirety and replacing it with the following:

"(e) Guarantees. CVI and each Person that will become a Subsidiary of CVI upon consummation of the CVI Acquisition and the Gerry Acquisition shall have executed and delivered a CVI Guarantee; provided, however, that no such Person (other than CVI) having, directly or indirectly, less than 20,000 subscribers shall be required to deliver a CVI Guarantee if Subsidiaries of CVI that deliver a CVI Subsidiary Guarantee collectively shall own more than 85% of all of the subscribers of CVI. Each CVI Guarantee shall be in full force and effect."

1.04. Section 3.02 of the Credit Agreement shall be amended by adding the following at the end thereof:

"(g) CVI Acquisition. In the case of the CVI Acquisition, (i) after giving effect thereto, CVI shall be a wholly owned direct or indirect Subsidiary of TWI and (ii) the Administrative Agent shall have received reasonably satisfactory evidence of compliance with the indentures relating to CVI's 9 1/4% Senior Debentures due 2008 and 10 3/4% Senior Notes due 2002."

1.05. Section 4.05(c) of the Credit Agreement shall be amended by (a) replacing the word "and" at the end of clause (ii) thereof with "," and (b) adding at the end of clause (iii) thereof the following language: "and (iv) to make loans to CVI, the proceeds of which loans shall be used by CVI for the purposes described in clauses (i)-(iii) of this Section 4.05(c)".

1.06. Section 4.21(a) of the Credit Agreement shall be amended by deleting, from the second sentence thereof, "On and after the closing of the CVI Acquisition," and adding the following in its place:

"During the Applicable Period, the Subsidiaries of CVI that have not delivered a CVI Guarantee have less than 15% of the subscribers of CVI in the aggregate; after the Applicable Period,".

1.07. Section 5.12 of the Credit Agreement shall be amended by (a) replacing the word "or" at the end of clause (ii) of the proviso of the first sentence thereof with ","; (b) adding at the end of clause (iii) of the proviso of the first sentence thereof the following language: "or (iv) CVI and, prior to the consummation of the Stock Contribution, any Subsidiary of CVI"; and (c) adding the following before the last sentence thereof:

"Simultaneously with or promptly after the consummation of the Stock Contribution, each Subsidiary of CVI shall execute and deliver to the Lenders a Subsidiary Guarantee to the extent necessary to make the representation and warranty in Section 4.21(a) true and correct; upon such execution and delivery, each CVI Guarantee shall be automatically released."

1.08. Section 6.04(a)(v) of the Credit Agreement shall be amended by deleting "and (2)" and adding in its place "(2) the CVI Loans and (3)".

1.09. Section 6.07 of the Credit Agreement shall be amended by replacing the word "and" at the end of clause (v) thereof with "," and adding, at the end of clause (vi) thereof, "and (vii) the CVI Loans and the CVI Guarantees".

1.10. Section 7.03 of the Credit Agreement shall be amended by adding, after the words "contained in this

Agreement" in clause (b) thereof, "or in Section 1(b) or (c) of any CVI Guarantee".

1.11. Section 7.08 of the Credit Agreement shall be amended by adding the following at the end thereof: "at any time during the Applicable Period, CVI shall cease to be a direct or indirect Wholly Owned Subsidiary of TWI; or".

1.12. Section 7.12 of the Credit Agreement shall be amended by adding "(i)" before the first sentence thereof and adding the following after the semicolon thereof:

" or (ii) At any time during the Applicable Period, any CVI Guarantee shall cease to be in full force and effect, or CVI or any of its Subsidiaries shall disavow its obligations under its CVI Guarantee; or".

1.13. Article VII of the Credit Agreement shall be amended by adding the following after the end of Section 7.12:

"SECTION 7.13. Stock Contribution. The Stock Contribution shall not have been effected within five (5) Business Days (or such later date as shall be reasonably consented to by the Administrative Agent but in any event not later than 30 days) after TWI shall become aware that all legal impediments to the Stock Contribution have been removed or lifted;".

1.14. Section 9.15 of the Credit Agreement shall be amended by adding the following at the end thereof:

"(d) From and after the closing of the CVI Acquisition and until the Stock Contribution and the assumption by CVI of all of TWI Cable's rights, obligations and liabilities under the Credit Documents as contemplated by the definition of "TWI Cable" (the "Applicable Period"), CVI and its Subsidiaries shall be treated as Restricted Subsidiaries of TWI Cable for all purposes under this Agreement unless the context specifically requires otherwise."

1.15. Annex I hereto shall be attached to the Credit Agreement as Exhibit G-6.

SECTION 2. Representations and Warranties and Agreements. In order to induce the Lenders to enter into this

Amendment, each of the Borrowers makes the following representations, warranties and agreements to each of the Lenders:

2.01. No Default. No Default or Event of Default has occurred and is continuing.

2.02. Representations and Warranties. All of the representations and warranties in the Credit Documents, after giving effect to this Amendment, are true, correct and accurate in all material respects on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date.

2.03. Agreement. Each of the Borrowers agrees to use its reasonable best efforts to have all legal impediments to the Stock Contribution removed or lifted as soon as practicable.

SECTION 3. Conditions. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions:

3.01. Execution. The Administrative Agent shall have received duly executed counterparts hereof from (i) each of the Borrowers and (ii) the Lenders constituting the Required Lenders.

3.02. Representations and Warranties. All of the representations and warranties of the Borrowers in Sections 2.01 and 2.02 hereof shall be true and correct.

3.03. Officers' Certificate. The Administrative Agent shall have received an Officers' Certificate to the effect that all of the conditions in this Section 3 are satisfied.

SECTION 4. Miscellaneous.

4.01. Amendment Limited. All terms, provisions, covenants, representations, warranties, agreements and conditions contained in the Credit Agreement shall remain in full force and effect except as expressly contemplated herein and shall not otherwise be deemed waived, modified or amended hereby.

4.02. Counterparts. This Amendment may be executed in any number of counterparts and by the different parties

hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of such counterparts together shall constitute one and the same agreement.

4.03. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York without regard to its principles of conflicts of law.

4.04. Headings. Headings have been inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

TIME WARNER ENTERTAINMENT
COMPANY, L.P.

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Senior Vice President & Chief
           Financial Officer

TIME WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP

By: TIME WARNER ENTERTAINMENT
COMPANY, L.P.,
Managing Partner

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Senior Vice President & Chief
           Financial Officer

TWI CABLE INC.

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Vice President

Signature pages for the Banks that are Parties to Amendment No. 1 to the TWE Credit Agreement have been omitted.

WAIVER NO. 1

WAIVER NO. 1 ("Waiver"), dated as of December 1, 1995, to that certain Credit Agreement, dated as of June 30, 1995, as amended, among TIME WARNER ENTERTAINMENT COMPANY, L.P., TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE
PARTNERSHIP and TWI CABLE INC., as Borrowers, CHEMICAL BANK, as Administrative
Agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW
YORK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation and Syndication Agents, and the lenders party thereto (the "Credit Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to those terms in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Lenders wish to waive certain provisions of the Credit Agreement on the terms and subject to the conditions provided herein;

NOW, THEREFORE, it is agreed:

SECTION 1. Waivers. Subject to Section 2 below:

1.01. Notwithstanding Section 6.04(a)(v) of the Credit Agreement, $66,000,000 aggregate principal amount of 9.86% Senior Notes due May 15, 2001 of Cablevision Industries, Inc. ("CII") and $100,000,000 aggregate principal amount of 10.36% Senior Notes due July 15, 1999 of CII (together, the "CII Notes") need not be repaid on the Acquisition Funding Date for the CVI Acquisition (the "CVI Acquisition Funding Date") but shall be repaid on a date (the "Repayment Date") not later than the 21st day after such date (or the business day immediately following such 21st day if such 21st day is not a business day).

1.02. Notwithstanding clause (iii) of the proviso in the definition of Consolidated Net Income in the Credit Agreement, prior to the Repayment Date, the income of CII and its Subsidiaries need not be excluded from TWI Cable's Consolidated Net Income by virtue of the existence of restricted payments covenants in Section 10.5 of each of the agreements governing the CII Notes.

1.03. Notwithstanding Section 2.01(b)(i) of the Credit Agreement, up to $200,000,000 of the Total Commitment

need not be used on the CVI Acquisition Funding Date, but shall be used only to repay the CII Notes (plus any make-whole and other premiums relating thereto) on the Repayment Date and to pay related fees and expenses.

1.04. To the extent that CII or any of its Subsidiaries is required under Section 3.02(e) of the Credit Agreement to execute and deliver a CVI Guarantee on the CVI Acquisition Funding Date, such CVI Guarantee need not be executed and delivered on such date but shall be executed and delivered to the Lenders not later than the Repayment Date.

1.05. During the period from the CVI Acquisition Funding Date to the Repayment Date, the Borrowers shall not be deemed to have breached the representation set forth in the second sentence of Section 4.21(a) of the Credit Agreement by virtue of CII and its Subsidiaries not delivering a CVI Guarantee on the CVI Acquisition Funding Date.

SECTION 2. Covenant. The Borrowers covenant and agree, prior to or immediately upon consummation of the CVI Acquisition, to cause a notice to be delivered to the holders of the CII Notes for the optional prepayment thereof in accordance with the terms of the agreements governing the CII Notes.

SECTION 3. Miscellaneous. All terms, provisions, covenants, representations, warranties, agreements and conditions contained in the Credit Agreement shall remain in full force and effect except as expressly contemplated herein and shall not otherwise be deemed waived, modified or amended hereby. This Waiver may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of such counterparts together shall constitute one and the same agreement. This Waiver shall become effective upon the execution and delivery to the Administrative Agent of a counterpart hereof by (i) each of the Borrowers and (ii) the Lenders constituting the Required Lenders. This Waiver shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of law.

IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly executed as of the date first above written.

TIME WARNER ENTERTAINMENT COM-
PANY, L.P.

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Senior Vice President and Chief
           Financial Officer

TIME WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP

By: TIME WARNER ENTERTAINMENT
COMPANY, L.P.,
Managing Partner

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Senior Vice President and Chief
           Financial Officer

TWI CABLE INC.

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Vice President

Signature pages for the Banks that are Parties to Waiver No. 1 to the TWE Credit Agreement have been omitted.

AMENDMENT AND WAIVER NO. 2

AMENDMENT AND WAIVER NO. 2 ("Amendment"), dated as of August 26, 1996, to that certain Credit Agreement, dated as of June 30, 1995, among TIME WARNER ENTERTAINMENT COMPANY, L.P., TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP and TWI CABLE INC., as Borrowers, THE CHASE MANHATTAN BANK, as Administrative Agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW YORK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation and Syndication Agents, and the lenders party thereto, as amended to the date hereof (the "Credit Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to those terms in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Borrowers and the Lenders wish to amend and waive certain provisions of the Credit Agreement as set forth herein;

NOW, THEREFORE, it is agreed:

SECTION 1. Amendments. The Credit Agreement shall be amended as follows:

1.01. Section 1.01 of the Credit Agreement shall be amended as follows:

(a) The following definitions shall be added:

"Applicable Amount" shall mean (i) $300,000,000 or (ii) in the event that any of the TWI Convertible Intercompany Debt shall have been converted into common equity of TWI Cable, an amount (not less than $0) equal to $300,000,000 less the amount of the TWI Convertible Intercompany Debt so converted.

"Free Cash Flow" shall mean, with respect to any New Beneficial Asset for any period, the net income (or loss) of, or otherwise derived from, such New Beneficial Asset, as determined in accordance with or otherwise consistent with GAAP, plus (to the extent deducted in calculating such net income), the sum of amortization and depreciation and other non-cash

charges to net income, and, without duplication, the proceeds of any sale or other disposition of, or any distributions or proceeds of financings with respect to, such New Beneficial Asset (but only to the extent that (i) such proceeds are not invested in or otherwise used in connection with the ownership and operation of such assets and (ii) the indebtedness relating to such financings will be assumed by TWEAN), minus the sum of capital expenditures attributable to such asset and non-cash credits to net income, plus or minus changes in working capital.

"New Beneficial Assets" shall have the meaning provided in the definition of "Transfer."

"New Holder Guarantee" shall mean a guarantee of the Obligations of TWEAN, substantially in the form of Exhibit G-8.

"New Holder Guarantor" shall have the meaning provided in
Section 3.03(h).

"Transaction Summary" shall mean Annex A of Amendment and Waiver No. 2 to this Agreement, with such changes thereto as are not materially less favorable to the Lenders and as are reasonably satisfactory to the Administrative Agent.

"Transfer Date" shall have the meaning provided in the definition of "Transfer."

"TW Holding" shall mean (i) TW Holding Co., a New York general partnership, whose partners shall include TWI Cable and certain of its Subsidiaries; Paragon; and CVI and certain of its Subsidiaries or (ii) Paragon.

"TW Holding Guarantee" shall mean a guarantee of all of the Obligations of TWEAN, substantially in the form of Exhibit G-7.

"TW Holding Partner Guarantee" shall mean a pro rata guarantee of TW Holding's obligations under the TW Holding Guarantee, substantially in the form of Exhibit G-9.

"TW Holding Partner Guarantor" shall have the meaning provided in Section 3.03(h).

"TWI Convertible Intercompany Debt" shall mean Convertible Intercompany Debt of TWI Cable to TWI in an aggregate principal amount not to exceed $1,500,000,000 (excluding accrued interest thereon added to principal from time to time in lieu of cash payment of interest, in accordance with the terms of such Convertible Intercompany Debt); provided, however, that (x) all of the proceeds of such Convertible Intercompany Debt shall be used by TWI Cable upon receipt thereof to repay its outstanding Loans and (y) the rate of interest on such Convertible Intercompany Debt shall not at any time exceed the highest rate of interest on the Loans to TWI Cable hereunder (it being understood, without limiting any other provision of this Agreement, that the amount of the TWI Convertible Intercompany Debt in excess of the Applicable Amount shall be included in the calculation of the Leverage Ratio of TWI Cable for all purposes under this Agreement).

(b) The definition of "Convertible Intercompany Debt" shall be amended by replacing it in its entirety with the following:

"Convertible Intercompany Debt" shall mean any Indebtedness for money borrowed of (a) any Borrower owing to TWI or any of its Subsidiaries or (b) any Foreign Subsidiary owing to TWI that, in each case, (i) is issued on terms reasonably satisfactory to the Administrative Agent, (ii) if owed to a Person other than a Borrower or a Restricted Subsidiary of a Borrower, is convertible into equity of the borrower of such Indebtedness or is extinguishable, in each case, upon (x) the liquidation or dissolution of the borrower of such Indebtedness, (y) failure to repay any Loans at final maturity or (z) acceleration of the maturity of any Loans hereunder, and
(iii) provides that principal thereof and interest thereon may not be paid except to the extent permitted under Section 6.06; provided, however, that any Convertible Intercompany Debt of a Borrower shall be subordinated in right of payment to the Obligations on terms and conditions reasonably satisfactory to the Administrative Agent.

(c) The definition of "Applicable Fee Percentage" shall be amended by adding the following at the end thereof:

"Notwithstanding anything to the contrary, so long as any TWI Convertible Intercompany Debt is outstanding, the Applicable Fee Percentage for TWI Cable shall be determined by reference to its Leverage Ratio if such Applicable Fee Percentage would be higher than that determined by reference to TWI Cable's Debt Ratings."

(d) The definition of "Applicable Margin" shall be amended by adding the following at the end thereof:

"Notwithstanding anything to the contrary, so long as any TWI Convertible Intercompany Debt is outstanding, the Applicable Margin for TWI Cable shall be determined by reference to its Leverage Ratio if such Applicable Margin would be higher than that determined by reference to TWI Cable's Debt Ratings."

(e) The definition of "Beneficial Assets" shall be amended by adding ", the New Beneficial Assets" after "TWE Beneficial Assets".

(f) The definition of "Guarantee" shall be amended by adding "TW Holding Guarantee, New Holder Guarantee, TW Holding Partner Guarantee," before "TWE Guarantee".

(g) The definition of "Guarantor" shall be amended by adding "any New Holder Guarantor, any TW Holding Partner Guarantor, TW Holding in its capacity as a guarantor of the Obligations of TWEAN," after "any Subsidiary Guarantor".

(h) The definition of "Indebtedness" shall be amended by deleting "and" before clause (f) of the proviso thereof and adding before the period thereof "; (g) any Guarantee; and (h) any reimbursement obligation among Guarantors with respect to any Guarantees; provided, however, that any such obligation shall be subordinated to the obligations of the Guarantors under the Credit Documents".

(i) The definition of "Restricted Payment" shall be amended (I) by replacing the second parenthetical phrase in clause (iv) thereof with the following:

"(other than (x) any payment by any Subsidiary of a Borrower to any Wholly Owned Subsidiary of such

Borrower or to such Borrower and (y) so long as no Default or Event of Default has occurred and be continuing or would result therefrom, any payment of principal of or interest on such amount of the TWI Convertible Intercompany Debt that is in excess of the Applicable Amount)"

and (II) by replacing clause (v) thereof with the following:

"(v) Investments by any Company in any of its Affiliates, other than any direct or indirect Investment by any Company in (A) any Person that, after giving effect to such Investment, would be a Restricted Subsidiary of such Company, (B) any Person that is not an Affiliate of such Company immediately prior to such Investment or (C) any joint venture between such Company and one or more Persons who are not Affiliates of TWI or any Company".

(j) The definition of "Transfer" shall be amended by replacing it in its entirety with the following:

"Transfer" shall mean a transfer to TWEAN (in such capacity, the "Transferee Borrower") by TWI Cable or any of its Subsidiaries of one or more Acquired Cable Businesses (or one or more cable systems comprising parts thereof), together with the portion of the then outstanding Loans of TWI Cable (and if the Stock Contribution shall not have occurred, of the then outstanding CVI Loans) allocated to the Applicable Acquired Cable Business or applicable cable system, as the case may be, as described in the Transaction Summary (the "Allocated Loans"). Notwithstanding the foregoing, if TWI Cable or such Subsidiary, as the case may be, has not obtained all of the governmental consents or approvals required for a transfer of an Acquired Cable Business or cable system prior to the proposed date of such transfer (the "Transfer Date"), TWI Cable or such Subsidiary, as the case may be, may, on the Transfer Date, transfer the Allocated Loans but hold the related assets for the use and benefit of TWEAN (such assets, collectively, the "New Beneficial Assets"); provided, however, that TWI Cable shall (i) use its reasonable best efforts to afford TWEAN the economic benefits intended to be conferred by the New Beneficial Assets, (ii) assign to TWEAN the right to

receive all Free Cash Flow derived from the New Beneficial Assets on and after the Transfer Date, which Free Cash Flow shall be paid to TWEAN as soon as reasonably practicable but in no event more than 45 days after the end of each fiscal quarter, (iii) take all reasonable actions to obtain such governmental consents or approvals as soon as practicable after the Transfer Date and (iv) effectuate the transfers of New Beneficial Assets after all governmental consents or approvals required for the transfer of such New Beneficial Assets are obtained (it being understood that no cable television franchise comprising a New Beneficial Asset shall be required to be contributed to TWEAN until governmental consents or approvals have been obtained with respect to the contribution of all cable television franchises in the same cable television system).

(k) The definition of "TWE Partnership Agreement" shall be amended by adding ", as amended on the date hereof and as hereafter amended in accordance with the terms of this Agreement" before the period thereof.

(l) The definition of "TWEAN Contribution Agreement" shall be amended by adding ", as amended in accordance with the terms of this Agreement" before the period thereof.

(m) The definition of "TWEAN Partnership Agreement" shall be amended by adding ", as amended in accordance with the terms of this Agreement" before the period thereof.

1.02. Guarantees. Section 3.03(h) of the Credit Agreement shall be amended by adding the following at the end thereof:

"TW Holding shall have executed and delivered the TW Holding Guarantee. Each holder of New Beneficial Assets (each, in such capacity, a "New Holder Guarantor") shall have executed and delivered a New Holder Guarantee. Each partner of TW Holding that assigns indebtedness to TW Holding (each, in such capacity, a "TW Holding Partner Guarantor") shall have executed and delivered a TW Holding Partner Guarantee. Each such Guarantee shall be in full force and effect."

1.03. Intercompany Indebtedness. Section 6.04 of the Credit Agreement shall be amended by deleting "and" at the

- -7-

end of clause (v) thereof and adding the following immediately after the end of clause (vi) thereof:

"(vii) Indebtedness of any Restricted Subsidiary of such Borrower to a Wholly Owned Restricted Subsidiary of such Borrower or to such Borrower (other than Indebtedness of TWEAN to TWE or to a Wholly Owned Restricted Subsidiary of TWE or Indebtedness of a Wholly Owned Restricted Subsidiary of TWE to TWEAN) or Indebtedness of a Foreign Subsidiary of such Borrower to another Foreign Subsidiary of such Borrower;".

1.04. Restricted Payments. Section 6.06(e) of the Credit Agreement shall be amended by (I) deleting "assuming any Loans of TWI Cable" from clause
(x)(ii) thereof and replacing it with "assuming any Allocated Loans" and (II) by adding "or (z) any holder of New Beneficial Assets (other than any Borrower or any Restricted Subsidiary) from distributing or otherwise transferring any assets other than such New Beneficial Assets" before the period thereof.

1.05. Unrestricted Subsidiaries. Section 6.14(a) of the Credit Agreement shall be amended by deleting the parenthetical phrase in clause (iii) thereof.

1.06. Release of Certain Guarantees. Section 9.08 of the Credit Agreement shall be amended by deleting the text before "(ii)" and replacing it with the following:

"TWE, TW Holding (other than in its capacity as a Subsidiary Guarantor) or any TWE Partner Guarantor, TW Holding Partner Guarantor, Holder Guarantor, holder of TWEAN Material Beneficial Assets or New Holder Guarantor may, without the consent of any Lender, be released from its Guarantee if (i) such Guarantor shall not hold any Material Beneficial Assets or any New Beneficial Assets (or in the case of any TWE Partner Guarantor, none of its Subsidiaries that issued a Holder Guarantee shall hold any Material Beneficial Assets),"

and by deleting from the third sentence thereof "TWE or TWEAN, as the case may be," and replacing it with "The Borrowers".

1.07. Calculations for Summit and New Beneficial Assets. (a) Section 9.15(a) of the Credit Agreement shall be

amended by deleting it in its entirety and replacing it with the following:

"All Financial Statements to be furnished to the Lenders hereunder shall be prepared, and all calculations determining compliance with Article VI (including the definitions used therein) shall be made, in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto; provided, however, that except as otherwise specifically provided herein, all such calculations shall utilize accounting principles and policies in effect at the time of the preparation of, and in conformity with those used to prepare, the audited Financial Statements of TWE for the fiscal year ended December 31, 1994. Notwithstanding the foregoing:

(i) the assets and liabilities and results of operations of TWE shall include, without duplication, (x) the TWE Beneficial Assets and any related liabilities of the holders thereof and (y) the cash flow received by TWE with respect to TWE Beneficial Assets;

(ii) the assets and liabilities and results of operations of TWEAN shall include, without duplication, (x) the TWEAN Beneficial Assets and any related liabilities of the holders thereof, (y) the New Beneficial Assets and any related liabilities of the holders thereof and (z) the cash flow received by TWEAN with respect to TWEAN Beneficial Assets and New Beneficial Assets; and

(iii) to the extent that Beneficial Assets or New Beneficial Assets and any related liabilities of the holders thereof and the related cash flows are included in the calculations for TWE or TWEAN, as the case may be, they shall be excluded from the calculations for any other Borrower."

(b) Section 9.15(b) of the Credit Agreement shall be amended by deleting "Notwithstanding paragraph (a) of this Section 9.15, nothing" and replacing it with the following:

"The covenants contained in Article V and Article VI (other than
Section 6.11) shall apply as if holders of TWE Material Beneficial Assets were Restricted

Subsidiaries of TWE and holders of TWEAN Material Beneficial Assets (other than any Borrower or any Restricted Subsidiary) were Restricted Subsidiaries of TWEAN during any period and on any date on which such holders (each, a "Beneficial Subsidiary") own such Beneficial Assets (but with respect to the Specified Holders, only to the extent of the assets and liabilities related to Material Beneficial Assets). Nothing".

(c) Section 9.15(c) of the Credit Agreement shall be amended (I) by deleting "Sections 6.04(b), 6.06 and 6.11" and replacing it with "Article VI" and (II) by deleting "and" at the end of clause (ii) thereof and adding the following immediately after the end of clause (iii) and before the period thereof:

"; and

(iv) Summit, so long as it is an Unrestricted Subsidiary, shall be excluded from all such calculations, except as otherwise expressly provided in the definitions relating thereto."

1.08. Annex I, Annex II and Annex III hereto shall be attached to the Credit Agreement as Exhibit G-7, Exhibit G-8 and Exhibit G-9, respectively.

SECTION 2. Waivers and Consent.

2.01. Consideration in Transfers. With respect to Section 3.03(d) of the Credit Agreement, the Lenders agree that the consideration to be received by TWI Cable in the Transfers to occur on the Transfer Date, as set forth in the Transaction Summary, is satisfactory to the Lenders.

2.02. Restricted Payment. Notwithstanding Section 6.06 of the Credit Agreement: (a) Paragon may redeem TWE's partnership interest in Paragon (anticipated to be approximately 49.8%) by distributing to TWE an undivided interest of approximately 95.2% in the cable television systems described in Schedule 1 to the Transaction Summary without any reduction to the Consolidated Cash Flow of TWI Cable pursuant to Section 9.15(c)(iii); (b) TWE may contribute to Paragon cable television systems serving approximately 6,500 subscribers in exchange for an increase in TWE's interest in Paragon; and (c) TWEAN may distribute to TWE Primestar operations serving

approximately 6,700 subscribers in connection with TWE's contribution to TWEAN of Primestar operations serving approximately 15,500 subscribers.

2.03. Amendment or Waiver of Organizational Documents. Notwithstanding Section 6.12 of the Credit Agreement, provisions of the Partnership Agreements may be amended, modified or waived in connection with the transactions contemplated by the Transaction Summary; provided, however, that the Administrative Agent shall have received a copy of each agreement or instrument evidencing any such amendment, modification or waiver, and shall be reasonably satisfied with respect thereto.

SECTION 3. Representations and Warranties. In order to induce the Lenders to enter into this Amendment, each of the Borrowers makes the following representations, warranties and agreements to each of the Lenders:

3.01. No Default. No Default or Event of Default has occurred and is continuing.

3.02. Representations and Warranties. All of the representations and warranties in the Credit Documents, after giving effect to this Amendment, are true, correct and accurate in all material respects on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date.

SECTION 4. Conditions. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions:

4.01. Execution. The Administrative Agent shall have received duly executed counterparts hereof from (i) each of the Borrowers and (ii) the Lenders constituting the Required Lenders.

4.02. Representations and Warranties. All of the representations and warranties of the Borrowers in Sections 3.01 and 3.02 hereof shall be true and correct.

4.03. Officers' Certificates. The Administrative Agent shall have received an Officers' Certificate to the effect that all of the conditions in this Section 4 are satisfied.

SECTION 5. Miscellaneous.

5.01. Amendment Limited. All terms, provisions, covenants, representations, warranties, agreements and conditions contained in the Credit Agreement shall remain in full force and effect except as expressly contemplated herein and shall not otherwise be deemed waived, modified or amended hereby.

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

5.03. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York without regard to its principles of conflicts of law.

5.04. Headings. Headings have been inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

TIME WARNER ENTERTAINMENT
COMPANY, L.P.

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Senior Vice President and Chief
           Financial Officer

TIME WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP

By: TIME WARNER ENTERTAINMENT
COMPANY, L.P.,
Managing Partner

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title: Senior Vice President and Chief
           Financial Officer

TWI CABLE INC.

By: /s/ Richard J. Bressler
    ________________________________________
    Name:
    Title:

THE CHASE MANHATTAN BANK, as
Administrative Agent and Lender

By: /s/ B.J. Lillis
    ________________________________________
    Name:
    Title: Attorney-in-Fact

Signature pages for the Banks that are Parties to Amendment and Waiver No. 2 to the TWE Credit Agreement have been omitted.

Execution Counterpart

AMENDMENT NO. 5

AMENDMENT NO. 5 dated as of April 25, 1996 between TURNER BROADCASTING SYSTEM, INC., a Georgia corporation (the "Company"), the Banks (as such term is defined below) party hereto and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) ("Chase"), as agent (the "Agent").

The Company, certain lenders (the "Banks") and the Agent are party to a Credit Agreement dated as of July 1, 1993 (as amended, supplemented and otherwise modified and in effect to but excluding the date hereof, the "Credit Agreement"). The Company has requested that the Banks agree, and the Banks party hereto are willing, to amend certain provisions of the Credit Agreement, all on the terms and conditions of this Amendment. Accordingly, in consideration of the premises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. Terms used but not defined herein shall have the respective meanings ascribed to such terms in the Credit Agreement.

Section 2. Amendments. Subject to the satisfaction of the conditions to effectiveness specified in Section 4 hereof, but with effect on and after the date hereof, the Credit Agreement shall be amended as follows:

A. Certain New Defined Terms. Section 1.01 of the Credit Agreement shall be amended by adding the following new definitions and inserting the same in the appropriate alphabetical locations:

"Atlanta Hawks' shall mean Atlanta Hawks, Ltd., a Georgia limited partnership."

"'Acquisition Date' shall mean the date that the Company becomes a Wholly Owned Subsidiary of either Time

Warner or a Person of which Time Warner is a Wholly Owned Subsidiary."

"'Time Warner" shall mean Time Warner Inc., a Delaware corporation."

B. Definition of Cash Flow. Clause (i) of the first sentence of the definition of "Cash Flow" in Section 1.01 of the Credit Agreement shall be amended to read as follows:

"(i) Atlanta Hawks shall be deemed to be a Consolidated Subsidiary during such period unless, on the last day of such period, there shall exist a Lien on any of the revenues of Atlanta Hawks and"

C. Definition of Subsidiary. The definition of "Subsidiary" in
Section 1.01 of the Credit Agreement shall be amended by adding a new sentence at the end thereof reading as follows:

"Notwithstanding anything to the contrary contained herein (but subject to clause (i) of the first sentence of the definition of "Cash Flow" in
Section 1.01 hereof), Atlanta Hawks shall not be deemed to be a Subsidiary or a Wholly Owned Subsidiary of the Company."

D. Funded Debt Ratio. Section 8.13 of the Credit Agreement shall be amended to read as follows:

"8.13 Funded Debt Ratio. The Company shall not permit the Funded Debt Ratio to exceed the following respective ratios at any time during the following respective periods:

Period                                     Ratio
------                                     -----





                 Amendment No. 5
                 ---------------

From and including
  the first Delivery Date
  after March 31, 1995
  through but excluding
  the first Delivery Date after
  September 30, 1996                              6.00 to 1.00

From and including
  the first Delivery Date
  after September 30, 1996
  through but excluding
  the first Delivery Date after
  December 31, 1996                               6.50 to 1.00

From and including
  the first Delivery Date
  after December 31, 1996
  through but excluding
  the first Delivery Date after
  March 31, 1997                                  6.00 to 1.00


From and including
  the first Delivery Date
  after March 31, 1997
  through but excluding
  the first Delivery Date after
  September 30, 1997                              5.50 to 1.00

From and including
  the first Delivery Date
  after September 30, 1997
  through but excluding
  the first Delivery Date after
  March 31, 1998                                  5.00 to 1.00

From and including
  the first Delivery Date
  after March 31, 1998
  and at all times thereafter                     4.50 to 1.00"

E. Events of Default. Section 9(e) of the Credit Agreement shall be amended to read as follows:

"(e) Before the Acquisition Date, there shall occur any amendment in the provisions requiring supermajority vote pursuant to Article 12,
Section 3 of the by-laws of the Company as amended on and through July 21, 1988 or any amendment in the provisions which are subject to special class vote pursuant to Article 5, Section C.4 of the articles of incorporation of the Company as amended on and through August 25, 1987; or"

Section 3. Representations and Warranties. The Company represents and warrants to the Banks and the Agent that:

(a) this Amendment has been duly and validly executed and delivered by the Company and constitutes the Company's legal, valid and binding obligation, enforceable against the Company in accordance with its terms; and

(b) after giving effect to this Amendment, (i) no Default shall have occurred and be continuing and (ii) the representations and warranties made by the Company in Section 7 of the Credit Agreement are true and correct on and as of the date hereof with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

Section 4. Conditions To Effectiveness. The amendments to the Credit Agreement set forth in Section hereof shall become effective, as of the date hereof, upon the receipt by the Agent of this Amendment, duly executed and delivered by the Company, the Majority Banks and the Agent.

Section 5. Documents Otherwise Unchanged. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect, and each reference to the Credit Agreement and words of similar import in the Credit Agreement, as amended hereby, and the Notes shall be a reference to the Credit Agreement as amended hereby and as the same may be further

amended, supplemented and otherwise modified and in effect from time to time.

Section 6. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be identical and all of which, when taken together, shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart.

Section 7. Binding Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

TURNER BROADCASTING SYSTEM, INC.

By /s/ Christian L. Becken
  ____________________________
  Title: VP & Treasurer

Signature pages for the Banks that are Parties to Amendment No. 5 to the 1993 TBS Credit Agreement have been omitted.