As Amended through March 20, 1997

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 $.01 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. LIMITED TRANSFERABILITY OF OPTIONS.

Except as set forth in this paragraph 10 and paragraph 21, options and SARs granted under the Plan shall not be transferable other than by will or the laws of descent and distribution, and such 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 option 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 option agreement.

11. TERMINATION OF EMPLOYMENT.

If a holder's employment shall be terminated by the Company or any of it subsidiaries prior to the complete exercise of an option, then such option shall thereafter be exercisable, solely to the extent provided in the applicable option agreement; provided, however, that (a) no option granted under the Plan may be exercised after the scheduled expiration date of such option; (b) if the holder's employment terminates by reason of death or permanent and

total disability as defined in Section 22(e)(3) of the Code, as the same may be amended from time to time, 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 the next succeeding paragraph.

If a holder's employment with the Company or any of its subsidiaries shall be terminated by the Company 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 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 mean only a felony conviction for fraud, misappropriation or embezzlement), then all options held by such holder and any permitted transferee pursuant to paragraph 10 shall immediately terminate.

Notwithstanding any other provision of the Plan, the Board may provide in the applicable option agreement that the options and/or SARs granted under the Plan shall become and/or remain exercisable at rates and times at variance with the rules otherwise herein set forth; provided, however, that any such option 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.

The Board may determine whether any given leave of absence constitutes a termination of employment. Options and SARs 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 one of its subsidiaries.

12. INTENTIONALLY OMITTED.

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.

21. BENEFICIARIES.

Each holder may designate any person(s) or legal entity(ies), including his or her estate, as his or her beneficiary under the Plan. Such designation shall be made in writing on a form filed with the Secretary of the Company or his or her designee and may be revoked or changed by such holder at any time by filing written notice of such revocation or change with the Secretary of the Company or his or her designee. If no person shall be designated by a holder as his or her beneficiary or if no person designated as a beneficiary survives such holder, the holder's beneficiary shall be his or her estate.

As Amended through March 20, 1997

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 $.01 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 paragraphs 9 and 25 and subparagraph 6G 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. Limited Transferability of Options. Except as set forth in this subparagraph G and paragraph 23, Options shall not be transferable other than by will or the laws of descent and distribution, and Options may be exercised during the lifetime of the Holder thereof only by such Holder (or his or her court appointed legal representative). The Stock Option Agreement may provide that Options are transferable by gift to such persons or entities and upon such terms and conditions 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. General. If a Holder's employment shall be terminated by the Company or any Subsidiary or the Holder shall cease to be an Employee of an Affiliated Entity prior to the complete exercise of an Option (or deemed exercise thereof, as provided in subparagraphs 6E and 6F), or prior to the complete vesting of any Restricted Shares, then such Option shall thereafter be exercisable, and the Restricted Shares shall vest, solely to the extent provided in the applicable Stock Option Agreement or Restricted Shares 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 or the Holder ceases to be an Employee of an Affiliated Entity 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 the Restricted Shares and any Retained Distributions shall vest in full; and (c) any termination by the employing company for cause will be treated in accordance with the provisions of subparagraph 9B.

B. Termination for Cause. If a Holder's employment with the Company or any of its Subsidiaries shall be terminated by the

Company or such Subsidiary or the Holder shall cease to be an Employee of an Affiliated Entity prior to the exercise of any Option, or the complete vesting of any Restricted Shares, 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 subparagraph 6G shall immediately terminate and all Restricted Shares and Retained Distributions shall be forfeited.

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

D. Miscellaneous. The Board may determine whether any given leave of absence constitutes a termination of employment or the termination of the Holder's status as an Employee of an Affiliated Entity. 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 one of its Subsidiaries 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.

23. BENEFICIARIES

Each Holder may designate any person(s) or legal entity(ies), including his or her estate, as his or her beneficiary under the Plan. Such designation shall be made in writing on a form filed with the Secretary of the Company or his or her designee and may be revoked or changed by such Holder at any time by filing written notice of such revocation or change with the Secretary of the Company or his or her designee. If no person shall be designated by a Holder as his or her beneficiary or if no person designated as a beneficiary survives such Holder, the Holder's beneficiary shall be his or her estate.

As Amended through March 20, 1997

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 $.01 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. Limited Transferability of Options and SARs. Except as set forth in this Section 6.6 and Section 23, 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. 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.

23. BENEFICIARIES

Each Holder may designate any person(s) or legal entity(ies), including his or her estate, as his or her beneficiary under the Plan. Such designation shall be made in writing on a form filed with the Secretary of the Company or his or her designee and may be revoked or changed by such Holder at any time by filing written notice of such revocation or change with the Secretary of the Company or his or her designee. If no person shall be designated by a Holder as his or her beneficiary or if no person designated as a beneficiary survives such Holder, the Holder's beneficiary shall be his or her estate.

As Amended through March 20, 1997

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 $.01 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 (a) 1.5% (one and one-half percent) of the number of shares of Common Stock outstanding on December 31, 1993, (b) 1.25% (one and one-quarter percent) of the number of shares of Common Stock outstanding on December 31, 1994, (c) 1% (one percent) of the number of shares of Common Stock outstanding on December 31, 1995, (d) 1.2% (one and two-tenths percent) of the aggregate number of shares of Common Stock and Series LMCN-V Common Stock, par value $.01 per share, outstanding on December 31, 1996 and (e) 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. Limited Transferability of Options and SARs. Except as set forth in this Section 6.6 and Section 22, 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.

22. BENEFICIARIES

Each Holder may designate any person(s) or legal entity(ies), including his or her estate, as his or her beneficiary under the Plan. Such designation shall be made in writing on a form filed with the Secretary of Time Warner or his or her designee and may be revoked or changed by such Holder at any time by filing written notice of such revocation or change with the Secretary of Time Warner or his or her designee. If no person shall be designated by a Holder as his or her beneficiary or if no person designated as a beneficiary survives such Holder, the Holder's beneficiary shall be his or her estate.

As Amended through March 20, 1997

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 $.01 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. Limited Transferability of Options and SARs. Except as set forth in this Section 6.6 and Section 23, 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. 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.

23. BENEFICIARIES

Each Holder may designate any person(s) or legal entity(ies), including his or her estate, as his or her beneficiary under the Plan. Such designation shall be made in writing on a form filed with the Secretary of Time Warner or his or her designee and may be revoked or changed by such Holder at any time by filing written notice of such revocation or change with the Secretary of Time Warner or his or her designee. If no person shall be designated by a Holder as his or her beneficiary or if no person designated as a beneficiary survives such Holder, the Holder's beneficiary shall be his or her estate.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 19, 1998 effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and Gerald M. Levin (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement dated as of November 15, 1990, as amended by an amendment dated as of May 22, 1992 (the "Prior Agreement"). The Company wishes to restate the Prior Agreement and secure the services of the Executive on a full-time basis for an extended period to and including December 31, 2003 (the "Term Date") on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so restated and 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. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the "term of employment", as used in Section 3.6, 3.7, 3.8 and 8 through 12 shall include the term of any Advisory Period (as defined in Section 13).

2. Employment. The Company shall employ the Executive, and the Executive shall serve, as Chairman of the Board and Chief Executive Officer 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 of the Company may from time to time delegate to the Executive in addition thereto. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the Company's Board of Directors; (iii) the Executive shall have no other employment and, without the prior consent of a majority of the members of the Company's Board of Directors, no outside business activities which require the devotion of substantial amounts of the Executive's time and (iv) the place for the performance of the Executive's services shall be the principal executive offices of the Company which shall be in the New York City 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any of the Company's written policies on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("Entity").

The Company shall use its best efforts to cause the Executive to be a member of its Board of Directors throughout the term of employment during the term of employment and shall include him in the management slate for election during the term of employment as a director at every stockholders' meeting at which his term as a director would otherwise expire.

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 $1,000,000 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 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 may 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 actual amount of any such annual cash bonus to be paid to the Executive will be determined by the Compensation Committee of the Company's Board of Directors. 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. 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, but in no event later than 90 days after the end of the period for which the bonus is payable.

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 a defined contribution which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement, including Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi

Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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 pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

3.4 Deferred Salary and Bonus. In addition to any other deferred salary or 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, to defer payment of and to have the Company pay to the Trustee for credit to the Trust Account all or any portion of the Executive's salary and/or 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 pay to the Trustee for credit to the Trust Account $300,000 of the Base Salary payable to the Executive for the period beginning on the Effective Date and ending on the Term Date. The Executive may change the election provided in the preceding sentence for any calendar year by written notice delivered to the Company at least 10 days prior to the commencement of any such calendar year.

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. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7 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 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.

3.8 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 an officer or 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.

4. Termination.

4.1 Termination for Cause. The Company may terminate the term of employment, the Advisory Period (if any) and all of the Company's obligations under this Agreement, other than its obligations set forth below in this Section 4.1, for "cause" but only if the term of employment or any Advisory Period 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 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 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 such termination by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in 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 Trust Account, or to pay Advisory Period compensation, if applicable, 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 and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust Account 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 fourth sentence of Section 3.3 and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. 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 or, if applicable, the Advisory Period, 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, 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 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 the title specified in the first sentence of Section 2 during the term of employment; (ii) the Executive being required to report to persons other than those specified in
Section 2 during the term of employment; (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) during the term of employment; (iv) the Company requiring the Executive's primary services to be rendered at a place other than at the Company's principal executive offices in the New York City metropolitan 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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a lump sum payment as provided 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 4.4 and 4.5 and Sections 6 through 12 shall survive such termination, and (ii) the Executive shall be entitled to receive any earned and unpaid Base Salary and deferred compensation or Advisory Period compensation, as the case may be, accrued through the effective date of such termination and if such termination occurs during the term of employment, 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) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) above, the Company shall pay to the Executive as damages in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is

given) an amount (discounted as provided in the immediately following sentence) equal to (a) in the event such termination occurs during the term of employment, all amounts otherwise payable pursuant to Sections 3.1, 3.2 and 3.3 for the year in which such termination occurs and for each subsequent year through the Term Date, assuming that annual bonuses are required to be paid for each such year, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4) and (b) in the event such termination occurs during the Advisory Period, all amounts otherwise payable pursuant to Section 13 from the date of such termination through the Term Date. 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, 3.2 and 13 and the credit to the Trust Account provided for in the third 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 make the election provided in clause (B) above, the term of employment or, if applicable, the Advisory Period shall continue and the Executive shall remain an employee of the Company through 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) in the event such termination occurs during the term of employment, (i) Base Salary (all or a portion of which may be deferred by the Executive pursuant to Section 3.4) at an annual rate equal to his Base Salary in effect immediately prior to the notice of termination as provided in Section 3.1, (ii) 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) equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest and (iii) deferred compensation as provided in Section 3.3 and (b) in the event such termination occurs during the Advisory Period, Advisory Period compensation as provided in Section 13. 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 or, if applicable, the Advisory Period shall cease 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 severance in a lump sum within 30 days after such commencement or such effective date (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) for the balance of (x) the Base Salary (assuming no deferral pursuant to Section 3.4), deferred compensation (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3) and regular annual bonuses (assuming no deferral pursuant to Section 3.4) or (y) the Advisory Period compensation, as the case may be, 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 charitable or not-for-profit Entity, or any family-owned corporation, trust or partnership, 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 or, if applicable, the Advisory Period 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.4 Release. In partial consideration for the Company's obligation to make the payments described in Section 4.2, the Executive shall execute and deliver to the

Company a release in substantially the form attached hereto as Annex B. The Company shall deliver such release to the Executive within 10 days after the written notice of termination is delivered pursuant to Section 4.2 and the Executive shall execute and deliver such release to the Company within 21 days after receipt thereof. If the Executive shall fail to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke his consent to such release as provided therein, the Executive's term of employment shall terminate as provided in Section 4.2, but the Executive shall receive, in lieu of the payments provided for in said Section 4.2, a lump sum cash payment in an amount determined in accordance with the written personnel policies of the Company relating to notice and severance then generally applicable to employees with length of service and compensation level of the Executive.

4.5 Mitigation. In the event of termination of the term of employment or, if applicable, the Advisory Period pursuant to Section 4.2, 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 Entity, the total cash salary and bonus received in connection with such other employment, whether paid to him or deferred for his benefit, for any services through the Term Date if such termination occurs during the term of employment and for services as a full-time employee through the Term Date if such termination occurs during the Advisory Period, in either case up to an amount equal to (x) the discounted lump sum payment received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 3 or, if applicable the Advisory Period compensation under Section 13 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 on the date of such termination, provided that if such termination occurs during the Advisory Period, the amount determined pursuant to this clause (y) shall be zero, shall reduce, pro tanto, any amount which the Company would otherwise be required to pay to the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 term of employment and the Advisory Period by the Executive or the Company pursuant to
Section 4.2 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus and deferred compensation under Section 3 or, if applicable, with respect to Advisory Period compensation under Section 13 for such year. Any obligation of the Executive to mitigate his damages pursuant to this Section 4.5 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, 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.

4.6 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.

5. Disability. If during the term of employment and prior to any termination 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 Trust 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 for the year in which the Disability Date occurs and shall pay the Executive disability benefits for the period ending on the Term Date (the "Disability Period"), in an annual 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 Trust 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 during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest (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 and the Advisory Period 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; and (ii) the provisions of Sections 9 and 10 shall ontinue 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 Board of Directors or 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. 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. If a Disability Date occurs during the Advisory Period, the Company shall pay to the Executive the full amount of the Advisory Period compensation in accordance with Section 13 through the Term Date without regard to the preceding two sentences. Except as otherwise provided in this Section 5, the during the Disability Period and the Advisory Period, 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 or, if applicable, the Advisory Period shall end and the Executive shall cease to be an employee of the Company on the Term Date 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 or, if applicable, the Advisory Period, this Agreement and all obligations of the Company to make any payments under Sections 3, 4, 5 and 13 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 or, if applicable, Advisory Period compensation, to the last day of the month in which his death occurs and if such death occurs during the term of employment, bonus compensation (at the time bonuses are normally paid) based on the average of the regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar 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 calendar year, and (ii) the Trust 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 Trust 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. The Company shall maintain $6,000,000 face amount of split ownership 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. 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). The Company shall not borrow from the cash value of such policy. 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. In addition to the foregoing, during the Executive's employment with the Company, the Company shall (x) provide the Executive with $50,000 of group life insurance and (y) pay to the Executive annually an amount equal to the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) twice the Executive's Base Salary minus (ii) $50,000. The Executive shall be under no obligation to use the payments made by the

Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this
Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

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 any Advisory Period 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 life insurance (to the extent set forth in Section 7), hospitalization, medical, dental, accident, disability or similar plan or program of the Company now existing or established hereafter. In addition, 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 executives of the Company to the extent the Executive 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.

8.2 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 and any Advisory Period, the Executive shall continue to be eligible to participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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 any Advisory Period and until such time as the Executive shall leave the payroll of the Company. At the time the Executive's term of employment and any Advisory Period terminates and he leaves the payroll of the Company pursuant to the provisions of Section 4.1, 4.2, 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 any more restrictive provisions of any such plan or agreement (but without affecting any less restrictive or more favorable to the Executive 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
(i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the term thereof) during the remainder of the term of employment and any Advisory Period and for a period of three months thereafter or such longer period as shall be specified in any applicable stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

8.3 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 clause (A) or (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 continue to apply through the latest of (i) the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason and (ii) for twelve months after the effective date of any notice of termination of the Executive's employment pursuant to Section 4.1, 4.2 or 4.3. The provisions of Sections 9.1 and 9.3 shall continue to apply until three years after the latest of the events 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 and any Advisory Period, 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 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 and any Advisory Period, 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 shall 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; and

9.1.3 If the term of employment is terminated pursuant to
Section 4.1 or 4.2, for a period of one year after such termination, without the prior writtenconsent 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 exempt employee of the Company at the date of such termination or within six months prior thereto.

9.2 Non-Compete. The Executive shall not, directly or indirectly, without the prior consent of a majority of the members of the Company's Board of Directors, render any services to any person or Entity or acquire any interest of any type in any Entity, that might be deemed in competition with the Company; provided, however, that the forego ing 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 one percent (1%) 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 indirectly, in competition with the Company, (c) serving as a director of any Entity that is not in competition with the Company or (d) during the Advisory Period, being a partner in or of counsel to a law firm that represents any person or Entity that is in competition with the Company so long as the Executive does not personally provide or assist in the provision of services to any such person or Entity. For purposes of the foregoing, a person or Entity shall be deemed to be in competition with the Company if such person or it engages in any line of business that is substantially the same as either
(i) 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 or
(ii) any operating business that is engaged in or conducted by the Company and as to which, to the knowledge of the Executive, the Company covenants in writing, in connection with the disposition of such business, not to compete therewith.

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, 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 commits a material breach of the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to two and one-half times the Executive's then current Base Salary, or if the Executive is not employed by the Company at the time of such breach, an amount equal to two and one-half times the most recent Base Salary paid to the Executive by the Company. 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 Section 4.2. 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, 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 participa tion 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.

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 prepaid telegram, 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: President

(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, 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 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, cancelled, 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 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11 No Offset. Except as provided in Section 9.4 of this Agreement, 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 Retained Income - Section A.6 of Annex A Advisory Period - Section 13 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 deferred compensation - Section 3.3 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 2
Executive - the first paragraph in page 1 fair market value - Section A.1 of Annex A Investment Advisor - Section A.1 of Annex A Pay-Out Period - Section A.6 of Annex A Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 senior executives - Section 3.1 Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3

Trust Agreement - Section 3.3

Trustee - Section 3.3
Valuation Date - Section A.6 of Annex A Work Product - Section 10

13. Advisory Services. Notwithstanding anything to the contrary contained in this Agreement (except the last sentence of Section 1), the Executive shall have the right to elect by delivery of written notice to the Company, which notice may be delivered at any time on or after January 1, 2002, to terminate the term of employment and his position as Chairman and Chief Executive Officer of the Company effective six months after the delivery of such notice and to serve as an advisor to the Company for the period from the effective date of such notice through the Term Date (the "Advisory Period"). During the Advisory Period, the Executive will provide such advisory services concerning the business, affairs and management of the Company as may be required by the Board of Directors or the Chief Executive Officer of the Company, but shall not be

required to devote more than five days (up to eight hours per day) each month to such service, which shall be performed at a time and place mutually convenient to both parties and consistent with the Executive's other activities. If at any time during the Advisory Period, the Executive engages in other full-time employment, the Executive shall not be deemed to be in breach of this Section 13, but unless such employment consists of the Executive providing services to one or more (i) charitable or non-profit organizations or (ii) family-owned corporations, trusts, or partnerships, the Advisory Period shall terminate, the Executive shall leave the payroll of the Company and the Company shall have no further obligations under this agreement other than with respect to earned and unpaid compensation and benefits. Notwithstanding the foregoing, but subject to
Section 9 of this Agreement, during the Advisory Period the Executive may provide part-time services to third parties (including serving as a member of the Board of Directors of any such party). During the Advisory Period, the Executive shall be entitled to receive annual compensation in an amount equal to the Base Salary and deferred compensation being received by the Executive pursuant to Sections 3.1 and 3.3 at the time the Executive delivers the notice provided for in this Section 13 and shall continue to be entitled to the benefits described in Sections 7 and 8 hereof; provided, however, that the Executive shall not be entitled to an annual bonus or any additional grants of stock options during the Advisory Period, shall not accrue any vacation time during the Advisory Period and shall not be entitled to any severance pay at the end thereof. In addition, during the Advisory Period the Company shall provide the Executive with an office, office facilities and a secretary in accordance with the provisions of Section 4.3.

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

TIME WARNER INC.

By    /s/ Richrard D. Parsons
      ------------------------------
        Richard D. Parsons
        President


      /s/ Gerald M. Levin
     -------------------------------
        Gerald M. Levin

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the

Trustee for credit to the Trust Account in accordance with the provisions of
Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following 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, 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 in breach of this Agreement, the Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account

shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of , 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             ,     .



                     ---------------------------
                                    [Name]

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 25, 1998 and effective as of January 1, 1998, (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and R.E. Turner III (the "Executive").
The Executive is currently employed by the Company pursuant to an Employment Agreement dated as of October 10, 1996 (the "Prior Agreement"). The Company wishes to amend and restate the Prior Agreement and 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 for the Prior Agreement to be so amended and restated and 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 Video Division (the "Video Division"). The Video Division shall consist of (i) Turner Broadcasting System, Inc. ("TBS"), including all of the businesses conducted by TBS and its subsidiaries on October 10, 1996, 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 on October 10, 1996, (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 written 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 October 10, 1996; provided,

however, that the Executive shall in any event comply with the provisions of Sections 9 and 10 and any Company written 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, but in no event later than 90 days after the end of the period for which the bonus is payable.
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 a defined contribution which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement, including Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi

Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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 pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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; provided, that in case of any conflict between the provisions of this Agreement and the Trust Agreement, the provisions of this Agreement shall control. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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. On or promptly after April 1, 1998, the entire balance of the Prior Account shall be transferred to, and thereafter shall for all purposes be made and deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 charges shall be deemed to have been made under this Agreement.

3.6 Reimbursement. The Company shall reasonably promptly 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 written 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.

3.7 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.

3.8 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 an officer or 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, 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 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 Trust 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 not yet been paid as of the date of such termination, such bonus payable as determined in the ordinary course and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust 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 fourth sentence of
Section 3.3, the provisions of Section 3.6 with respect to expenses incurred prior to such termination and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. 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, the occurrence of any of the following: (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; or (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.

The Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective no less than 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2,(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 this Section 4.2 or any time prior to 10 days

after written notice of such termination is given by the Company pursuant to this Section 4.2, 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 date of such termination, (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 not yet been paid as of the date of such termination, such bonus payable as determined in the ordinary course 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 (it being understood that for purposes of determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an annualized basis), all or a portion of which pro rata bonus will be credited to the Trust 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 (iii) Executive shall retain all rights with respect to amounts credited to the Trust Account. In addition, the fourth sentence of Section 3.3, the provisions of Section 3.6 with respect to expenses incurred prior to such termination and the provisions of Section 3.8 and Annex A shall survive any termination pursuant to this
Section 4.2.

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 (it being understood that for purposes of determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an

annualized basis), 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 Trust Account provided for in the third 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 (it being understood that for purposes of determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an annualized basis), 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, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of

the Company) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third 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 pursuant to Section 4.2, 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 pursuant to Section 4.2 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 Trust 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 not yet been paid as of the date of such termination, such bonus payable as determined in the ordinary course, (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 (it being understood that for purposes of determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an annualized basis), all or a portion of which pro rata bonus will be credited to the Trust 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 Trust 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 fourth sentence of Section 3.3, the provisions of Section 3.6 with respect to expenses incurred prior to such termination and the provisions of Sections 3.8, 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, contin ue to pay the Executive his full compensation and continue to credit the Trust 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 (it being understood that for purposes of determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an annualized basis), and shall pay the Executive disability benefits until the Term Date (the "Disability Period"), in an annual 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 Trust 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 (it being understood that for purposes of determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an annualized basis), 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 Sec tions 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 (it being understood that for purposes of

determining such average bonus, the bonus paid by the Company to the Executive with respect to the period from October 10, 1996 through December 31, 1996, shall be deemed to be "grossed up" on an annualized basis), 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 Trust 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 Trust 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.

7.1 Split Ownership 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). The Company shall not borrow from the cash value of such policy. 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.

7.2 Group Life Insurance. In addition to the foregoing, during the term of employment, the Company shall (x) provide the Executive with $50,000 of group life insurance and (y) pay to the Executive annually an amount equal to the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) twice the Executive's Base Salary minus (ii) $50,000. The Executive shall be under no obligation to use the payments made by the Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this
Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.
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 life insurance (to the extent set forth in Section 7), 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 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.

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 participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7.2 and 8.1 to the extent such benefits are maintained in effect by the Company for its senior executives (and under Section 7.1 without regard to whether such benefits are maintained in effect for other senior executives of the Company); 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, if the Executive leaves the payroll of the Company as a result of a termination pursuant to Section 4.2, then (i) 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, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the expiration of the option term) during the remainder of the term of employment and for a period of three months thereafter or such longer period as shall be specified in any applicable stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

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. Except as provided in Section 5, 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 pro cesses 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 termination, 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 pur chases, 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 participa tion 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, 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 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.

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 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 deferred compensation - Section 3.3 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 Pay-Out Period - Section A.6 of Annex A Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 senior executives - Section 3.1 TBS - Section 2
Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3
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.

By       /s/ Gerald M. Levin
_____________________________
Gerald M. Levin
Chairman and Chief Executive
Officer
 /s/ R.E. Turner
_____________________________
 R.E. Turner III

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of the Executive's Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all

respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following 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. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

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 October 10, 1996 :

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.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 18, 1998, effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and Richard D. Parsons (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement dated as of November 2, 1994 (the "Prior Agreement"). The Company wishes to amend and restate the Prior Agreement and secure the services of the Executive on a full-time basis for the period to and including December 31, 1999 (the "Term Date") on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so amended and restated and 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. The Company shall employ the Executive, and the Executive shall serve, as the President of the Company during the term of employment. The Executive shall have responsibility for the direction and supervision of the following functions of the Company, with the authority, duties and powers appropriate and customary to discharge such responsibility:
all corporate staff functions, including without limitation, legal, finance, communications and public affairs and administration, and each of the Executive Vice Presidents or Senior Vice Presidents in charge of each such function shall report to the Executive. In addition, the Executive 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 his stature as the President of the Company. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill

and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the Company's Board of Directors and to the Company's Chief Executive Officer, (iii) 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 and (iv) the place for the performance of the Executive's services shall be the principal executive offices of the Company which shall be in the New York City 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any generally applicable written policies of the Company on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("Entity").

The Company shall use its best efforts to cause the Executive to be a member of its Board of Directors throughout the term of employment and shall include him in the management slate for election as a director at every stockholders' meeting at which his term as a director would otherwise expire.

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 $600,000 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 (subject to Section 5). 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 eligible to receive during the term of employment an annual cash bonus based on the performance of the Company and of the Executive in an amount commensurate with the position and duties of the Executive relative to other senior executives of the Company. The actual amount of any such annual cash bonus to be paid to the Executive will be determined by the Compensation Committee of the Company's Board of Directors based upon a recommendation of the Company's Chief Executive Officer. Such determination with respect to the amount, if any,

of annual cash bonuses to be paid to the Executive under this Agreement shall be final and conclusive except as specifically provided otherwise in this Agreement. 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, but in no event later than 90 days after the end of the period for which the bonus is payable. Notwithstanding the foregoing, determination and payment of any bonus compensation under this Section 3.2 may be made pursuant to a plan intended to assure the deductibility of such bonus compensation pursuant to Section 162(m) of the Internal Revenue Code of 1986 (the "Code").

3.3 Deferred Compensation. In addition to Base Salary and annual bonus as set forth in Sections 3.1 and 3.2, the Executive shall be credited with a defined contribution which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement, including Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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, 4.2.3, 4.3.2 or 4.3.3, the Company shall pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7 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 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.

3.8 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 an officer or member of the Board of Representatives or other governing body of any partnership or joint venture in which the Company has an equity interest or as a trustee or fiduciary of any plan, program, trust or other entity established for the benefit of the Company, its subsidiaries or any of their respective employees in connection with the business of the Company (and after the term of employment, to the extent relating to his service as such officer, director, member, trustee or fiduciary) 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.

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, 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 action of the Company's Board of Directors, or a committee thereof, after a hearing at which the Executive has had the opportunity to address the Board, 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 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 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 such termination by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in 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 Trust 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 and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust 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 fourth sentence of Section 3.3 and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. 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 (other than those provisions that specifically survive such termination) 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, 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 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 the title specified in the first sentence 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 or any written delegation from the Chief Executive Officer 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 Company's principal executive offices in the New York City metropolitan area; (v) the Company breaching its obligations under the last paragraph of Section 2; and (vi) 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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a lump sum payment (and credits) as provided 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 3.8, 4.5 and 4.7 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 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) in respect of the two calendar years immediately preceding the calendar year in which such termination occurs, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) of Section 4.2 above, the Company shall pay to the Executive (or credit to the Trust Account with respect to Section 3.3) as damages in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is given) an amount (discounted as provided in the immediately following sentence) equal to the greater of (i) all amounts otherwise payable (or to be credited) pursuant to Sections 3.1, 3.2 and 3.3 for the year in which such termination occurs and for each subsequent year through and including the Term Date and (ii) all amounts that would be payable (or credited) pursuant to Sections 3.1, 3.2 and 3.3 if the Term Date had been a date one year after the date of such notice of termination (assuming, in the case of either (i) or (ii) above, that annual bonuses are required to be paid for each such year, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years immediately preceding the calendar year in which such termination occurs (assuming that no portion of such bonus is deferred pursuant to Section 3.4), with the bonus for any partial calendar year appropriately pro rated according to the number of whole or partial months the Executive was employed by the Company in such calendar year. 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 Trust Account provided for in the third 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.

4.2.3 In the event the Executive shall make the election provided in clause (B) above, the term of employment shall continue and the Executive shall remain an employee of the Company for the period ending on the later of (i) the Term Date and (ii) the date which is one year after the date notice of termination is given under this Section 4.2, and during such period the Executive shall be entitled to receive, whether or not the Executive becomes disabled during such period but subject to Section 6, (a) salary at an annual rate equal to the Base Salary, (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 of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years immediately preceding the calendar year in which such termination occurs (with any partial calendar year bonus appropriately pro rated according to the number of whole or partial months the Executive was employed by the Company in such calendar year) 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 cease 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 severance in a lump sum within 30 days after such commencement or such effective date (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) equal to the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third 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 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 if the Executive accepts full-time employment with any affiliate of the Company, then the payments (and credits) 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 After the Term Date. If at the Term Date, the term of employment shall not have been previously terminated pursuant to the provisions of this Agreement, no Disability Period is then in effect and the parties shall not have agreed in writing to an extension or renewal of this Agreement or on the terms of a new written employment agreement, then the term of employment shall continue and the Executive shall continue to be employed by the Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 90 days written notice delivered to the other party. Such 90-day notice may be given by either party on or after October 1, 1999 so that the term of employment may end on the Term Date or any date thereafter. If the Executive shall terminate this Agreement on or after the Term Date, then the Executive shall receive Base Salary, deferred compensation and a pro rata annual bonus through the effective date of termination with the pro rata annual bonus being equal to the portion of the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years immediately preceding the calendar year in which such termination occurs based on the number of whole or partial months in such year prior to the date of termination. If the Company shall terminate the term of employment (other than those provisions that specifically survive such termination) 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), which the Company shall have the right to do so long as no Disability Date (as defined in Section 5) has occurred prior to the delivery by the Company of written notice of termination, then in lieu of the provisions of Section 4.2, the Executive 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. After the Executive makes such election, the following provisions shall apply:

4.3.1 Regardless of the election made by the Executive pursuant to the preceding paragraph, at the end of the 90-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, 4.5 and 4.7 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 to the Executive (or credit to the Trust Account with respect to Section 3.3) in a lump sum at the end of the 90-day notice period provided for in the first sentence of
Section 4.3 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such notice of termination is given) an amount (discounted as provided in the second sentence of Section 4.2.2) equal to the sum of (i) one year's Base Salary, (ii) 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 for the two calendar years immediately preceding the calendar year in which such termination occurs plus a pro rata portion of such annual bonus for any elapsed portion of the calendar year preceding such notice of termination and (iii) the annual amount of deferred compensation to be credited to the Trust Account pursuant to Section 3.3 (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3).

4.3.3 In the event the Executive shall make the election provided in clause (B) above, the term of employment shall continue and the Executive shall remain an employee of the Company until the date which is twelve months after the end of the 90-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 the Executive becomes disabled during such period but subject to Section 6, (i) salary at an annual rate equal to the Base Salary,
(ii) 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 for the two calendar years immediately preceding the calendar year in which such termination occurs plus a pro rata portion of such annual bonus for any portion of such twelve month period included in the succeeding calendar year and (iii) credits to the Trust Account of deferred compensation as provided in Section 3.3 of this Agreement. 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 terminate his employment during such period, the Executive shall cease to be an employee of the Company and the term of employment shall cease 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 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of

Section 4.2.2, except that "applicable Federal rate" shall be determined as of the date of such commencement or such effective date, as the case may be) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3) 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 term of employment and 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 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.5 Release. In partial consideration for the Company's obligation to make the payments described in Sections 4.2 and 4.3, the Executive 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 elect, the Company shall deliver such release to the Executive within 10 days after the 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. Upon receipt by the Company of such release signed by the Executive, the Company shall deliver to the Executive a release substantially in the form attached hereto as Annex C, signed by the Company. If the Company shall request the Executive to execute an Annex B release and the Executive shall fail to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke his consent to such release as provided therein, the Company shall have no obligation to deliver the Annex C release and the Executive's term of employment shall terminate as provided in Section 4.2 or 4.3, as applicable, 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 written personnel policies of the Company relating to notice and severance then generally applicable to senior executives of the Company with length of service and compensation level of the Executive.

4.6 Retirement. Notwithstanding the provisions of Sections 4.2, 4.3 or 5, if the term of employment is in effect and the Executive is still employed by the Company pursuant to this Agreement on the date the Executive first becomes eligible for normal retirement as defined in any applicable retirement plan of the Company or any subsidiary of the Company (the "Retirement Date"), then this Agreement shall terminate automatically on such date and the Executive's employment with the Company shall thereafter be governed by the policies generally applicable to employees of the Company, and the Executive shall not thereafter be entitled to the payments provided in such Sections to the extent not received by the Executive on or prior to the Retirement Date. In addition, no benefits or payments provided in Sections 4.2, 4.3 or 5 shall include any period after the Retirement Date and if the provision of benefits or calculation of payments provided in any such Section would include any period subsequent to the Retirement Date, such provision of benefits shall end on the Retirement Date and the calculation of payments shall cover only the period ending on the Retirement Date. Notwithstanding the foregoing, the provisions of Annex A and the Trust Agreement shall apply to the investment and payment of deferred compensation after such termination, the provisions of
Section 7 of this Agreement shall survive any such termination and the provisions of Sections 12.1 and 12.7 shall apply to any dispute with respect to this Agreement that arises after any such termination.

4.7 Mitigation. In the event of termination of the term of employment pursuant to Section 4.2 or 4.3, 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 Entity or a governmental agency or body, 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 (i) in the case of a termination pursuant to
Section 4.2, the later of (x) the

Term Date or (y) one year after the date notice of termination is delivered pursuant to Section 4.2, and (ii) in the case of a termination pursuant to
Section 4.3, the date which is one year after the end of the 90-day notice period referred to in the first sentence of Section 4.3, in either case up to an amount equal to (x) the discounted lump sum payment and credit to the Trust Account received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 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 the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 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 pursuant to Section 4.2 or 4.3 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus and deferred compensation under Section 3 for such year. Any obligation of the Executive to mitigate his damages pursuant to this
Section 4.7 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, 4.2.3, 4.3.2 or 4.3.3, 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.

4.8 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 or 4.3 shall be made at the same times as such payments are made to senior executives of the Company or such subsidiary.

5. Disability. If during the term of employment and prior to any termination of this Agreement under Section 4.2 or 4.3, 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 Trust 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 for the portion of the calendar year in which the Disability Date occurs that shall precede such date and shall pay the Executive disability benefits for the longer of (i) the period from the Disability Date through the Term Date or (ii) one year following the Disability Date (in the case of either
(i) or (ii), the "Disability Period"), in an annual amount equal to 75% of (a) the Base Salary (and this reduced amount shall also be deemed to be the Base Salary for purposes of determining the amounts to be credited to his Trust 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 immediately preceding the year in which the Disability Date occurs (all or a portion of which may be deferred by the Executive pursuant to Section 3.4), with the bonus for any partial calendar year pro rated according to the number of whole or partial months the Executive was employed by the Company in such calendar year. 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. The Disability Period shall continue during such 60-day period. 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, including without limitation, the provisions of
Section 3 which shall apply in lieu of the Disability provisions of this Section 5, 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 may terminate this Agreement by written notice to the Company within 60 days after the termination of the sixty-day period provided for above, in which case neither party shall have any further obligations hereunder after the date of such termination. If the Company elects not to restore the Executive to full-time service and the Executive does not elect to terminate this Agreement, 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; and (ii) the provisions of Sections 9 and 10 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 Board of Directors or 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. 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 with respect to periods 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 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 regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years immediately preceding the calendar year in which such death occurs, 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 Trust 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 Trust 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. The Company shall maintain $4,000,000 face amount of split ownership 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. 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). The Company shall not borrow from the cash value of such policy. The Executive shall be entitled to designate the beneficiary or beneficiaries of such policy, which may include a trust. At the death of the Executive, or on the earlier surrender of such policy by the owner, the Executive agrees that the Executive's estate or 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 but in no event shall such payment to the Company exceed the amount of the death benefit paid under the policy. If other than the Company, 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. In addition to the foregoing, during the Executive's employment with the Company, the Company shall (x) provide the Executive with $50,000 of group life insurance and (y) pay to the Executive annually an amount equal to the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) twice the Executive's Base Salary minus (ii) $50,000. The Executive shall be under no obligation to use the payments made by the Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

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 life insurance (to the extent set forth in Section 7), 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 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.

In addition to any retirement benefits to which the Executive is entitled under the Time Warner Employees' Pension Plan, any supplemental retirement or excess benefit plan maintained by the Company or any of its affiliates or any successor plans thereto (hereinafter collectively referred to as the "Pension Plan"), the Company will, following the Executive's termination of employment for any reason, except by the Company for cause pursuant to Section 4.1 and except for a termination by the Executive in breach of this Agreement, pay or cause to be paid to the Executive or his beneficiary as the case may be, in accordance with the following provisions, an amount which is equivalent to the excess of (the "Excess Amount") (i) the amount such Executive or beneficiary would be entitled to receive under the Pension Plan assuming the Executive had five additional years of service (as such term is defined in the Pension Plan) taking into account all the provisions of the Pension Plan as are from time to time in effect and applicable to the Executive or his beneficiary over (ii) the amount such Executive or beneficiary would be entitled to receive under the Pension Plan based on actual years of service taking into account all the provisions of the Pension Plan as are from time to time in effect and applicable to the Executive or his beneficiary.

If the Executive or his beneficiary is entitled to an Excess Amount as described in the preceding paragraph, the Company shall pay the Excess Amount to the Executive or his beneficiary as follows. If the Executive is otherwise entitled to benefits under the Pension Plan, then the Excess Amount shall be paid at the same times and in the same manner as shall be elected by the Executive or his beneficiary for payment of amounts under the Pension Plan. If the Executive is not otherwise entitled to benefits under the Pension Plan, then the Excess Amount shall be paid at the time(s) and in one of the forms of payment permitted under the Pension Plan as elected by the Executive or his beneficiary. If the Executive or his beneficiary dies before any payments described above have been made, the payments shall be made to the beneficiary thereof at the same time and in the same manner as they would have been paid if the payments were to be made under the Pension Plan.

8.2 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 or 4.3 and during the Disability Period, the Executive shall continue to be eligible to participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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, 4.3, 5 or 6, the Executive's rights to benefits and payments under any benefit plans, programs or practices 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, programs or practices 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 (i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the expiration of the option term) during the remainder of the term of employment and for a period of three months thereafter or such longer period as shall be specified in any applicable stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

8.3 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, 4.3, 5 or 6 (and regardless of whether the Executive elects clause (A) or (B) as provided in Section 4.2 and 4.3), 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 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 as set forth below in this
Section 9.

9.1 Confidentiality Covenant. The Executive covenants and agrees that (i) through the date he ceases to be an employee of the Company and leaves the payroll of the Company for any reason, and (ii) for twelve months after the effective date of termination of the Executive's employment and of the other provisions of this Agreement pursuant to Section 4.1, 4.2 or 4.3, and
(iii) with respect to Sections 9.1.1. and 9.1.2, for an additional 36 months after the later of the dates described in clauses (i) and (ii) above:

9.1.1 The Executive shall keep secret all 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 during the term of employment, in connection with his duties hereunder, or 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 shall 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, other than publicly available documents or documents relating to the terms and conditions of the Executive's employment, 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; provided that if the Executive is to continue as a director, consultant or advisor to the Company after such

termination, the Executive may retain such documents as are necessary or appropriate to the performance of his duties unless and until the Company requests that such documents be delivered to it; and

9.1.3 If the term of employment is terminated pursuant to Section 4.1, 4.2 or 4.3, the Executive shall not employ, and shall not cause any Entity of which he is an affiliate to employ, without the prior written consent of the Company, any person who was a full-time exempt employee of the Company at the date of such termination or within six months prior thereto.

9.2 Non-Compete. The Executive covenants and agrees that (i) through the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason, and (ii) with respect to an Entity that is engaged in competition with the Company and that had, or the parent Entity or predecessor Entity of which had, consolidated gross revenues from all sources, including non-competitive businesses, of $2 billion or more for the fiscal year preceding the Executive's commencement of service for such Entity, through the date that is twelve months after the effective date of any notice of termination of the Executive's employment with the Company pursuant to
Section 4.1, 4.2 or 4.3, 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 shall be deemed 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, securi ties 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 one percent (1%) of the outstanding voting power of that Entity or (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. For purposes of the foregoing, a person or Entity shall be deemed to be in competition with the Company if such person or it engages in any line of business that is substantially the same as either (i) 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 or (ii) any operating business that is engaged in or conducted by the Company and as to which, to the knowledge of the Executive, the Company covenants in writing, in connection with the disposition of such business, not to compete therewith.

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, 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 commits a material breach of the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to two and one-half times the Executive's then current Base Salary, or if the Executive is not employed by the Company at the time of such breach, an amount equal to two and one-half times the most recent Base Salary paid to the Executive by the Company. 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, 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 participa tion 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. Notwithstanding the foregoing, the Executive may, provided that
Section 9.2 is complied with, acquire an interest in any business opportunity presented to the Company hereunder if the Company declines to pursue such business opportunity and if such investment is approved by the Chief Executive Officer of the Company in writing.

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 prepaid telegram, 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, B and C, 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, 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 all or substantially all of the business and assets of the Company (as the case may be), 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, cancelled, 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 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11 No Offset. Except as provided in Section 9.4 of this Agreement, 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 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, deferred compensation - Section 3.3 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 2
Excess Amount - Section 8.1 Executive - the first paragraph in page 1 fair market value - Section A.1 of Annex A Investment Advisor - Section A.1 of Annex A Pay-Out Period - Section A.6 of Annex A Pension Plan - Section 8.1 Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 Retirement Date - Section 4.6 senior executives - Section 3.1 Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3
Valuation Date - Section A.6 of Annex A Work Product - Section 10

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

TIME WARNER INC.

By     /s/ Gerald M. Levin
   ----------------------------
           Gerald M. Levin
           Chairman and Chief
           Executive Officer

     /s/ Richard D. Parsons
  ----------------------------
  Richard D. Parsons

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such

income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following 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, 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding

the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of _____________, 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 ___________ , ____.

ANNEX C

RELEASE

In connection with the Employment Agreement made as of ____ , between TIME WARNER INC., (the "Company"), and [TK] (the "Agreement"), the Company does hereby release and forever discharge [TK] and his estate, heirs, beneficiaries and representatives, 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 his employment with the Company or any of its affiliates or the termination of such employment, which the Company may now or hereafter have under any federal, state or local law, regulation or order, through and including the date of this Release; provided, however, that the execution of this Release shall not prevent the Company from bringing a lawsuit against [TK] (x) to enforce his obligations under [Section 9] of the Agreement or (y) to seek damages or reimbursement for fraud or embezzlement committed by him during his employment with the Company.

IN WITNESS WHEREOF the Company has caused this Release to be executed on its behalf by a duly authorized officer this ______ day of __, 199_.

TIME WARNER INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 18, 1998 effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and Peter R. Haje (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement dated as of May 17, 1995 (the "Prior Agreement"). The Company wishes to restate the Prior Agreement and secure the services of the Executive on a full-time basis for the period to and including December 31, 1999 (the "Term Date") and thereafter for a two-year advisory period on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so restated and 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. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the "term of employment", as used in Section 3.6, 3.7, 3.8 and 8 through 12 shall mean the period ending at the end of the Advisory Period (as defined in Section 13).

2. Employment. The Company shall employ the Executive, and the Executive shall serve, as Executive Vice President, Secretary and General Counsel 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 or the President of the Company may from time to time delegate to the Executive in addition thereto. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the Company's Board of Directors, its Chief Executive Officer, its President or its Chief Operating Officer, (iii) the Executive 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) the place for the performance of the Executive's services shall be the principal executive offices of the Company which shall be in the New York City 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any of the Company's written policies on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("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 $550,000 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 then current practices and policies with respect to senior executives. For the purposes of this Agreement "senior executives" shall mean executives of the Company at the same executive level as the Executive.

3.2 Bonus. In addition to Base Salary, the Executive may be entitled to receive during the term of employment an annual cash bonus based on the performance of the Company and of the Executive. Bonuses for senior executives may be determined by the Compensation Committee of the Company's Board of Directors or by the Chief Executive Officer or the President of the Company. 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. 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, but in no event later than 90 days after the end of the period for which the bonus is payable.

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 a defined contribution which shall be determined and paid out on a deferred basis ("deferred compensation") as

provided in this Agreement, including Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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 pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7 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 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.

3.8 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 an officer or 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.

4. Termination.

4.1 Termination for Cause. The Company may terminate the term of employment, the Advisory Period and all of the Company's obligations under this Agreement, other than its obligations set forth below in this Section 4.1, for "cause" but only if the term of employment and Advisory Period have 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

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 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 such termination by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in 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 Trust Account, or to pay Advisory Period compensation, as the case may be, 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 and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust Account 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 fourth sentence of Section 3.3 and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. 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 and the Advisory Period 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, 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 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 the title specified in the first sentence of Section 2 or a more senior title; (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 Company's principal executive offices in the New York City metropolitan 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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a lump sum payment as provided 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 4.4 and 4.5 and Sections 6 through 12 shall survive such termination, and (ii) the Executive shall be entitled to receive any earned and unpaid Base Salary and deferred compensation or Advisory Period compensation, as the case may be, accrued through the effective date of such termination and if such termination occurs during the term of employment, 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) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) above, the Company shall pay to the Executive as damages in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is

given) an amount (discounted as provided in the immediately following sentence) equal to all amounts otherwise payable pursuant to Sections 3.1, 3.2, 3.3 and 13 for the year in which such termination occurs and for each subsequent year through the end of the Advisory Period, assuming that annual bonuses are required to be paid for each such year during the term of employment, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (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, 3.2 and 13 and the credit to the Trust Account provided for in the third 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 make the election provided in clause (B) above, the term of employment and the Advisory Period shall continue and the Executive shall remain an employee of the Company through the end of the Advisory Period 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 notice of termination as provided in Section 3.1, (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 the term of employment equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, (c) deferred compensation as provided in Section 3.3 and (d) Advisory Period compensation as provided in Section 13. 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 and the Advisory Period shall cease 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 severance in a lump sum within 30 days after such commencement or such effective date (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3), regular annual bonuses (assuming no deferral pursuant to Section 3.4) and Advisory Period compensation 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 Advisory Period. Notwithstanding the preceding sentence, if the Executive accepts employment with any charitable or not-for-profit Entity, or any family-owned corporation, trust or partnership, 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 and the Advisory Period 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.4 Release. In partial consideration for the Company's obligation to make the payments described in Section 4.2, the Executive shall execute and deliver to the Company a release in substantially the form attached hereto as Annex B. The Company shall deliver such release to the Executive within 10 days after the written notice of termination is delivered pursuant to
Section 4.2 and the Executive shall execute and deliver such release to

the Company within 21 days after receipt thereof. If the Executive shall fail to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke his consent to such release as provided therein, the Executive's term of employment shall terminate as provided in Section 4.2, but the Executive shall receive, in lieu of the payments provided for in said
Section 4.2, a lump sum cash payment in an amount determined in accordance with the written personnel policies of the Company relating to notice and severance then generally applicable to employees with length of service and compensation level of the Executive.

4.5 Mitigation. In the event of termination of the term of employment and Advisory Period pursuant to Section 4.2, 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 dupli cation 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 Entity, the total cash salary and bonus received in connection with such other employment, whether paid to him or deferred for his benefit, for any services through December 31, 1999 and for services as a full-time employee from January 1, 2000 through December 31, 2001, up to an amount equal to (x) the discounted lump sum payment received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 3 and Advisory Period compensation under Section 13 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 on the date of such termination, provided that if such termination occurs during the Advisory Period, the amount determined pursuant to this clause (y) shall be zero, shall reduce, pro tanto, any amount which the Company would otherwise be required to pay to the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 term of employment and the Advisory Period by the Executive or the Company pursuant to Section 4.2 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus and deferred compensation under Section 3 and Advisory Period compensation under Section 13 for such year. Any obligation of the Executive to mitigate his damages pursuant to this Section 4.5 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, 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.

4.6 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.

5. Disability. If during the term of employment and prior to any termination 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 Trust 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 for the year in which the Disability Date occurs and shall pay the Executive disability benefits for the period ending on the Term Date (the "Disability Period"), in an annual 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 Trust 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 during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest (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 and the Advisory Period 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; and (ii) the provisions of Sections 9 and 10 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 Chief Executive Officer or the President 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. 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. At the end of a Disability Period or if a Disability Date occurs during the Advisory Period, the Company shall pay to the Executive the full amount of the Advisory Period compensation in accordance with Section 13 without regard to the preceding two sentences. Except as otherwise provided in this Section 5, the during the Disability Period and the Advisory Period, 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 Advisory Period and the term of employment and the Advisory Period shall end and the Executive shall cease to be an employee of the Company at the end of the Advisory 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 or, if applicable, Advisory Period 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 regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar 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 calendar year, and (ii) the Trust 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 Trust 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. The Company shall maintain $4,000,000 face amount of split ownership 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. 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). The Company shall not borrow from the cash value of such policy. 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. In addition to the foregoing, during the Executive's employment with the Company, the Company shall (x) provide the Executive with $50,000 of group life insurance and (y) pay to the Executive annually an amount equal to the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) twice the Executive's Base Salary minus (ii) $50,000. The Executive shall be under no obligation to

use the payments made by the Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

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 the Advisory Period 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 life insurance (to the extent set forth in Section 7), hospitalization, medical, dental, accident, disability or similar plan or program of the Company now existing or established hereafter. In addition, so long as the Executive is an employee of the Company during the term of employment (but not the Advisory Period) the Executive shall be entitled to receive other benefits generally available to all senior executives of the Company to the extent the Executive 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.

8.2 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 and the Advisory Period, the Executive shall continue to be eligible to participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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 the Advisory Period and until such time as the Executive shall leave the payroll of the Company. At the time the Executive's term of employment and Advisory Period terminates and he leaves the payroll of the Company pursuant to the provisions of Section 4.1, 4.2, 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 any more restrictive provisions of any such plan or agreement (but without affecting any less restrictive or more favorable to the Executive 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 (i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the term thereof) during the remainder of the term of employment and the Advisory Period and for a period of three months thereafter or such longer period as shall be specified in any applicable stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

8.3 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 clause (A) or (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 continue to apply through the latest of (i) the end of the Advisory Period (but not later than three years after the effective date of any termination of this Agreement pursuant to Section 4.2) or (ii) the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason. The provisions of Sections 9.1 and 9.3 shall continue to apply until three years after the latest of the events 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 and the Advisory Period, 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 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 and the Advisory Period, 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 shall 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; and

9.1.3 If the term of employment is terminated pursuant to Section 4.1 or 4.2, for a period of one year after such termination, without the prior written 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 exempt employee of the Company at the date of such termination or within six months prior thereto.

9.2 Non-Compete. 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 person or Entity or acquire any interest of any type in any Entity, that might be deemed 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 one percent (1%) 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 indirectly, in competition with the Company, (c) serving as a director of any Entity that is not in competition with the Company or (d) during the Advisory Period, being a partner in or of counsel to a law firm that represents any person or Entity that is in competition with the Company so long as the Executive does not personally provide or assist in the provision of services to any such person or Entity. For purposes of the foregoing, a person or Entity shall be deemed to be in competition with the Company if such person or it engages in any line of business that is substantially the same as either (i) 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 or (ii) any operating business that is engaged in or conducted by the Company and as to which, to the knowledge of the Executive, the Company covenants in writing, in connection with the disposition of such business, not to compete therewith.

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, 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 commits a material breach of the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to two and one-half times the Executive's then current Base Salary, or if the Executive is not employed by the Company at the time of such breach or such breach occurs during the Advisory Period, an amount equal to two and one-half times the most recent Base Salary paid to the Executive by the Company. 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 Section 4.2. 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, 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 participa tion 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.

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 prepaid telegram, 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: Senior Vice President - Administration)

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, 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 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, cancelled, 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 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11 No Offset. Except as provided in Section 9.4 of this Agreement, 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 Retained Income - Section A.6 of Annex A Advisory Period - Section 13 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 deferred compensation - Section 3.3 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 2 Executive - the first paragraph in page 1 fair market value - Section A.1 of Annex A Investment Advisor - Section A.1 of Annex A Pay-Out Period - Section A.6 of Annex A Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 senior executives - Section 3. Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3
Valuation Date - Section A.6 of Annex A Work Product - Section 10

13. Advisory Services. The Executive shall render the advisory services described in this Section for the period beginning on January 1, 2000 and ending on December 31, 2001 (the "Advisory Period"). During the Advisory Period, the Executive will provide such advisory services concerning the business, affairs and management of the Company as may be required by the Board of Directors, the Chief Executive Officer or the President of the Company, but shall not be required to devote more than five days (up to eight hours per day) each month to such service, which shall be performed at a time and place mutually convenient to both parties and consistent with the Executive's other activities. If at any time during the Advisory Period, the Executive engages in other full-time employment, the Executive shall not be deemed to be in breach of this Section 13, but unless such employment consists of the Executive providing services to one or more (i) charitable or non-profit organizations or (ii) family-owned corporations, trusts, or partnerships, the term of

employment and the Advisory Period shall terminate, the Executive shall leave the payroll of the Company and the Company shall have no further obligations under this agreement other than with respect to earned and unpaid compensation and benefits. Notwithstanding the foregoing, but subject to Section 9 of this Agreement, during the Advisory Period the Executive may provide part-time services to third parties (including serving as a member of the Board of Directors of any such party). During the Advisory Period, the Executive shall be entitled to receive compensation in an amount equal to $400,000 per annum and shall continue to be entitled to the benefits described in Sections 7 and 8 hereof; provided, however, that the Executive shall not be entitled to a driver or automobile allowance or financial counseling during the Advisory Period, shall not accrue any vacation time during the Advisory Period and shall not be entitled to any severance pay at the end thereof. In addition, during the first year of the Advisory Period the Company shall provide the Executive with an office, office facilities and a secretary in accordance with the provisions of
Section 4.3.

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

TIME WARNER INC.

By /s/ Richard D. Parsons
  -------------------------------
    Richard D. Parsons, President

   /s/  Peter R. Haje
  -------------------------------
    Peter R. Haje

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges

and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following the later of (i) the end of the Advisory Period and (ii) 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all

of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust Account shall be valued as of the later of (i) December 31, 2001 or (ii) twelve months after termination of the Executive's employment with the Company, and the balance of the Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of _____________, 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 ___________ , ____.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 18, 1998, effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and Richard J. Bressler (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement made as of December 1, 1994 (the "Prior Agreement"). The Company wishes to restate the Prior Agreement and secure the services of the Executive on a full-time basis for the period to and including December 31, 1999 (the "Term Date") on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so restated and 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. The Company shall employ the Executive, and the Executive shall serve, as Executive Vice President and Chief Financial Officer 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 or the President of the Company may from time to time delegate to the Executive in addition thereto. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the Company's Board of Directors, its Chief Executive Officer or its President, (iii) the Executive 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) the place for the performance of the Executive's services shall be the principal executive offices of the Company which shall be in the New York City 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any of the Company's written policies on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("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 $450,000, 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 then current practices and policies with respect to senior executives. For the purposes of this Agreement "senior executives" shall mean executives of the Company at the same executive level as the Executive.

3.2 Bonus. In addition to Base Salary, the Executive may be entitled to receive during the term of employment an annual cash bonus based on the performance of the Company and of the Executive. Bonuses for senior executives may be determined by the Compensation Committee of the Company's Board of Directors or by the Chief Executive Officer or the President of the Company. 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. 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, but in no event later than 90 days after the end of the period for which the bonus is payable.

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 a defined contribution deferred compensation which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement, including Annex A hereto. Subject to the provisions of Section A.7 of Annex A, During the term of employment, the Company shall

pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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, 4.2.3, 4.3.2 or 4.3.3, the Company shall pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7 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 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.

3.8 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 an officer or 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.

4. Termination.

4.1 Termination for Cause. The Company may terminate the term of employment and all of the Company's obligations under this Agreement, 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 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 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 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 such termination by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in 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 Trust 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 and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust Account 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 fourth sentence of Section 3.3 and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. 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, 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 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 the title specified in the first sentence of
Section 2 or a more senior title; (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 Company's principal executive offices in the New York City metropolitan area; or (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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a lump sum payment as provided 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 4.5 and 4.7 and Sections 6 through 12 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) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) above, the Company shall pay to the Executive as damages in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is given) an amount (discounted as provided in the immediately following sentence) equal to the greater of (i) all amounts otherwise payable pursuant to Sections 3.1, 3.2 and 3.3 for the year

in which such termination occurs and for each subsequent year through and including the Term Date and (ii) all amounts that would be payable pursuant to Sections 3.1, 3.2 and 3.3 if the Term Date had been a date three years after the date of such notice of termination (assuming, in the case of either (i) or (ii) above, that annual bonuses are required to be paid for each such year, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (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 Trust Account provided for in the third 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 make the election provided in clause (B) above, the term of employment shall continue and the Executive shall remain an employee of the Company for the period ending on the later of (i) the Term Date and (ii) the date which is three years after the date notice of termination is given 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 6, (a) Base Salary at an annual rate equal to his Base Salary in effect immediately prior to 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 of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest 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 cease 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 severance in a lump sum within 30 days after such commencement or such effective date (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third 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 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 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 After the Term Date. If at the Term Date, the term of employment shall not have been previously terminated pursuant to the provisions of this Agreement, no Disability Period is then in effect and the parties shall not have agreed to an extension or renewal of this Agreement or on the terms of a new employment agreement, then the term of employment shall continue and the Executive shall continue to be employed by the Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 60 days written notice delivered to the other party (which notice may be delivered by either party at any time on or after the date which is 60 days prior to the Term Date). If the Company shall terminate the term of employment 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), which the Company shall have the right to do so long as no Disability Date (as defined in Section 5) has occurred prior to the delivery by the Company of written notice of termination, then in lieu of the provisions of Section 4.2, the Executive 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 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 provided in Section 4.3.3. After the Executive makes such election, the following provisions shall apply:

4.3.1 Regardless of the election made by the Executive pursuant to the preceding paragraph, 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 4.5 and 4.7 and Sections 6 through 12 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 to the Executive in a lump sum at the end of the 60-day notice period provided for in the first sentence of Section 4.3 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such notice of termination is given) an amount (discounted as provided in the second sentence of Section 4.2.2) equal to three times the sum of (i) the Executive's Base Salary as in effect immediately prior to such notice of termination, (ii) 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 for the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4) and
(iii) the annual amount of deferred compensation payable by the Company to the Trust Account pursuant to Section 3.3 as in effect immediately prior to such notice of termination (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3).

4.3.3 In the event the Executive shall make the election provided in clause (B) above, the term of employment shall continue and 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 becomes disabled during such period but subject to
Section 6, (i) the Executive's Base Salary as in effect immediately prior to such notice of termination, (ii) 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 for the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive was the greatest and (iii) deferred compensation as provided in Section 3.3 of this Agreement. At the end of such twelve month period the term of employment shall cease, the Executive shall cease to be an employee of the Company and the Company shall pay to the Executive in a lump sum (discounted as provided

in the second sentence of Section 4.2.2, except that "applicable Federal rate" shall be determined as of the end of such twelve-month period) an amount equal to two times the sum of the amounts described in clauses (i), (ii) and (iii) of this Section 4.3.3. 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 terminate his employment during such period, the Executive shall cease to be an employee of the Company and the term of employment shall cease 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 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that "applicable Federal rate" shall be determined as of the date of such commencement or such effective date, as the case may be) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in third sentence of
Section 3.3) and regular annual bonuses the Executive would have been entitled to receive pursuant to this Section 4.3.3 (including the lump sum) 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 term of employment and 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 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.5 Release. In partial consideration for the Company's obligation to make the payments described in Sections 4.2 and 4.3, the Executive shall execute and deliver

to the Company a release in substantially the form attached hereto as Annex B. The Company shall deliver such release to the Executive within 10 days after the 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 shall fail to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke his consent to such release as provided therein, the Executive's term of employment shall terminate as provided in Section 4.2 or 4.3, as applicable, 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 written personnel policies of the Company relating to notice and severance then generally applicable to employees with length of service and compensation level of the Executive.

4.6 Retirement. Notwithstanding the provisions of Sections 4.2, 4.3 or 5, if the term of employment is in effect and the Executive is still employed by the Company pursuant to this Agreement on the date the Executive first becomes eligible for normal retirement as defined in any applicable retirement plan of the Company or any subsidiary of the Company (the "Retirement Date"), then this Agreement shall terminate automatically on such date and the Executive's employment with the Company shall thereafter be governed by the policies generally applicable to employees of the Company, and the Executive shall not thereafter be entitled to the payments provided in such Sections to the extent not received by the Executive on or prior to the Retirement Date. In addition, no benefits or payments provided in Sections 4.2, 4.3 or 5 shall include any period after the Retirement Date and if the provision of benefits or calculation of payments provided in any such Section would include any period subsequent to the Retirement Date, such provision of benefits shall end on the Retirement Date and the calculation of payments shall cover only the period ending on the Retirement Date. Notwithstanding the foregoing, the Company's obligations under Section 7 of this Agreement shall continue after any such termination and the provisions of Sections 12.1 and 12.7 shall apply to any dispute with respect to this Agreement that arises after any such termination.

4.7 Mitigation. In the event of termination of the term of employment pursuant to Section 4.2 or 4.3, 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 Entity, 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 (i) in the case of a termination pursuant to Section 4.2, the later of (x) the Term Date or (y) three years after the date notice of termination is delivered pursuant to Section 4.2, and (ii) in the case of a termination pursuant to Section 4.3, the date which is three years after the end of the 60-day notice period referred to in the first sentence of
Section 4.3, in either case up to an amount equal to (x) the discounted lump sum payment received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 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 the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 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 pursuant to Section 4.2 or 4.3 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus and deferred compensation under Section 3 for such year. Any obligation of the Executive to mitigate his damages pursuant to this
Section 4.7 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, 4.2.3, 4.3.2 or 4.3.3, 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.

4.8 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 or 4.3 shall be made at the same times as such payments are made to senior executives of the Company or such subsidiary.

5. Disability. If during the term of employment and prior to any termination of this Agreement under Section 4.2 or 4.3, 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 Trust 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 for the year in which the Disability Date occurs and shall pay the Executive disability benefits for the longer of
(i) the period ending on the Term Date or (ii) three years (in the case of either (i) or (ii), the "Disability Period"), in an annual 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 Trust 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 during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest (all or a portion of which may be deferred by the Executive pursuant to
Section 3.4). If during the Disability Period the Execu tive 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; and (ii) the provisions of Sections 9 and 10 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 Chief Executive Officer or the President 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. 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 Sections 4.2 and 4.3 shall not apply during the Disability Period 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 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 regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar 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 calendar year, and (ii) the Trust 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 Trust 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 for any increased life insurance, the Company shall obtain $4,000,000 face amount of split ownership 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. 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). The Company shall not borrow from the cash value of such policy. 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. In the event the Executive's advises the Company in writing within 30 days of the execution 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 spouse and/or descendants, the Company shall permit such ownership provided the trustees of the trust 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. In addition to the foregoing, during the Executive's employment with the Company, the Company shall (x) provide the Executive with $50,000 of group life insurance and (y) pay to the Executive annually an amount equal to the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) twice the Executive's Base Salary minus (i) $50,000. The Executive shall be under no obligation to use the payments made by the Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this
Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

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 life insurance (to the extent set forth in Section 7), 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 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.

8.2 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 or 4.3 and during the Disability Period, the Executive shall continue to be eligible to participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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, 4.3, 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 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 (i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the term thereof) during the remainder of the term of employment and for a period of three months thereafter or such longer period as may be specified in any stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

8.3 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, 4.3, 5 or 6 (and regardless of whether the Executive elects clause (A) or (B) as provided in Section 4.2 and 4.3), 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 continue to apply through the latest of (i) the Term Date, (ii) the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason and (iii) twelve months after the termination of the Executive's employment with the Company pursuant to
Section 4.1, 4.2 or 4.3. The provisions of Sections 9.1 and 9.3 shall continue to apply until three years after the latest of the events 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 pro cesses 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 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 The Executive shall 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; and

9.1.3 If the term of employment is terminated pursuant to Section 4.1, 4.2 or 4.3, for a period of one year after such termination, without the prior written 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 employee of the Company at the date of such termination or within six months prior thereto but such prohibition shall not apply to the Executive's secretary or executive assistant or to any other employee eligible to receive overtime pay.

9.2 Non-Compete. 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 person or Entity or acquire any interest of any type in any Entity, that might be deemed 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 one percent (1%) 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 indirectly, 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 it engages in any line of business that is substantially the same as either
(i) 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 or
(ii) any operating business that is engaged in or conducted by the Company and as to which, to the knowledge of the Executive, the Company covenants in writing, in connection with the disposition of such business, not to compete therewith.

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, 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 commits a material breach of the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to two and one-half times the Executive's then current Base Salary, or if the Executive is not employed by the Company at the time of such breach, an amount equal to two and one-half times the most recent Base Salary paid to the Executive by the Company. 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, 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 participa tion 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.

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 prepaid telegram, 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, 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 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, cancelled, 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 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11 No Offset. Except as provided in Section 9.4 of this Agreement, 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 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 deferred compensation - Section 3.3 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 2
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 Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 Retirement Date - Section 4.6 senior executives - Section 3.1 Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3
Valuation Date - Section A.6 of Annex A Work Product - Section 10

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

TIME WARNER INC.

By  /s/ Richard D. Parsons
   ------------------------------
     Richard D. Parsons
     President

    /s/ Richard J. Bressler
 --------------------------------
      Richard J. Bressler

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and

only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following 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, 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of _____________, 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 ___________, ____.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 18, 1998, effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and Timothy A. Boggs (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement dated as of May 15, 1996 (the "Prior Agreement"). The Company wishes to restate the Prior Agreement and secure the services of the Executive on a full-time basis for the period to and including December 31, 2000 (the "Term Date") on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so restated and 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. The Company shall employ the Executive, and the Executive shall serve, as Senior Vice President and 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 or the President of the Company may from time to time delegate to the Executive in addition thereto. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the President of the Company, the Company's Board of Directors, and if so requested, to such other corporate officer(s) of the Company more senior than the Executive as the Board of Directors shall determine, (iii) the Executive 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) the place for the performance of the Executive's services shall be the principal executive offices of the Company in the greater Washington D.C. 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any of the Company's written policies on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("Entity").

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 person or Entity or acquire any interest of any type in any Entity, that might be deemed in competition with the Company or any of its subsidiaries 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 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 one percent (1%) 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 indirectly, in competition with the Company or any of its subsidiaries or (c) serving as a director of any other public company that is not in competition with the Company or any of its subsidiaries. For purposes of the foregoing, a person or Entity shall be deemed to be in competition with the Company or any of its subsidiaries if such person 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 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 and as to which, to the knowledge of the Executive, the Company or any of its subsidiaries 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 then current practices and policies with respect to senior executives. For the purposes of this Agreement "senior executives" shall mean executives of the Company at the same executive level as the Executive.

3.2 Bonus. In addition to Base Salary, the Executive shall be eligible to receive during the term of employment 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 by the Chief Executive Officer or the President of the Company, 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 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. 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, but in no event later than 90 days after the end of the period for which the bonus is payable.

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 a defined contribution which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement and in Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust Account"), monthly, an amount equal to 25% of one-twelfth of the Executive's then current Base Salary. If a lump sum payment is made pursuant to
Section 4.2.2, 4.2.3, 4.3.2 or 4.3.3, the Company shall pay to the Trustee for credit to the Trust 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 Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement and Annex A and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. The Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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 (or any preceding agreement). The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7 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 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.

3.8 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 an officer or 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.

4. Termination.

4.1 Termination for Cause. The Company may terminate the term of employment and all of the Company's obligations under this Agreement, 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 action of 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 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 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 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, 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 Trust 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 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 Trust 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 fourth sentence of Section 3.3 and the provisions of Sections 3.6, 3.8, 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 Termination by the Company Without Cause. 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, 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 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 the title specified in the first sentence of
Section 2 or a more senior title; (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 Company's principal executive offices in the 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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that the last paragraph of Section 2, Sections 3.8, 4.5 and 4.6 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) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $437,500, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) above, the Company shall pay to the Executive as damages (or pay to the Trustee for credit to the Trust Account with respect to Section 3.3) in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is given) an amount (discounted as provided in the immediately following sentence) equal to the greater of (i) 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 through and including the Term Date and (ii) all amounts that would be payable (whether or not deferred) pursuant to Section 3 if the Term Date had been a date one year after the date of such notice of termination (assuming, in the case of either (i) or (ii) above, that annual bonuses are required to be paid for each such year, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4), provided that such annual bonus shall not be less than $437,500. 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 Trust Account provided for in the third 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 Sec tion 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 term of employment shall continue and the Executive shall remain an employee of the Company for the period ending on the later of (i) the Term Date and (ii) the date which is one year after the effective date of termination 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 6, (a) Base Salary at an annual rate equal to his Base Salary in effect immediately prior to 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 of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $437,500 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 cease 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 severance in a lump sum within 30 days after such commencement or such effective date (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of
Section 4.2.2, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third 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 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 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 After the Term Date. At least 120 days prior to the Term Date, the Company and the Executive shall commence discussions regarding a renewed or extension of this Agreement on terms and conditions mutually agreeable to the parties. If at the Term Date, the term of employment shall not have been previously terminated pursuant to the provisions of this Agreement, no Disability Period is then in effect and the parties shall not have agreed to an extension or renewal of this Agreement or on the terms of a new employment agreement, then the term of employment shall continue and the Executive shall continue to be employed by the Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 60 days written notice delivered to the other party (which notice may be delivered by either party at any time on or after the date which is 60 days prior to 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 terminate the term of employment 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 pursuant to the preceding paragraph, 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, 4.5 and 4.6 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 to the Executive (or pay to the Trustee for credit to the Trust 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 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such notice of termination is given) an amount (discounted as provided in the second sentence of Section 4.2.2) equal to the sum of (i) one year's Base Salary as in effect immediately prior to such notice of termination, (ii) 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 for the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4), provided that such annual bonus shall not be less than $437,500 and (iii) the annual amount of deferred compensation payable by the Company to the Trust Account pursuant to
Section 3.3 as in effect immediately prior to such notice of termination (which shall be credited to the Trust Account as provided in the third sentence of
Section 3.3).

4.3.3 In the event the Executive shall make the election provided in clause (B) above, the term of employment shall continue and 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 6, (i) the Executive's Base Salary as in effect immediately prior to such notice of termination, (ii) 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 Trust Account) for the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive was the greatest, provided that such annual bonus shall not be less than $437,500 and (iii) credits to the Trust Account of deferred compensation as provided in Section 3.3 of this Agreement. 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 and the term of employment shall cease 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 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that "applicable Federal rate" shall be determined as of the date of such commencement or such effective date, as the case may be) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3) 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 term of employment and 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 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.5 Release. In partial consideration for and as an express condition of the Company's obligation to make the payments described in Sections 4.2 and 4.3, the

Executive 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 the 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 his consent to such release as provided therein, the Executive's term of employment shall terminate as provided in Section 4.2 or 4.3, as applicable, 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 written personnel policies of the Company relating to notice and severance then generally applicable to employees with length of service and compensation level of the Executive.

4.6 Mitigation. In the event of termination of the term of employment pursuant to Section 4.2 or 4.3, 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 Entity 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 discounted lump sum payment actually received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 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 the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 term of employment pursuant to Section 4.2 or 4.3 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus and deferred compensation under Section 3 for such year. Any obligation of the Executive to mitigate his damages pursuant to this
Section 4.6 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, 4.2.3, 4.3.2 or 4.3.3, 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.

4.7 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 or 4.3 shall be made at the same times as such payments are made to senior executives of the Company or such subsidiary.

5. Disability. If during the term of employment and prior to any termination of this Agreement under Section 4.2 or 4.3, 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 Trust 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 for the year in which the Disability Date occurs and shall pay the Executive disability benefits for the longer of (i) the period ending on the Term Date or (ii) one year following the Disability Date (in the case of either (i) or (ii), the "Disability Period"), in an annual amount equal to 75% of (a) what the Executive's 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 Trust 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 during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $437,500 (all or a portion of 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 his disability, the Company shall have the right (exercis able 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 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 paragraph 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 Company shall be entitled to deduct from all pay ments 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 (but only with respect to that portion of the Disability Period occurring during the term of employment) from Work men'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 and unless the Company has restored the Executive to fill-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 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, 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 thereof) 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 regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $437,500, 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 Trust 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 Trust 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. During the Executive's employment with the Company, the Company shall provide the Executive with $50,000 group life insurance. In addition, during each year of the Executive's employment, the Company shall pay to the Executive annually an amount equal to two times the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) $1.5 million plus (ii) twice the Executive's Base Salary less $50,000. The Executive shall be under no obligation to use the payments made by the Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

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 life insurance (to the extent set forth in Section 7), 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 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.

8.2 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 or 4.3 and during the Disability Period, the Executive shall continue to be eligible to participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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, 4.3, 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 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 (i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the expiration of the option term) for the later of the remainder of the term of employment or through the Term Date, and for a period of three months thereafter or such longer period as may be specified in any stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive. The Executive's rights to receive payment of deferred compensation from the Trust Account, and the Company's and the Trustee's obligations with respect to the maintenance of the Trust Account and the payment of such deferred compensation, shall be governed by the provisions of Section 3.3, Annex A and the Trust Agreement.

8.3 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, 4.3, 5 or 6 (and regardless of whether the Executive elects clause (A) or (B) as provided in Section 4.2 and 4.3), 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.

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 pro cesses 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 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 The Executive shall 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; and

9.1.3 If the term of employment is terminated pursuant to
Section 4.1, 4.2 or 4.3, for a period of one year after such termination, without the prior written 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 exempt employee of the Company 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 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 Executiveis 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
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.

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, 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 participa tion 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.

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 prepaid telegram, 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, 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 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, cancelled, 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 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11 No Offset. Except as provided in Section 9.4 of this Agreement, 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 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 Competitive Entity - Section 2 deferred compensation - Section 3.3 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 2
Executive - the first paragraph in page 1 fair market value - Section A.1 of Annex A GUL - Section 7
Investment Advisor - Section A.1 of Annex A Lobbying Services - Section 9.2 Pay-Out Period - Section A.6 of Annex A Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Prohibited Entity - Section 9.2 Rabbi Trust - Section 3.3 Retirement Date - Section 4.6 senior executives - Section 3.1 Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3
Valuation Date - Section A.6 of Annex A Work Product - Section 10

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

TIME WARNER INC.

By     /s/ Richard D. Parsons
       -----------------------------
       Richard D. Parsons
       President


 /s/   Timothy A. Boggs
       -----------------------------
       Timothy A. Boggs

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no

other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding

sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following 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, 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuantto this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of _____________, 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 ___________ , ____.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 18, 1998, effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and John A. LaBarca (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement made as of July 14, 1997 (the "Prior Agreement"). The Company wishes to restate the Prior Agreement and secure the services of the Executive on a full-time basis for the period to and including April 30, 2002 and thereafter for a one-year advisory period on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so restated and 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 April 30, 2002, subject, however, to the terms and conditions set forth in this Agreement. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the "term of employment" as used in Section 3.6, 3.7, 3.8 and 8 through 12 shall mean the period ending at the end of the Advisory Period (as defined in Section 13).

2. Employment. The Company shall employ the Executive, and the Executive shall serve, as Senior Vice President, Financial Operations and Controller 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 Chief Financial Officer of the Company may from time to time delegate to the Executive in addition thereto. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the Chief Financial Officer of the

Company, (iii) the Executive shall have no other employment and, without the prior written consent of the Chief Executive Officer, the President or the Chief Financial Officer of the Company, no outside business activities which require the devotion of substantial amounts of the Executive's time and (iv) the place for the performance of the Executive's services shall be the principal executive offices of the Company which shall be in the New York City 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any of the Company's written policies on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("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 $325,000 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 then current practices and policies with respect to senior executives. For the purposes of this Agreement "senior executives" shall mean executives of the Company at the same executive level as the Executive.

3.2. Bonus. In addition to Base Salary, the Executive may be entitled to receive during the term of employment an annual cash bonus based on the performance of the Company and of the Executive. Bonuses for senior executives may be determined by the Compensation Committee of the Company's Board of Directors or by the Chief Executive Officer or the Chief Financial Officer of the Company. 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. 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, but in no event later than 90 days after the end of the period for which the bonus is payable.

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 a defined contribution

which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement, including Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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 pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7. 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 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.

3.8. 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 an officer or 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.

4. Termination.

4.1. Termination for Cause. The Company may terminate the term of employment and all of the Company's obligations under this Agreement, 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 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 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 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 such termination by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in 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 Trust 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 and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust Account 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 fourth sentence of Section 3.3 and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. Unless previously terminated pursuant to any other provision of this Agreement and unless a Disability Date has occurred and the disability period remains 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, 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 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 the title specified in the first sentence of Section 2 or a more senior title; (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 Company's principal executive offices in the New York City metropolitan 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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a lump sum payment as provided 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 4.4 and 4.5 and Sections 6 through 12 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) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $462,500, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) above, the Company shall pay to the Executive as damages in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is given) an amount (discounted as provided in the immediately following sentence) equal to all

amounts otherwise payable pursuant to Sections 3.1, 3.2, 3.3 and 13 for the year in which such termination occurs and for each subsequent year of the term of employment and the Advisory Period (assuming that annual bonuses are required to be paid for each such year of the term of employment, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4), with the bonus for any partial calendar year appropriately annualized, provided that such annual bonus shall not be less than $462,500. 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, 3.2 and 13 and the credit to the Trust Account provided for in the third 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 make the election provided in clause (B) above, the term of employment shall continue and the Executive shall remain an employee of the Company until the end of the term of employment and the Advisory Period 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 notice of termination for each year through the term of employment, (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 during the term of employment (in which case a pro rata portion of such annual bonus will be payable) during such period equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (with any partial calendar year bonus appropriately annualized) as provided in Section 3.2, provided that such annual bonus shall not be less than $462,500, (c) deferred compensation as provided in Section 3.3 and (d) Advisory Period compensation as provided in
Section 13. 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 and the Advisory Period shall cease 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 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2 except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3), regular annual bonuses (assuming no deferral pursuant to Section 3.4) and Advisory Period compensation 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 Advisory 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 4.2.3; 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 and the Advisory Period 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.4. Release. In partial consideration for the Company's obligation to make the payments described in Section 4.2, the Executive shall execute and deliver to the Company a release in substantially the form attached hereto as Annex B. The Company shall

deliver such release to the Executive within 10 days after the written notice of termination is delivered pursuant to Section 4.2 and the Executive shall execute and deliver such release to the Company within 21 days after receipt thereof. If the Executive shall fail to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke his consent to such release as provided therein, the Executive's term of employment shall terminate as provided in Section 4.2, but the Executive shall receive, in lieu of the payments provided for in said Section 4.2, a lump sum cash payment in an amount determined in accordance with the written personnel policies of the Company relating to notice and severance then generally applicable to employees with length of service and compensation level of the Executive.

4.5. Mitigation. In the event of termination of the term of employment pursuant to Section 4.2, 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 Entity, 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 April 30, 2003 up to an amount equal to (x) the discounted lump sum payment received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 3 and Advisory Period compensation under
Section 13 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 the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 a termination pursuant to Section 4.2 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus, deferred compensation under Section 3 and Advisory Period compensation under
Section 13 for such year. Any obligation of the Executive to mitigate his damages pursuant to this Section 4.5 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, 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.

4.6. 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.

5. Disability. If during the term of employment or the Advisory Period and prior to any termination 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, contin ue to pay the Executive his full compensation and continue to credit the Trust Account, when otherwise due, as provided in Section 3 and 13 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 for the year in which the Disability Date occurs and shall pay the Executive annual disability benefits (a) for the balance of the term of employment in an annual amount equal to 75% of (i) 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 Trust Account pursuant to Section 3.3 and Annex A as further disability benefits) and (ii) the average of the regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $462,500 (all or a portion of which may be deferred by the Executive pursuant to Section 3.4) and (b) for the balance of the Advisory Period in an amount equal to $350,000 per annum. If during the term of employment and subsequent to the Disability Date 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 of employment shall not be extended by virtue of the occurrence of the disability. 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 term of employment and Advisory Period; and (ii) the provisions of Sections 9 and 10 shall continue to apply to the Executive during such 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 Chief Executive Officer, the President or the Chief Financial 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. 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 pay ments to be made to the Executive during any disability period pursuant to this Section 5 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 and the Advisory 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 and the Advisory Period 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 unless the Company has restored the Executive to fill-time service at full compensation prior to April 30, 2002, the term of employment and the Advisory Period shall end as provided in this Agreement and the Executive shall cease to be an employee of the Company at the end of the Advisory 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 or the Advisory Period, this Agreement and all obligations of the Company to make any payments under Sections 3, 4, 5 and 13 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 or Advisory Period compensation, as applicable, to the last day of the month in which his death occurs and if the Executive dies during the term of employment, shall be entitled to receive bonus compensation (at the time bonuses are normally paid) based on the average of the regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $462,500, 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 Trust 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 Trust 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. The Company shall continue to maintain $1,500,000 face amount of split ownership life insurance on the life of the Executive, to be owned by the Company or the trustees of a trust for the benefit of the Executive's spouse and/or descendants. The Company shall pay all premiums on such policy and shall maintain such policy (without reduction of the face amount of the coverage) until the Executive reaches age 65, whether or not the Executive is an employee of the Company or any of its affiliates; provided, however, that the Company's obligation to pay such premiums shall terminate on the date the Executive's employment with the Company is terminated for cause pursuant to Section 4.1 or the Executive terminates his employment in breach of this Agreement. The Company shall not borrow from the cash value of such policy. The Executive shall be entitled from time to time to designate the beneficiary or beneficiaries of such policy which may include a trust. At the death of the Executive, or on the earlier surrender of such policy by the owner, the Executive agrees that the Executive's estate or 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. Unless the policy is owned by a trust, 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. If the owner of the policy is a trust, such owner 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. At the time the Executive reaches age 65, the Company shall offer the Executive the opportunity to purchase such policy for the lesser of the net premiums paid by the Company or the cash surrender value of such policy. The provisions of this Section 7 shall be in addition to any other insurance normally provided by the Company 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 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.

8.2. 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 participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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, 5, 6 or 13, 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 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 (i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the term thereof) during the remainder of the term of employment and the Advisory Period and for a period of three months thereafter or such longer period as may be specified in any stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

8.3. 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, 6 or 13 (and regardless of whether the Executive elects clause (A) or (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.

8.4. Retirement Benefits. Upon the Executive's termination of employment for any reason, except by the Company for cause pursuant to Section 4.1 and except for a termination by the Executive in breach of this Agreement, the Company will calculate the retirement benefits to which the Executive is entitled under the Time Warner Employees' Pension Plan, any supplemental retirement or excess benefit plan maintained by the Company or any of its affiliates or any successor plans thereto (hereinafter collectively referred to as the "Pension Plan"), by crediting the Executive with an extra .9 (nine-tenths) of a year of service for each year the Executive is employed by the Company up to a maximum of nine additional years of service. Such additional pension benefits shall be paid at the same times and in the same manner as shall be elected by the Executive or his beneficiary for payment of amounts under the Pension Plan.

9. Protection of Confidential Information; Non-Compete. The provisions of Section 9.2 shall continue to apply through the latest of (i) the end of the Advisory Period, (ii) the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason and (iii) twelve months after the termination of the Executive's employment with the Company pursuant to Section 4.1 or 4.2. The provisions of Sections 9.1

and 9.3 shall continue to apply until three years after the latest of the events 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 pro cesses 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 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. The Executive shall 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; and

9.1.3. If the term of employment is terminated pursuant to Section 4.1 or 4.2, for a period of one year after such termination, without the prior written 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 exempt employee of the Company at the date of such termination or within six months prior thereto.

9.2. Non-Compete. 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 person or Entity or acquire any interest of any type in any Entity, that might be deemed 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 one percent (1%) 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 indirectly, 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 it engages in any line of business that is substantially the same as either
(i) 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, or
(ii) any operating business that is engaged in or conducted by the Company and as to which, to the knowledge of the Executive, the Company covenants in writing, in connection with the disposition of such business, not to compete therewith.

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, 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 commits a material breach of the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to two and one-half times the Executive's then current Base Salary, or if the Executive is not employed by the Company at the time of such breach, an amount equal to two and one-half times the most recent Base Salary paid to the Executive by the Company. 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. 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 and the Advisory Period, 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 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.

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 prepaid telegram, 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, 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 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, cancelled, 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. Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceedings or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11. No Offset. Except as provided in Section 9.4 of this Agreement, 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 Retained Income - Section A.6 of Annex A Advisory Period - Section 13 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 deferred compensation - Section 3.3 Disability Date - Section 5 Effective Date - the first paragraph on page 1 eligible securities - Section A.1 of Annex A Entity - Section 2
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 Pension Plan - Section 8.4 Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 senior executives - Section 3.1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3
Valuation Date - Section A.6 of Annex A Work Product - Section 10

13. Advisory Services. The Executive shall render the advisory services described in this Section for the period beginning on May 1, 2002 and ending on April 30, 2003 (the "Advisory Period"). During the Advisory Period, the Executive will provide such advisory services concerning the business, affairs and management of the Company as may be requested by the Board of Directors, the Chief Financial Officer or the President of the Company, but 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 and consistent with the Executive's other activities. If at any time during the Advisory Period, the Executive engages in other full-time employment, the Executive shall not be deemed to be in breach of this Section 13, but unless such employment consists of the Executive providing services to one or more (i) charitable or non-profit organizations or (ii) family-owned corporations, trusts, or partnerships, the term of

employment and the Advisory Period shall terminate, the Executive shall leave the payroll of the Company and the Company shall have no further obligations under this Agreement other than with respect to earned and unpaid compensation and benefits. Notwithstanding the foregoing, but subject to Section 9.2 of this Agreement, during the Advisory Period the Executive may provide part-time services to third parties (including serving as a member of the Board of Directors of any such party). During the Advisory Period, the Executive shall be entitled to receive compensation in an amount equal to $350,000 per annum and shall continue to be entitled to the benefits described in Sections 7 and 8 hereof; provided, however, that the Executive shall not be entitled to a driver or automobile allowance or financial counseling during the Advisory Period, shall not accrue any vacation time during the Advisory Period and shall not be entitled to any severance pay at the end thereof. In addition, during the Advisory Period the Company shall provide the Executive with an office, office facilities and a secretary as described in Section 4.3 hereof.

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

TIME WARNER INC.

By /s/ Richard D. Parsons
  -------------------------------
    Richard D. Parsons
    President

   /s/ John A. LaBarca
---------------------------------
    John A. LaBarca

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and

only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor, shall remain the sole property of the Company, subject to the claims of its general creditors as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following the later of (i) the date the Advisory Period is scheduled to terminate and (ii) 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay- Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay- Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of _____________, 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 ___________ , ____.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of March 18, 1998, effective as of January 1, 1998 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation (the "Company"), and Philip R. Lochner, Jr. (the "Executive").

The Executive is currently employed by the Company pursuant to an Employment Agreement dated as of February 15, 1994 (the "Prior Agreement"). The Company wishes to restate the Prior Agreement and secure the services of the Executive on a full-time basis for the period to and including December 31, 1998 (the "Term Date") on and subject to the terms and conditions set forth in this Agreement, and the Executive is willing for the Prior Agreement to be so restated and 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. The Company shall employ the Executive, and the Executive shall serve, as Senior Vice President - Administration 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 or the President of the Company may from time to time delegate to the Executive in addition thereto. 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. During the term of employment, (i) the Executive's services shall be rendered on a substantially full-time, exclusive basis and he will apply on a full-time basis all of his skill and experience to the performance of his duties in such employment, (ii) the Executive shall report only to the Company's Board of Directors, its Chief Executive Officer or its President, (iii) the Executive 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) the place for the performance of the Executive's services shall be the principal executive offices of the Company which shall

be in the New York City 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. The foregoing shall be subject to the Company's written 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 shall not interfere with the performance of his duties hereunder, provided that the Executive complies with the provisions of Sections 9 and 10 and any of the Company's written policies on conflicts of interest and service as a director of another corporation, partnership, trust or other entity ("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 $350,000 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 then current practices and policies with respect to senior executives. For the purposes of this Agreement "senior executives" shall mean executives of the Company at the same executive level as the Executive.

3.2 Bonus. In addition to Base Salary, the Executive may be entitled to receive during the term of employment an annual cash bonus based on the performance of the Company and of the Executive. Bonuses for senior executives may be determined by the Compensation Committee of the Company's Board of Directors or by the Chief Executive Officer or the President of the Company. 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. 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, but in no event later than 90 days after the end of the period for which the bonus is payable.

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 a defined contribution which shall be determined and paid out on a deferred basis ("deferred compensation") as provided in this Agreement, including Annex A hereto. During the term of employment, the Company shall pay to the trustee (the "Trustee") of a Company grantor trust (the "Rabbi Trust") for credit to a special account maintained on the books of the Rabbi Trust for the Executive (the "Trust 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, 4.2.3, 4.3.2 or 4.3.3, the Company shall pay to the Trustee for credit to the Trust Account at the time of such payment an amount equal to 50% of the Base Salary portion of such lump sum payment. The Trust Account shall be maintained by the Trustee in accordance with the terms of this Agreement, including Annex A, and the trust agreement (the "Trust Agreement") establishing the Rabbi Trust (which Trust Agreement shall in all respects be in furtherance of, and not inconsistent 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. Effective April 1, 1998, the Company shall establish and maintain the Rabbi Trust as a grantor trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code and shall pay all fees and expenses of the Trustee and shall enforce the provisions of the Trust Agreement for the benefit of the Executive. Prior to April 1, 1998, the Company shall credit the Executive with deferred compensation in accordance with the provisions of Section 3.3 of the Prior Agreement.

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 Trust 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. The Prior Account shall be promptly transferred to, and shall for all purposes be deemed part of, the Trust Account and shall be maintained by the Trustee in accordance with this Agreement and the Trust 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 reasonably promptly pay or reimburse the Executive for all reasonable travel, 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 written 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.

3.7 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 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.

3.8 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 an officer or 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.

4. Termination.

4.1 Termination for Cause. The Company may terminate the term of employment and all of the Company's obligations under this Agreement, 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 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 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 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 such termination by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in 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 Trust 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 and (iii) with respect to any rights the Executive has in respect of amounts credited to the Trust Account 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 fourth sentence of Section 3.3 and the provisions of Sections 3.8, 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 Termination by the Company Without Cause. 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, 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 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 the title specified in the first sentence of
Section 2 or a more senior title; (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 Company's principal executive offices in the New York City metropolitan 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 Company shall have the right, exercisable by written notice to the Executive, to terminate the Executive's employment under this Agreement without cause, effective at least 30 days after the giving of such notice, which notice shall specify the effective date of such termination.

In the event of a termination pursuant to this Section 4.2, the Executive shall be entitled to elect by delivery of written notice to the Company, within 30 days after written notice of such termination is given pursuant to this Section 4.2, either (A) to cease being an employee of the Company and receive a lump sum payment as provided 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 pursuant to the preceding paragraph, (i) after the effective date of such termination, the Executive shall have no further obligations or liabilities to the Company whatsoever, except that Sections 4.5 and 4.7 and Sections 6 through 12 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) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $450,000, all or a portion of which pro rata bonus will be credited to the Trust 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 make the election provided in clause (A) above, the Company shall pay to the Executive as damages in a lump sum within 30 days thereafter (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such notice of termination is given) an amount (discounted as provided in the immediately following sentence) equal to the greater of (i) all amounts otherwise payable pursuant to Sections 3.1, 3.2 and 3.3 for the year in which such termination occurs and for each subsequent year through and including the Term Date and (ii) all amounts that would be payable pursuant to Sections 3.1, 3.2 and 3.3 if

the Term Date had been a date three years after the date of such notice of termination (assuming, in the case of either (i) or (ii) above, that annual bonuses are required to be paid for each such year, with each such annual bonus being equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4), provided that such annual bonus shall not be less than $450,000. 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 Trust Account provided for in the third 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 make the election provided in clause (B) above, the term of employment shall continue and the Executive shall remain an employee of the Company for the period ending on the later of (i) the Term Date and (ii) the date which is three years after the date notice of termination is given 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 6, (a) Base Salary at an annual rate equal to his Base Salary in effect immediately prior to 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 of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $450,000 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 cease 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 severance in a lump sum within 30 days after such commencement or such effective date (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the calendar year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that the "applicable Federal rate" shall be determined as of the date the Executive shall cease to be an employee of the Company) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third 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 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 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 After the Term Date. If at the Term Date, the term of employment shall not have been previously terminated pursuant to the provisions of this Agreement, no Disability Period is then in effect and the parties shall not have agreed to an extension or renewal of this Agreement or on the terms of a new employment agreement, then the term of employment shall continue and the Executive shall continue to be employed by the Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 60 days written notice delivered to the other party (which notice may be delivered by either party at any time on or after the date which is 60 days prior to the Term Date). If the Company shall terminate the term of employment 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), which the Company shall have the right to do so long as no Disability Date (as defined in Section 5) has occurred prior to the delivery by the Company of written notice of termination, then in lieu of the provisions of Section 4.2, the Executive 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 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 provided in Section 4.3.3. After the Executive makes such election, the following provisions shall apply:

4.3.1 Regardless of the election made by the Executive pursuant to the preceding paragraph, 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 4.5 and 4.7 and Sections 6 through 12 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 to the Executive in a lump sum at the end of the 60-day notice period provided for in the first sentence of Section 4.3 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such notice of termination is given) an amount (discounted as provided in the second sentence of Section 4.2.2) equal to three times the sum of (i) the Executive's Base Salary as in effect immediately prior to such notice of termination, (ii) 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 for the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive was the greatest (assuming that no portion of such bonus is deferred pursuant to Section 3.4), provided that such annual bonus shall not be less than $450,000 and (iii) the annual amount of deferred compensation payable by the Company to the Trust Account pursuant to Section 3.3 as in effect immediately prior to such notice of termination (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3).

4.3.3 In the event the Executive shall make the election provided in clause (B) above, the term of employment shall continue and 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 becomes disabled during such period but subject to
Section 6, (i) the Executive's Base Salary as in effect immediately prior to such notice of termination, (ii) 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 for the two calendar years during the most recent five calendar years for which the regular annual bonus received by the Executive was the greatest, provided that such annual bonus shall not be less than $450,000 and (iii) deferred compensation as provided in
Section 3.3 of this Agreement. At the end of such twelve month period the term of employment shall

cease, the Executive shall cease to be an employee of the Company and the Company shall pay to the Executive in a lump sum (discounted as provided in the second sentence of Section 4.2.2, except that "applicable Federal rate" shall be determined as of the end of such twelve-month period) an amount equal to two times the sum of the amounts described in clauses (i), (ii) and (iii) of this
Section 4.3.3. 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 terminate his employment during such period, the Executive shall cease to be an employee of the Company and the term of employment shall cease 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 (provided that if the Executive was named in the compensation table in the Company's then most recent proxy statement, such lump sum payment shall be made within 30 days after the end of the year in which such commencement or effective date occurred) an amount (discounted as provided in the second sentence of Section 4.2.2, except that "applicable Federal rate" shall be determined as of the date of such commencement or such effective date, as the case may be) for the balance of the Base Salary, deferred compensation (which shall be credited to the Trust Account as provided in the third sentence of Section 3.3) and regular annual bonuses the Executive would have been entitled to receive pursuant to this Section 4.3.3 (including the lump sum) 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 term of employment and 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 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 but taking into account the Executive's reduced need for such office space, secretarial services and office facilities, services and furnishings as a result of the Executive no longer being a full-time employee.

4.5 Release. In partial consideration for the Company's obligation to make the payments described in Sections 4.2 and 4.3, the Executive shall execute and deliver to the Company a release in substantially the form attached hereto as Annex B. The Company shall deliver such release to the Executive within 10 days after the 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 shall fail to execute and deliver such release to the Company within such 21 day period, or if the Executive shall revoke his consent to such release as provided therein, the Executive's term of employment shall terminate as provided in
Section 4.2 or 4.3, as applicable, 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 written personnel policies of the Company relating to notice and severance then generally applicable to employees with length of service and compensation level of the Executive.

4.6 Retirement. Notwithstanding the provisions of Sections 4.2, 4.3 or 5, if the term of employment is in effect and the Executive is still employed by the Company pursuant to this Agreement on the date the Executive first becomes eligible for normal retirement as defined in any applicable retirement plan of the Company or any subsidiary of the Company (the "Retirement Date"), then this Agreement shall terminate automatically on such date and the Executive's employment with the Company shall thereafter be governed by the policies generally applicable to employees of the Company, and the Executive shall not thereafter be entitled to the payments provided in such Sections to the extent not received by the Executive on or prior to the Retirement Date. In addition, no benefits or payments provided in Sections 4.2, 4.3 or 5 shall include any period after the Retirement Date and if the provision of benefits or calculation of payments provided in any such Section would include any period subsequent to the Retirement Date, such provision of benefits shall end on the Retirement Date and the calculation of payments shall cover only the period ending on the Retirement Date. Notwithstanding the foregoing, the Company's obligations under Section 7 of this Agreement shall continue after any such termination and the provisions of Sections 12.1 and 12.7 shall apply to any dispute with respect to this Agreement that arises after any such termination.

4.7 Mitigation. In the event of termination of the term of employment pursuant to Section 4.2 or 4.3, 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 Entity, 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 (i) in the case of a termination pursuant to Section 4.2, the later of (x) the Term Date or
(y) three years after the date notice of termination is delivered pursuant to
Section 4.2, and (ii) in the case of a termination pursuant to Section 4.3, the date which is three years after the end of the 60-day notice period referred to in the first sentence of Section 4.3, in either case up to an amount equal to
(x) the discounted lump sum payment received by or for the account of the Executive with respect to Base Salary, annual bonus and deferred compensation under Section 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 the Executive as a result of such termination and, to the extent amounts have theretofore been paid to him 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 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 pursuant to Section 4.2 or 4.3 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 discounted amount received by him or credited to the Trust Account with respect to Base Salary, annual bonus and deferred compensation under Section 3 for such year. Any obligation of the Executive to mitigate his damages pursuant to this
Section 4.7 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, 4.2.3, 4.3.2 or 4.3.3, 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.

4.8 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 or 4.3 shall be made at the same times as such payments are made to senior executives of the Company or such subsidiary.

5. Disability. If during the term of employment and prior to any termination of this Agreement under Section 4.2 or 4.3, 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 Trust 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 for the year in which the Disability Date occurs and shall pay the Executive disability benefits for the longer of
(i) the period ending on the Term Date or (ii) three years (in the case of either (i) or (ii), the "Disability Period"), in an annual 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 Trust 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 during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $450,000 (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; and (ii) the provisions of Sections 9 and 10 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 Chief Executive Officer or the President 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. 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 Sections 4.2 and 4.3 shall not apply during the Disability Period and unless the Company has restored the Executive to fill-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 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 regular annual bonuses (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent five calendar years for which the annual bonus received by the Executive from the Company was the greatest, provided that such annual bonus shall not be less than $450,000, 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 Trust 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 Trust 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. The Company shall maintain $2,000,000 face amount of split ownership 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. 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). The Company shall not borrow from the cash value of such policy. 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. In addition to the foregoing, during the Executive's employment with the Company, the Company shall (x) provide the Executive with $50,000 of group life insurance and (y) pay to the Executive annually an amount equal to the premium that the Executive would have to pay to obtain life insurance under the Group Universal Life ("GUL") insurance program made available by the Company in an amount equal to (i) twice the Executive's Base Salary minus (ii) $50,000. The Executive shall be under no obligation to use the payments made by the Company pursuant to the preceding sentence to purchase GUL insurance or to purchase any other life insurance. If the Company discontinues its GUL insurance program, the Company shall nevertheless make the payments required by this Section 7 as if such program were still in effect. The payments made to the Executive pursuant to this Section 7 shall not be considered as "salary" or "compensation" or "bonus" in determining the amount of any payment under any pension, retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

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 life insurance (to the extent set forth in Section 7), 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 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.

8.2 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 or 4.3 and during the Disability Period, the Executive shall continue to be eligible to participate in the benefit plans and to receive the benefits required to be provided to the Executive under Sections 7 and 8.1 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. 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, 4.3, 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 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 (i) all stock options granted to the Executive by the Company shall vest and become immediately exercisable at the time the Executive shall leave the payroll of the Company pursuant to Section 4.2, (ii) all stock options granted to the Executive by the Company shall remain exercisable (but not beyond the term thereof) during the remainder of the term of employment and for a period of three months thereafter or such longer period as may be specified in any stock option agreement and (iii) the Company shall not be permitted to determine that the Executive's employment was terminated for "unsatisfactory performance" within the meaning of any stock option agreement between the Company and the Executive.

8.3 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, 4.3, 5 or 6 (and regardless of whether the Executive elects clause (A) or (B)

as provided in Section 4.2 and 4.3), 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 continue to apply through the latest of (i) the Term Date, (ii) the date the Executive ceases to be an employee of the Company and leaves the payroll of the Company for any reason and (iii) twelve months after the termination of the Executive's employment with the Company pursuant to
Section 4.1, 4.2 or 4.3. The provisions of Sections 9.1 and 9.3 shall continue to apply until three years after the latest of the events 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 pro cesses 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 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 The Executive shall 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; and

9.1.3 If the term of employment is terminated pursuant to Section 4.1, 4.2 or 4.3, for a period of one year after such termination, without the prior written 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 exempt employee of the Company at the date of such termination or within six months prior thereto.

9.2 Non-Compete. 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 person or Entity or acquire any interest of any type in any Entity, that might be deemed 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 one percent (1%) 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 indirectly, 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 it engages in any line of business that is substantially the same as either
(i) 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 or
(ii) any operating business that is engaged in or conducted by the Company and as to which, to the knowledge of the Executive, the Company covenants in writing, in connection with the disposition of such business, not to compete therewith.

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, 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 commits a material breach of the provisions of Section 9.2, the Executive shall pay to the Company as liquidated damages an amount equal to two and one-half times the Executive's then current Base Salary, or if the Executive is not employed by the Company at the time of such breach, an amount equal to two and one-half times the most recent Base Salary paid to the Executive by the Company. 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, 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 participa tion 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.

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 prepaid telegram, 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, 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 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, cancelled, 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 Resolution of Disputes. Any dispute or controversy arising with respect to this Agreement shall, at the election of either the Company or the Executive, be submitted to JAMS/ENDISPUTE for resolution in arbitration in accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 12.7. 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 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.

12.11 No Offset. Except as provided in Section 9.4 of this Agreement, 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 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 deferred compensation - Section 3.3 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 2
Executive - the first paragraph in page 1 fair market value - Section A.1 of Annex A Investment Advisor - Section A.1 of Annex A Pay-Out Period - Section A.6 of Annex A Prior Account - Section 3.5 Prior Agreement - the second paragraph on page 1 Rabbi Trust - Section 3.3 Retirement Date - Section 4.6 senior executives - Section 3.1 Term Date - the second paragraph on page 1 term of employment - Section 1 Trust Account - Section 3.3 Trust Agreement - Section 3.3 Trustee - Section 3.3 Valuation Date - Section A.6 of Annex A Work Product - Section 10

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

TIME WARNER INC.

By /s/ Richard D. Parsons
  ------------------------------
    Richard D. Parsons

   /s/  Philip R. Lochner, Jr.
  -------------------------------
    Philip R. Lochner, Jr.

ANNEX A

DEFERRED COMPENSATION ACCOUNT

A.1 Investments. Funds credited to the Trust Account shall be actually 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 actually purchased and sold for the Trust Account on the date of reference. Such purchases may be made on margin; provided that the Company may, from time to time, by written notice to the Executive, the Trustee 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, the Trustee and the Investment Advisor, cause all eligible securities theretofore purchased on margin to be sold. The Investment Advisor shall send notification to the Executive and the Trustee in writing of each transaction within five business days thereafter and shall render to the Executive and the Trustee written quarterly reports as to the current status of his or her Trust Account. In the case of any purchase, the Trust Account shall be charged with a dollar amount equal to the quantity and kind of securities 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. In the case of any sale, the Trust Account shall be charged with the quantity and kind of securities sold, and shall be credited with a dollar amount equal to the quantity and kind of securities sold multiplied by the fair market value of such securities on the date of reference. Such charges and credits to the Trust 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 Rabbi Trust on the date of reference, the actual purchase or sale price per security to the Rabbi Trust 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 Trustee 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 Trust Account, including determining the fair market value of such security. The Trust Account shall be charged currently with all interest paid by the Trust Account with respect to any credit extended to the Trust Account. Such interest shall be charged to the Trust Account, for margin purchases actually made, at the rates and times actually paid by the Trust Account. 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 the Trustee 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 Trust Account at the rates and times actually paid.

A.2 Dividends and Interest. The Trust Account shall be credited with dollar amounts equal to cash dividends paid from time to time upon the stocks held therein. Dividends shall be credited as of the payment date. The Trust Account shall similarly be credited with interest payable on interest bearing securities held therein. Interest shall be credited as of the payment date, except that in the case of purchases of interest-bearing securities the Trust 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 Trust 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 Trust 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 Trust Account.

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

A.4 Obligation of the Company. Without in any way limiting the obligations of the Company otherwise set forth in the Agreement or this Annex A, the Company shall have the obligation to establish, maintain and enforce the Rabbi Trust and to make payments to the Trustee for credit to the Trust Account in accordance with the provisions of Section 3.3 of the Agreement, to use due care in selecting the Trustee or any successor trustee and to in all respects work cooperatively with the Trustee to fulfill the obligations of the Company and the Trustee to the Executive. The Trust Account shall be charged with all taxes (including stock transfer taxes), interest, brokerage fees and investment advisory fees, if any, payable by the Company and attributable to the purchase or disposition of securities designated by the Investment Advisor (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) and only in the event of a default by the Company of its obligation to pay such fees and expenses, the fees and expenses of the Trustee in accordance with the terms of the Trust Agreement, but no other costs of the Company. Subject to the terms of the Trust Agreement, the securities purchased for the Trust Account as designated by the Investment Advisor shall remain the sole property of the Company, subject to the claims of its general creditors, as provided in the Trust Agreement. Neither the Executive nor his legal representative nor any beneficiary designated by the Executive shall have any right, other than the right of an unsecured general creditor, against the Company or the Trust in respect of any portion of the Trust Account.

A.5 Taxes. The Trust 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 by the Trust Account pursuant to Section A.2 and gains recognized upon sales of any of the securities which are sold pursuant to Section A.1 or A.6. The Trust 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 pursuant to Section A.1 or A.2 and as a result of any payment of brokerage fees and investment advisory fees made pursuant to Section A.1. If any of the sales of the securities which are sold pursuant to Section A.1 or A.6 results in a loss to the Trust 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 Trust 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 Trust Account to the extent permitted by Applicable Tax Law in order to minimize the taxes deemed payable on such income and gains within the Trust Account. For the purposes of this Section A.5, all charges and credits to the Trust 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 Trust 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 Trust Account for such year) shall be credited to the Trust Account on the last day of such year. If and to the extent that any such net loss of the Trust Account shall be utilized to determine a credit to the Trust 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. Unless the Executive makes the election referred to in the next succeeding sentence, deferred compensation shall be paid bi-weekly for a period of ten years (the "Pay-Out Period") commencing on the first Company payroll date in the month following the later of (i) 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, 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 the first Company payroll date in January of the year following the year in which the latest of such events occurs. The Executive may elect a shorter Pay-Out Period by delivering written notice to the Company or the Trustee at least one-year prior to the commencement of the Pay-Out Period, which notice shall specify the shorter Pay-Out Period. On each payment date, the Trust Account shall be charged with the dollar amount of such payment. On each payment date, the amount of cash held in the Trust Account shall be not less than the payment then due and the Company or the Trustee may select the securities to be 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 Trust 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 payments during the Pay-Out Period, the Trust Account shall be valued on the fifth trading day prior to the end of the month preceding the first payment of each year of the Pay-Out Period, or more frequently at the Company's or the Trustee's election (the "Valuation Date"), by adjusting all of the securities held in the Trust Account to their fair market value (net of the tax adjustment that would be made thereon if sold, as estimated by the Company or the Trustee) and by deducting from the Trust Account the amount of all outstanding indebtedness. The extent, if any, by which the Trust Account, valued as provided in the immediately preceding sentence, exceeds the aggregate amount of credits to the Trust 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 or the Trustee, 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 Trust 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 Trust Account, after all the securities held therein 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 in the Trust 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 Trust 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 Trust Account, after the securities held therein 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 in the Trust 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 bi-weekly during the Pay-Out Period commencing on the first Company payroll date in 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 Trust Account shall be valued as of the date of the Executive's death and the balance of the Trust 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.

Notwithstanding the foregoing provisions of this Section A.6, if the Rabbi Trust shall terminate in accordance with the provisions of the Trust Agreement, the Trust Account shall be valued as of the date of such termination and the balance of the Trust Account shall be paid to the Executive within 15 days of such termination in accordance with the provisions of the third preceding paragraph.

Within 90 days after the end of each taxable year of the Company in which payments have been made from the Trust Account and at the time of the final payment from the Trust Account, the Company or the Trustee shall compute and the Company shall pay to the Trustee for credit to the Trust Account, the amount of the tax benefit assumed to be received by the Company 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 Trust Account pursuant to the preceding sentence in respect of the amounts credited to the Trust 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 Trust 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 Trust Account pursuant to this Annex A (excluding credits made pursuant to the second preceding sentence), after all credits and charges to the Trust 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 Trust 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.

ANNEX B

RELEASE

Pursuant to the terms of the Employment Agreement made as of _____________, 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 ___________ , ____.

$7,500,000,000

CREDIT AGREEMENT

dated as of

November 10, 1997

among

TIME WARNER INC.
TIME WARNER COMPANIES, INC.
TIME WARNER ENTERTAINMENT COMPANY, L.P.
TURNER BROADCASTING SYSTEM, INC.
TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP
TWI CABLE INC.

and

The Lenders Party Hereto

and

THE CHASE MANHATTAN BANK,
as Administrative Agent

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
THE BANK OF NEW YORK
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation and Syndication Agents

CHASE SECURITIES INC.,
as Arranger

SECTION 1.1. Defined Terms ...............................................     1
SECTION 1.2. Classification of Loans and Borrowings ......................    32
SECTION 1.3. Terms Generally .............................................    32
SECTION 1.4. Accounting Terms; GAAP ......................................    32

SECTION 2.1. Commitments .................................................    32
SECTION 2.2. Loans and Borrowings ........................................    33
SECTION 2.3. Requests for Revolving Borrowings ...........................    33
SECTION 2.4. Swingline Loans .............................................    34
SECTION 2.5. Funding of Borrowings .......................................    35
SECTION 2.6. Interest Elections ..........................................    36
SECTION 2.7. Termination and Reduction of Commitments and Borrowings Caps     37
SECTION 2.8. Repayment of Loans; Evidence of Debt ........................    38
SECTION 2.9. Prepayment of Loans .........................................    39
SECTION 2.10. Fees .......................................................    39
SECTION 2.11. Interest ...................................................    40
SECTION 2.12. Alternate Rate of Interest .................................    40
SECTION 2.13. Increased Costs ............................................    41
SECTION 2.14. Break Funding Payments .....................................    42
SECTION 2.15. Taxes ......................................................    43
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs     44
SECTION 2.17. Mitigation Obligations; Replacement of Lenders .............    45

SECTION 3.1. Organization; Powers ........................................    46
SECTION 3.2. Authorization; Enforceability ...............................    46
SECTION 3.3. Governmental Approvals; No Conflicts ........................    47
SECTION 3.4. Financial Condition; No Material Adverse Change .............    47
SECTION 3.5. Properties ..................................................    48
SECTION 3.6. Litigation and Environmental Matters ........................    48
SECTION 3.7. Compliance with Laws and Agreements .........................    48
SECTION 3.8. Government Regulation .......................................    49
SECTION 3.9. Taxes .......................................................    49

                                                                            Page
                                                                            ----

SECTION 3.10. ERISA ......................................................    49
SECTION 3.11. True and Complete Disclosure ...............................    49
SECTION 3.12. Partnership Tax Matters ....................................    50
SECTION 3.13. Beneficial Assets ..........................................    50
SECTION 3.14. Guarantees .................................................    50

SECTION 4.1. Initial Loans ...............................................    50
SECTION 4.2. Assumptions .................................................    52
SECTION 4.3. Diamond Implementation ......................................    54
SECTION 4.4. Each Credit Event ...........................................    54

SECTION 5.1. Financial Statements and Other Information ..................    55
SECTION 5.2. Notices of Material Events ..................................    57
SECTION 5.3. Existence; Conduct of Business ..............................    57
SECTION 5.4. Payment of Obligations ......................................    57
SECTION 5.5. Maintenance of Properties; Insurance ........................    57
SECTION 5.6. Books and Records; Inspection Rights ........................    58
SECTION 5.7. Compliance with Laws ........................................    58
SECTION 5.8. Use of Proceeds .............................................    58
SECTION 5.9. Fiscal Periods; Accountants .................................    58
SECTION 5.10. Enforcement of Rights Under Partnership Agreements .........    58
SECTION 5.11. TWE Beneficial Assets ......................................    58
SECTION 5.12. TWEAN Beneficial Assets ....................................    59
SECTION 5.13. Guarantees .................................................    59

SECTION 6.1. Changes in Business .........................................    60
SECTION 6.2. Mergers, Etc ................................................    60
SECTION 6.3. Liens .......................................................    61
SECTION 6.4. Indebtedness ................................................    63
SECTION 6.5. Investments .................................................    64
SECTION 6.6. Restricted Payments .........................................    64
SECTION 6.7. Transactions with Affiliates ................................    66
SECTION 6.8. ERISA .......................................................    66
SECTION 6.9. Financial Covenants .........................................    67

                                                                            Page
                                                                            ----

SECTION 6.10. Amendment or Waiver of Organizational Documents ............    68
SECTION 6.11. Certain Agreements .........................................    68
SECTION 6.12. Unrestricted Subsidiaries ..................................    69

SECTION 7.1. Payments ....................................................    69
SECTION 7.2. Representations, Etc ........................................    70
SECTION 7.3. Covenants ...................................................    70
SECTION 7.4. Default Under Other Agreements ..............................    70
SECTION 7.5. Bankruptcy, Etc .............................................    70
SECTION 7.6. ERISA .......................................................    71
SECTION 7.7. Judgments ...................................................    71
SECTION 7.8. Change of Control ...........................................    71
SECTION 7.9. Dissolution .................................................    71
SECTION 7.10. Taxation ...................................................    72
SECTION 7.11. Conflicting Agreements .....................................    72
SECTION 7.12. Certain Guarantees .........................................    72

ARTICLE VIII.

THE ADMINISTRATIVE AGENT

SECTION 9.1. Notices .....................................................    75
SECTION 9.2. Waivers; Amendments .........................................    75
SECTION 9.3. Expenses; Indemnity; Damage Waiver ..........................    76
SECTION 9.4. Successors and Assigns ......................................    77
SECTION 9.5. Survival ....................................................    80
SECTION 9.6. Counterparts; Integration; Effectiveness ....................    80
SECTION 9.7. Severability ................................................    80
SECTION 9.8. Right of Setoff .............................................    80
SECTION 9.9. Governing Law; Jurisdiction; Consent to Service of Process ..    81
SECTION 9.10. WAIVER OF JURY TRIAL .......................................    81
SECTION 9.11. Headings ...................................................    81
SECTION 9.12. Confidentiality ............................................    82
SECTION 9.13. Independence of Representations, Warranties and Covenants ..    82
SECTION 9.14. Release of Certain Guarantees ..............................    82
SECTION 9.15. Partners ...................................................    83
SECTION 9.16. Calculations; Computations; Interpretation .................    83

                                                                            Page
                                                                            ----

SECTION 9.17. Distribution of Documents ..................................    85


SCHEDULES:

Schedule A      Guarantors
Schedule 2.1    Lenders and Commitments
Schedule 3.13A  TWE Material Beneficial Assets
Schedule 3.13B  TWEAN Material Beneficial Assets
Schedule 6.3    Existing Liens
Schedule 6.12   Unrestricted Subsidiaries

EXHIBITS:

Exhibit A    Form of Assignment and Acceptance
Exhibit B    Form of Officer's Solvency Certificate
Exhibit C    Form of Interest Rate Certificate
Exhibit D-1  Form of Subsidiary Guarantee
Exhibit D-2  Form of TWE Partner Guarantee
Exhibit D-3  Form of TWI Guarantee
Exhibit D-4  Form of TWEAN Holder Guarantee
Exhibit D-5  Form of Paragon Guarantee
Exhibit D-6  Form of TWE Guarantee
Exhibit D-7  Form of TWIC Guarantee
Exhibit D-8  Form of Diamond Guarantee
Exhibit E-1  Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
             (Closing)
Exhibit E-2  Form of Opinion of General Counsel (Closing)
Exhibit F    Form of Advance Letter/Newhouse Letter
Exhibit G-1  Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
             (Transfers)
Exhibit G-2  Form of Opinion of General Counsel (Transfers)
Exhibit H    Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
             (Diamond Implementation)

CREDIT AGREEMENT, dated as of November 10, 1997, among TIME WARNER
INC., TIME WARNER COMPANIES, INC., TIME WARNER ENTERTAINMENT COMPANY, L.P., TURNER BROADCASTING SYSTEM, INC., TIME WARNER ENTERTAINMENT--ADVANCE/NEWHOUSE PARTNERSHIP, TWI CABLE INC., the LENDERS party hereto, and THE CHASE MANHATTAN
BANK, as Administrative Agent.

The parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.1. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

"ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

"Acquired Indebtedness" shall mean (i) Indebtedness of an entity, which entity is acquired by any Borrower or any of its Subsidiaries after the Closing Date; provided that such Indebtedness shall be outstanding at the time of the acquisition of such entity, shall not be created in contemplation of or in connection with such acquisition and shall not be, directly or indirectly, recourse (including by way of setoff) to any Company or any asset thereof other than to the entity and its Subsidiaries so acquired and the assets of the entity and its Subsidiaries so acquired or (ii) Indebtedness of any Borrower or any of its Subsidiaries that is not, directly or indirectly, recourse (including by way of setoff) to any Company or any asset thereof other than to specified assets acquired by such Borrower or such Subsidiary after the Closing Date, which Indebtedness is outstanding at the time of the acquisition of such assets and is not created in contemplation of or in connection with such acquisition and the holder of which waives, for the benefit of the other lenders thereto, any claims against any other assets of any Company or against the general credit of any Company (which waiver shall, in the judgment of the Administrative Agent after consultation with its counsel, constitute a satisfactory waiver under Section 1111(b) of the Bankruptcy Code).

"Adjusted Financial Statements" shall mean, of any Person for any period, (x) the balance sheet of such Person and its Restricted Subsidiaries (treating Unrestricted Subsidiaries as equity investments of such Person to the extent that such Unrestricted Subsidiaries would not otherwise be treated as equity investments of such Person in accordance with GAAP) as of the end of such period and (y) the related statements of operations and stockholders' or partners' equity for such period and, if such period is not a fiscal year, for the then elapsed portion of the fiscal year (treating Unrestricted Subsidiaries as equity investments to the extent that such Unrestricted Subsidiaries would not otherwise be treated as equity investments of such Person in accordance with GAAP).

"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

"Administrative Agent" shall mean Chase, in its capacity as administrative agent for the Lenders hereunder.

"Administrative Questionnaire" shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

"Advance" shall mean Advance Communication Corp., a New York corporation.

"Advance/Newhouse" shall mean Advance/Newhouse Partnership, a New York general partnership, of which Advance and Newhouse are general partners.

"Affiliate" shall mean, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the specified Person; provided that two or more Persons shall not be deemed Affiliates solely because an individual is a director and/or officer of each such Person.

"Agreement" shall mean this Credit Agreement.

"Allocated Loans" shall have the meaning provided in the definition of "Transfer."

"Alternate Base Rate" shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.

"Applicable Percentage" shall mean, with respect to any Lender, the percentage of the Total Commitment represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

"Applicable Rate" shall mean, for any day, with respect to any Eurodollar Loan or the Commitment Fee of any Borrower, the applicable rate per annum set forth below under the caption "Eurodollar Spread" or "Commitment Fee," as the case may be, based upon the ratings by Moody's and S&P, respectively, applicable on such date to the Index Debt of such Borrower:

    Moody's              S&P              Eurodollar Spread       Commitment Fee
    -------              ---              -----------------       --------------
Baa1 or higher      BBB+ or higher             0.300%                  0.100%
     Baa2                BBB                   0.350%                  0.125%
     Baa3                BBB-                  0.400%                  0.150%
     Ba1                 BB+                   0.600%                  0.225%
     Ba2                 BB                    0.750%                  0.250%
     Ba3                 BB-                   0.875%                  0.300%

For purposes of the foregoing, (i) if the Index Debt of any Borrower is rated by only one Rating Agency (other than by reason of the circumstances referred to in the last sentence of this paragraph), then the rating assigned by such Rating Agency shall be used; (ii) if the ratings assigned by Moody's and S&P for the Index Debt of such Borrower shall fall within different levels (including numerical modifiers and (+) and (-) as levels), the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more levels (including numerical modifiers and (+) and (-) as levels) lower than the other, in which case the Applicable Rate shall be determined by reference to the level next below that of the higher of the two ratings; and (iii) if the ratings assigned by Moody's and S&P for the Index Debt of such Borrower shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable Rating Agency. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrowers and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation. If a Rating Agency shall cease to assign a rating to a Borrower's Index Debt solely because such Borrower elects not to participate or otherwise cooperate in the ratings process of such Rating Agency, the Applicable Rate for such Borrower shall not be less than that before such Rating Agency's rating became unavailable.

If neither Rating Agency has assigned a rating to a Borrower's Index Debt, then the "Applicable Rate" shall mean, for any day, with respect to any Eurodollar Loan or the Commitment Fee of such Borrower, the applicable rate per annum set forth below under the caption "Eurodollar Spread" or "Commitment Fee," as the case may be, opposite the Leverage Ratio of such Borrower on such day:

                 Leverage Ratio                   Eurodollar Spread    Commitment Fee
                 --------------                   -----------------    --------------
                 less than 4.0                          0.350%             0.125%
less than 4.5 and greater than or equal to 4.0          0.400%             0.150%
less than 5.0 and greater than or equal to 4.5          0.600%             0.225%
less than 5.5 and greater than or equal to 5.0          0.750%             0.250%
         greater than or equal to 5.5                   0.875%             0.300%

Any change in the Leverage Ratio of such Borrower shall be effective to adjust the Applicable Rate as of the date for which the Leverage Ratio is calculated in the Interest Rate Certificate delivered pursuant to Section 5.1(c).

Notwithstanding the foregoing, (I) prior to the Diamond Implementation, the Applicable Rate for TWIC will be what the Applicable Rate for TWI or TWCI (whichever is lower) would be if TWI and TWCI were Borrowers and (II) at or after the Diamond Implementation, the Applicable Rate for TBS and TWIC will be the same as the Applicable Rate for TWI or TWCI (whichever is lower).

"Applicable Transfer" shall mean, for any representation or warranty or any condition precedent, the Transfer being consummated on the date such representation or warranty is to be made or such condition precedent is to be satisfied.

"Assessment Rate" shall mean, for any day, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation for insurance by such Corporation of time deposits made in dollars at the offices of such member in the United States; provided that if, as a result of any change in any law, rule or regulation, it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall be determined by the Administrative Agent to be representative of the cost of such insurance to the Lenders.

"Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.4), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

"Assumption" shall mean the assumption of the Allocated Loans of TWIC by TWEAN in a Transfer.

"Assumption Date" shall mean the date of any Assumption.

"Authorized Officer" shall mean, with respect to any Person, any officer of such Person reasonably acceptable to the Administrative Agent and designated as such in writing to the Administrative Agent by such Person.

"Availability" shall mean, with respect to any Borrower, the excess, if any, of such Borrower's Borrowing Cap then in effect (after giving effect to the proviso in Section 2.1) over the aggregate amount of Loans then outstanding to such Borrower, but in no event shall the aggregate Availability of all the Borrowers at any time exceed the Total Unutilized Commitment then in effect. The amount of Loans outstanding for purposes of calculating Availability under
Section 2.10(a) shall not include Swingline Loans. In allocating Availability among Borrowers for purposes of determining the Commitment Fee, Availability shall first be allocated to the Borrower with the highest Applicable Rate then in effect, next to the Borrower with the next highest Applicable Rate then in effect, and so on.

"Availability Period" shall mean the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

"Bankruptcy Code" shall have the meaning provided in Section 7.5.

"Base CD Rate" shall mean the sum of (a) the Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

"Beneficial Assets" shall mean the TWE Beneficial Assets and the TWEAN Beneficial Assets, and the related net cash flows.

"Beneficial Subsidiary" shall have the meaning provided in Section 9.16(b).

"Borrowers" shall mean (i) TWE, (ii) TBS, (iii) TWEAN, (iv) TWIC, (v) at or after the Diamond Implementation, TWI, and (vi) at or after the Diamond Implementation, TWCI, collectively; and "Borrower" shall mean any of them; provided that from and after the date on which any Borrower shall terminate its Borrowing Cap in accordance with Section 2.7(c) and all of such Borrower's Obligations shall have been paid in full, such Borrower shall cease to be a "Borrower" under the Credit Documents and shall cease to be subject as a Borrower to Articles V and VI.

"Borrowing" shall mean (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.

"Borrowing Cap" shall mean, (i) with respect to TWE, $7.5 billion, (ii) with respect to TWEAN, $2.0 billion and (iii) with respect to each other Borrower, (x) prior to the Diamond Implementation, $4.0 billion and (y) at or after the Diamond Implementation, $6.0 billion, in each case, as such amount may be reduced from time to time pursuant to Section 2.7.

"Borrowing Request" shall mean a request by the Borrower for a Revolving Borrowing in accordance with Section 2.3.

"Business Day" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

"Cable Business" shall mean a business substantially all of which consists of the construction, ownership, operation, management, promotion, extension or other utilization of any type of cable television distribution system or any similar distribution business, including the obtaining of a license or franchise to operate such a system or business.

"Capital Lease Obligations" of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

"Capital Stock" shall mean, with respect to any Person, any and all shares, partnership interests or other equivalents (however designated and whether voting or non-voting) of, such Person's equity, whether outstanding on the date hereof or hereafter issued, and any and all rights, warrants or options to purchase or acquire or exchangeable for or convertible into such shares, partnership interests or other equivalents.

"Cash Balance" shall mean, with respect to any Borrower, the aggregate amount of cash and Cash Equivalents held by such Borrower.

"Cash Equivalents" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) that (a) have maturities of not more than six months from the date of acquisition thereof or (b) are subject to a repurchase agreement with an institution described in clause (ii)(x) or (y) below exercisable within six months from the date of acquisition thereof, (ii) U.S. Dollar-denominated and Eurodollar time deposits, certificates of deposit and bankers' acceptances of (x) any domestic commercial bank of recognized standing having capital and surplus in excess of $500.0 million or (y) any bank whose short-term commercial paper rating from S&P is at least A-2 or the equivalent thereof or from Moody's is at least P-2 or the equivalent thereof (any such bank, an "Approved Lender"), in each case with maturities of not more than six months from the date of acquisition thereof, (iii) commercial paper and variable and fixed rate notes issued by any Lender or Approved Lender or by the parent company of any Lender or Approved Lender and commercial paper and variable rate notes issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's, and

in each case maturing within six months after the date of acquisition thereof, and (iv) tax-exempt commercial paper of United States municipal, state or local governments rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's and maturing within six months after the date of acquisition thereof.

"Change in Law" shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

"Change of Control" shall mean any of the following:

(i) with respect to TWI, either (a) a Person or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) acquiring or having beneficial ownership (it being understood that a tender of shares or other equity interests shall not be deemed acquired or giving beneficial ownership until such shares or other equity interests have been accepted for payment) of securities (including options) having a majority of the ordinary voting power of TWI (including options to acquire such voting power) or (b) persons who are directors of TWI as of the date hereof or persons designated or approved by such directors ceasing to constitute a majority of the board of directors of TWI;

(ii) with respect to TWCI, TWCI ceasing to be a direct or indirect Wholly Owned Subsidiary of TWI;

(iii) with respect to TWE, (a) TWI ceasing to own beneficially, directly or indirectly through Subsidiaries, at least 43-3/4% of the total equity in TWE, (b) a Person or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) owning an equity interest in TWE greater than that owned by TWI and its Wholly Owned Subsidiaries or (c) there being any managing General Partner of TWE other than TWI and/or one or more of its Wholly Owned Subsidiaries;

(iv) with respect to TBS, (a) until the Leverage Ratio of TBS is less than 5.0:1.0, TBS ceasing to be a direct or indirect Wholly Owned Subsidiary of TWI or (b) after such time, TWI ceasing to own, directly or indirectly through Subsidiaries, Capital Stock representing at least 66- 2/3% of the ordinary voting power or value of the Capital Stock of TBS;

(v) with respect to TWEAN, (a) TWE and TWI together ceasing to own beneficially, directly or indirectly, a majority of the TWEAN Partnership Interests, (b) TWE ceasing to own beneficially, directly or indirectly through Subsidiaries, at least 40% of the TWEAN Partnership Interests or
(c) TWE ceasing to have management or operational control over TWEAN under the TWEAN Partnership Agreement comparable in all material respects

to such control on the Closing Date (it being understood that a liquidation of TWEAN permitted under Section 6.2(b) shall not be deemed a Change of Control); or

(vi) with respect to TWIC, (a) until the Leverage Ratio of TWIC is less than 3.5:1.0, TWIC ceasing to be a direct or indirect Wholly Owned Subsidiary of TWI, (b) after such time, TWI ceasing to own beneficially, directly or indirectly through Subsidiaries, Capital Stock representing at least 66-2/3% of the ordinary voting power or value of the Capital Stock of TWIC or (c) TWI ceasing to have the managerial and operational control over TWIC that it would have if TWIC were a Subsidiary of TWE or TWEAN;

provided that the events described in paragraphs (i) through (vi) shall not constitute a "Change of Control" with respect to any Person if such event arises out of a liquidation, consolidation or merger of such Person permitted by
Section 6.2(b).

"Chase" shall mean The Chase Manhattan Bank.

"Class," when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.

"Closing Date" shall mean November 14, 1997, the date of the Initial Loans.

"Code" shall mean the Internal Revenue Code of 1986.

"Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.8 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.4. The initial amount of each Lender's Commitment is set forth on Schedule 2.1, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable.

"Commitment Fee" shall have the meaning provided in Section 2.10(a).

"Commitment Termination Date" shall mean the Business Day immediately preceding the Maturity Date.

"Companies" shall mean each of the Credit Parties and their respective Subsidiaries, collectively; and "Company" shall mean any of them.

"Confidential Information Memorandum" shall mean the Confidential Information Memorandum dated October 1997 relating to the loan facilities hereunder.

"Consolidated Amortization Expense" shall mean, for any period, for any Person, the amortization expense of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP.

"Consolidated Cash Flow" shall mean, for any period, for any Person, (A) the Consolidated Net Income of such Person and its consolidated Subsidiaries for such period plus (B) (to the extent deducted in calculating such Consolidated Net Income) the sum of (i) Consolidated Depreciation Expense, (ii) Consolidated Amortization Expense (excluding amortization of film inventory that does not constitute amortization of capitalized interest expense, capitalized depreciation expense and purchase price amortization), (iii) Consolidated Interest Expense, (iv) income tax expenses of such Person and its Subsidiaries,
(v) non-recurring non-cash items and (vi) minority interest expense in respect of preferred stock of Subsidiaries of such Person minus (C) the sum of (i) to the extent included in calculating such Consolidated Net Income, interest income (including interest on cash or Cash Equivalents) and (ii) to the extent not previously deducted as an expense in determining Consolidated Net Income, Management Fees actually paid in cash or other consideration in such period by such Person or its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP.

"Consolidated Cash Fixed Charges" shall mean the sum of Consolidated Cash Interest Expense plus Consolidated Cash Preferred Dividends.

"Consolidated Cash Interest Expense" shall mean, for any period, for any Person, Consolidated Interest Expense of such Person, but excluding, to the extent otherwise included therein, interest expense to the extent not payable in cash (e.g., interest on securities paid in additional securities, imputed interest and amortization of original issue discount), amortization of discount and deferred financing costs.

"Consolidated Cash Preferred Dividends" shall mean, for any period, for any Person, dividends payable in cash during such period in respect of any preferred stock of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, but decreased by the amount of such dividends paid with the proceeds of Stock Option Loans and excluding any dividends with respect to preferred stock of any other Person accrued during any period that the income (or loss) of such other Person is excluded from Consolidated Net Income of such Person by reason of clause (i) of the definition thereof.

"Consolidated Depreciation Expense" shall mean, for any period, for any Person, the depreciation expense of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP.

"Consolidated Interest Expense" shall mean, for any period, for any Person, the interest expense of such Person and its consolidated Subsidiaries, including, without duplication, total interest expense for such period (including that attributable to Capital Lease Obligations in accordance with GAAP) with respect to all outstanding Indebtedness of such Person and its consolidated Subsidiaries, including all capitalized interest, all commissions, discounts and other fees and charges

owed with respect to letters of credit and bankers' acceptance financing, as such amount may be increased or decreased by the net income or loss from Interest Rate Agreements for such period determined in accordance with GAAP, but excluding, without duplication, (i) any amounts payable pursuant to Section 2.10, (ii) any amounts with respect to Indebtedness of any other Person accrued during any period that the income (or loss) of such other Person is excluded from Consolidated Net Income of such Person by reason of clause (i) of the definition thereof and (iii) interest on Stock Option Loans, all determined on a consolidated basis for such period taken as a single accounting period.

"Consolidated Net Income" shall mean, for any period, for any Person, the net income (or loss) of such Person and its consolidated Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in accordance with GAAP; provided that the following, without duplication, shall be excluded: (i) the income (or loss) of any other Person accrued prior to the date that it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or that such other Person's assets are acquired by such Person or any of its Subsidiaries, (ii) the income of any Subsidiary of such Person to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement or instrument (other than this Agreement), judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary (provided that the income of any Subsidiary of such Person shall not be excluded by reason of this clause (ii) so long as such Subsidiary guarantees the Obligations of such Person), (iii) dividends, interest, income or other distributions or payments on any investment in or with respect to any Unrestricted Subsidiary or with respect to any other Person (including, when calculating Consolidated Net Income of TWE or TWEAN, Paragon to the extent treated as an equity investment of TWE and/or TWEAN as a result of the operation of Section 9.16(c)(iii)) which is not a consolidated Subsidiary of such Person (other than with respect to calculations made pursuant to Section 6.9(I)(b) or
(II)(b) to the extent any such dividends, interest, or other distributions or payments are actually paid or made), (iv) the income (or loss) realized by such Person or any of its consolidated Subsidiaries from dispositions of assets otherwise than in the ordinary course of business (including as the result of the sale of any business assets, business segment, business operation or Investment), (v) the income resulting from any write-up of any asset, (vi) the aggregate net gain (or loss) arising from any revaluation (but not sale) of readily marketable securities, (vii) the aggregate net gain (or loss) arising from extraordinary transactions and (viii) the income (or loss) from discontinued operations.

"Consolidated Total Debt" of any Person shall mean, as at any time of determination, the total Indebtedness (other than any Stock Option Loans and, in the case of TWE and TBS, up to $250.0 million of Film Financing in the aggregate for both of TWE and TBS) of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as at such time.

"Contingent Obligations," as applied to any Person, shall mean any direct or indirect liability, contingent or otherwise, of that Person (x) with respect to any indebtedness, lease, dividend, letter of credit or other monetary obligation of another if the primary purpose or intent thereof by the

Person incurring the Contingent Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, (y) under any letter of credit issued for the account of that Person or for which that Person is otherwise liable for reimbursement thereof, or (z) under Currency Agreements or Interest Rate Agreements. Contingent Obligations shall include (a) the direct or indirect guarantee, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another, and (b) any liability of such Person for the obligations of another through any agreement (contingent or otherwise) (i) to purchase, repurchase, or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), (ii) to maintain the solvency or any balance sheet item, level of income or financial condition of another, or (iii) to make take-or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement, if in the case of any agreement described under clause (i) or (ii) the primary purpose or intent thereof is as described in the preceding sentence; provided that Contingent Obligations shall not include obligations (not otherwise constituting Indebtedness) of any Person in respect of customary representations, warranties and covenants made or agreed to by such Person in connection with the sale and securitization of accounts receivable or similar contract rights. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported.

"Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. A Person shall be deemed to Control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

"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 and (ii) if owed by a Borrower 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; provided 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.

"Copyright Liens" shall mean any Liens granted by any Borrower or any of its Subsidiaries on copyrights relating to movies or other programming that is subject to contracts entitling such Borrower or Subsidiary to future payments in respect of such movies or other programming, which contractual rights to future payments are to be transferred by such Borrower or Subsidiary to a special purpose Subsidiary of such Borrower or Subsidiary organized for the purpose

of monetizing such rights to future payments and which Liens (x) are granted directly or indirectly for the benefit of the special purpose Subsidiary and/or the Persons who purchase such contractual rights to future payments from such special purpose Subsidiary and (y) extend only to the copyrights for the movies or other programming subject to such contracts for the purpose of permitting the completion, distribution and exhibition of such movies or other programming.

"Coverage Ratio" as of any date shall mean, with respect to any Borrower, the ratio of Consolidated Cash Flow to Consolidated Cash Fixed Charges of such Borrower, in each case for the Four Quarter Period ending on such date.

"Credit Documents" shall mean this Agreement and each of the Guarantees, including the exhibits, schedules and any other attachments hereto and thereto.

"Credit Event" shall mean (i) the effectiveness of the obligations of the Lenders to make Loans hereunder, (ii) any Transfer or Assumption, (iii) the Diamond Implementation or (iv) the making of any Loan hereunder (it being understood that the continuation or conversion of any Loan shall not be deemed the making of a Loan).

"Credit Parties" shall mean the Borrowers and the Guarantors; and "Credit Party" shall mean any of them.

"Currency Agreement" shall mean any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement designed to protect the Persons entering into same against fluctuations in currency values.

"Default" shall mean any event, act or condition which constitutes, or with notice or lapse of time, or both, would constitute, an Event of Default.

"Diamond Guarantee" shall mean a guarantee by TWI, TWCI, TBS and TWIC of all of the Obligations (other than the Obligations of TWE Entities), substantially in the form of Exhibit D-8.

"Diamond Implementation" shall mean the addition of TWI and TWCI as Borrowers, which shall become effective upon TWI, TWCI and TBS executing and delivering the Diamond Guarantee and the satisfaction or waiver of each of the other conditions set forth in Section 4.3.

"Diamond Parties" shall mean (i) TWI, (ii) TWCI, (iii) TBS and (iv) TWIC, collectively; and "Diamond Party" shall mean any of them.

"Documents" shall mean the Credit Documents and the Transfer Documents.

"dollars" or "$" refers to lawful money of the United States of America.

"Effective Date" shall have the meaning provided in Section 9.6.

"Environmental Laws" shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

"Environmental Liability" shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Company directly or indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974.

"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade or business (whether or not incorporated) that, together with such Credit Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

"ERISA Entity" shall mean each of the Credit Parties and each of their respective ERISA Affiliates, collectively; and "ERISA Entity" shall mean any of them.

"ERISA Event" shall mean (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, or the failure to make by its due date a required installment under
Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any ERISA Entity of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any ERISA Entity from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (f) the incurrence by any ERISA Entity of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (g) the receipt by any ERISA Entity of any notice, or the receipt by any Multiemployer Plan from any ERISA Entity of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or (h) the occurrence of a non exempt prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could result in liability to a Credit Party.

"Eurodollar," when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

"Event of Default" has the meaning assigned to such term in Article
VII.

"Exchange Act" shall mean the Securities Exchange Act of 1934.

"Excluded Taxes" shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Credit Party hereunder, (a) income or franchise taxes imposed on (or measured by) its net income, assets or net worth by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which any Credit Party is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrowers under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.15(f), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from any Borrower with respect to such withholding tax pursuant to Section 2.15(a).

"Existing Credit Agreements" shall mean (i) the Credit Agreement dated as of June 30, 1995 among TWE, TWEAN and TWIC, as borrowers, Chase, as administrative agent, and the lenders party thereto, (ii) the Credit Agreement dated as of July 1, 1993 among TBS, as borrower, Chase, as administrative agent, and the lenders party thereto and (iii) the Credit Agreement dated as of September 7, 1994 among TBS, as borrower, Chase, as administrative agent, and the lenders party thereto.

"FCC" shall mean the Federal Communications Commission.

"Federal Funds Effective Rate" shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

"Film Financing" shall mean, without duplication, monetary obligations arising out of transactions in which so-called tax-based financing groups or other third-party investors provide financing for the acquisition, production or distribution of motion pictures, television programs, sound recordings or books or rights with respect thereto in exchange, in part, for certain tax or other

benefits which are derived from such motion pictures, television programs, sound recordings, books or rights; provided that no such monetary obligations shall be, directly or indirectly, recourse (including by way of set-off) to any Restricted Company or any of its assets other than to the profits or distribution rights related to such motion pictures, television programs, sound recordings, books or rights and other than to a Subsidiary of TWE or TBS substantially all of the assets of which consist of the motion pictures, video and television programming or rights which are the subject of such transaction and related cash and Cash Equivalents.

"Financial Officer" shall mean, with respect to any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person.

"Financial Statements" shall mean, of any Person for any period, (x) the balance sheet of such Person and its Subsidiaries, on a consolidated basis, as of the end of such period and (y) the related statements of operations, stockholders' or partners' equity and cash flows for such period and, if such period is not a fiscal year, for the then elapsed portion of the fiscal year.

"Foreign Lender" shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrowers are located. For purposes of this definition, the United States of America, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

"Foreign Subsidiary" shall mean any Subsidiary of a Borrower that is incorporated or organized under the laws of any jurisdiction other than the United States or any state thereof, the U.S. Virgin Islands and Puerto Rico and does substantially all of its business outside the United States, the U.S. Virgin Islands and Puerto Rico.

"Four Quarter Period" shall mean a period consisting of four full consecutive fiscal quarters.

"Franchise" shall mean, with respect to any Person, a franchise, license, authorization or right to construct, own, operate, manage, promote, extend or otherwise utilize any cable television distribution system operated or to be operated by such Person or any of its Subsidiaries granted by any state, county, city, town, village or other local government authority or by the FCC, but shall not include any such franchise, license, authorization or right that is incidentally required for the purpose of installing, constructing or extending a cable television system.

"GAAP" shall mean generally accepted accounting principles in the United States of America. See Section 1.4 and 9.16.

"General Partner" shall mean any Person defined as such in the TWE Partnership Agreement or any TWEAN Partner.

"Governmental Authority" shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency,

authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other monetary obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or monetary obligation; provided, that the term guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

"Guarantees" shall mean (i) the TWE Partner Guarantees, (ii) the TWI Guarantee, (iii) the TWEAN Holder Guarantees, (iv) the Subsidiary Guarantees,
(v) the TWE Guarantee, (vi) the Paragon Guarantee, (vii) the TWIC Guarantee and
(viii) the Diamond Guarantee, collectively; and "Guarantee" shall mean any of them.

"Guaranteed Percentage" shall mean, with respect to any TWE Partner Guarantor, the percentage of the obligations of TWE hereunder being guaranteed by such TWE Partner Guarantor. The Guaranteed Percentage of each TWE Partner Guarantor shall be as follows: Warner Communications Inc.: 44.88%; American Television and Communications Corporation: 40.73%; and Warner Cable Communications Inc.: 14.39%; provided that the Guaranteed Percentage of any TWE Partner Guarantor may be changed by TWE from time to time by written notice to the Administrative Agent in connection with the merger or consolidation of such TWE Partner Guarantor; provided that (i) at all times the sum of the Guaranteed Percentages of all TWE Partner Guarantors shall equal 100% and (ii) with respect to any TWE Partner Guarantor that owns, directly or indirectly, any Beneficial Assets, such TWE Partner Guarantor's Guaranteed Percentage may not be changed unless at the time of such change the representations and warranties contained in Section 3.13(a) shall be true and correct.

"Guarantors" shall mean (i) the TWE Partner Guarantors, (ii) TWI in its capacity as guarantor under the TWI Guarantee, (iii) the TWEAN Holder Guarantors, (iv) the Subsidiary Guarantors, (v) TWE in its capacity as guarantor under the TWE Guarantee, (vi) Paragon in its capacity as guarantor under the Paragon Guarantee, (vii) TWI and TWCI in their capacities as guarantors under the TWIC Guarantee and (viii) TWI, TWCI, TBS and TWIC in their capacities as guarantors under the Diamond Guarantee, collectively; and "Guarantor" shall mean any of them, each of which is designated as such on Schedule A.

"Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

"Incur" shall mean, with respect to any Indebtedness, to incur, create, issue, assume, guarantee or otherwise become liable for or with respect to, or become responsible for the payment of, contingently or otherwise, such Indebtedness; provided that the term "Incur" shall not include conversions or continuations of Loans.

"Indebtedness" of any Person shall mean, without duplication, (i) all indebtedness of such Person for borrowed money or evidenced by bonds, notes, debentures or similar instruments, (ii) the deferred purchase price of any acquisition of a business, operation, business segment or other group of operating or revenue-producing assets (including any payments in respect of non-compete or other similar arrangements entered into in connection with such acquisition), whether or not such acquisition was made in the ordinary course of business, (iii) the face amount of all letters of credit issued for the account of such Person to the extent of all drafts drawn thereunder, (iv) all indebtedness of a second Person secured by any Lien on any property owned by such first Person (other than any Lien permitted by Section 6.3(b)(iv) and any Copyright Lien), whether or not such indebtedness has been assumed (but only to the extent of the lesser of the fair market value of the property subject to such Lien and the amount of indebtedness of such second Person), (v) all Capitalized Lease Obligations of such Person, (vi) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted (i.e., take-or-pay and similar obligations) (other than where the obligation is classified on such Person's financial statements in accordance with GAAP as an account payable), (vii) all Contingent Obligations of such Person to the extent such Contingent Obligations relate to any obligation that would otherwise constitute Indebtedness and (viii) Film Financings and all other obligations that would otherwise be Film Financings but for the proviso contained in the definition thereof. Notwithstanding the foregoing, Indebtedness shall not include (a) obligations in respect of trade payables and accrued expenses, in each case arising in the ordinary course of business (including up to $150,000,000 in the aggregate at any time outstanding for all of the Borrowers of undrawn obligations with respect to commercial letters of credit supporting lease payment obligations, insurance premium payment obligations and other trade payables entered into in the ordinary course of business that, in each case, are not secured by the related assets); (b) any obligation of such Person or any Subsidiary thereof to purchase products and services utilized in its business pursuant to agreements entered into the ordinary course of business (including under Negative Pick-Up Facilities); (c) any obligation of such Person to guarantee performance of, or enter into indemnification agreements with respect to, obligations, entered into in the ordinary course of business, under any and all Franchises, leases, performance bonds, franchise bonds, obligations to reimburse drawings under letters of credit issued in lieu of performance or franchise bonds; (d) completion bonds or guarantees or indemnities of a similar nature issued in the ordinary course of business in connection with the production of motion pictures and video and television programming (including under Negative PickUp Facilities); (e) obligations, if any, to make Tax Distributions; (f) amounts owed to TWI by any TWE Partner Guarantor or any

holder of TWE Material Beneficial Assets arising in the ordinary course of business with respect to deferred tax payments arising out of assets (other than Beneficial Assets) held by such holder but only if such obligations are subordinated to the Guarantee of such holder; (g) any Guarantee or any guarantee by TWIC or any of its Subsidiaries of the Obligations of (x) TWEAN or (y) any Guarantor of the Obligations of TWEAN; (h) any reimbursement obligation among Guarantors with respect to any Guarantees or among TWIC and its Subsidiaries with respect to any guarantees by TWIC or any of its Subsidiaries of any Obligations of (x) TWEAN or (y) any Guarantor of the Obligations of TWEAN; provided that any such obligation shall be subordinated to the obligations of the Guarantors under the Credit Documents. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.

"Indemnitee" shall have the meaning provided in Section 9.3.

"Index Debt," of any Borrower, shall mean each separate issuance or series of outstanding long term debt of such Borrower that is (a) unsecured, (b) not subordinated in right of payment to any other Indebtedness of such Borrower and (c) (i) not guaranteed and not otherwise credit enhanced, directly or indirectly, by any other Person or (ii) guaranteed or otherwise credit enhanced so long as the Loans of such Borrower, if any, are equally and ratably guaranteed or otherwise credit enhanced, as the case may be; provided that if at any time no such Indebtedness shall be outstanding, Index Debt shall include the Revolving Loans.

"Information" shall have the meaning specified in Section 9.12.

"Initial Loans" shall mean the initial Loans to be made hereunder.

"Interest Election Request" shall mean a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.6.

"Interest Payment Date" shall mean (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

"Interest Period" shall mean (a) as to any Eurodollar Borrowing of any Borrower, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the numerically

corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is (i) one, two, three or six months thereafter, as such Borrower may elect, (ii) twelve months thereafter if such Borrower shall have so elected and the Administrative Agent, after consultation with the Lenders, shall have determined in good faith based on then prevailing conditions in the interbank Eurodollar market that U.S. Dollar deposits are generally then being offered to first class banks in the interbank Eurodollar market for a comparable maturity and all of the Lenders shall have agreed to such Interest Period or (iii) one month thereafter if such Borrower shall have made no election as to the Interest Period; and (b) as to any ABR Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the earliest of (i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the Maturity Date, and (iii) the date such Borrowing is converted to a Borrowing of a different Type in accordance with Section 2.6 or repaid or prepaid in accordance with Section 2.9 or 2.10; provided that (x) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (y) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

"Interest Rate Agreement" shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate futures contract, interest rate option contract or other similar agreement or arrangement designed to manage the exposure of a Person or any of its Subsidiaries to fluctuating interest rates.

"Interest Rate Certificate" shall mean an Officers' Certificate substantially in the form of Exhibit B, delivered pursuant to Section 4.1(c)(iii) or 5.1(f).

"Interest Rate Determination Date" shall mean each date for calculating the Eurodollar Rate for purposes of determining the interest rate in respect of an Interest Period. The Interest Rate Determination Date shall be the second Business Day prior to the first day of the related Interest Period.

"Investment" by any Person means any direct or indirect (i) loan, advance or other extension of credit or contribution to any other Person (by means of transfers of cash or other property to others, payments for property or services for the account or use of others, mergers or otherwise), (ii) purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by any other Person (whether by merger, consolidation, amalgamation or otherwise and whether or not purchased directly from the issuer of such securities or evidences of Indebtedness), and (iii) all other items that would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP. Investments shall exclude

extensions of trade credit and advances to customers and suppliers to the extent in the ordinary course of business and made in accordance with customary industry practice. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.

"Lenders" shall mean the Persons listed on Schedule 2.1 and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Lenders" includes the Swingline Lender.

"Leverage Ratio" shall mean, as of any date, (i) with respect to any Person (other than TWI prior to the Diamond Implementation for purposes of
Section 6.4(I)(c)), the ratio of Net Total Debt of such Person as of such date to Consolidated Cash Flow of such Person for the Four Quarter Period ending on such date, and (ii) with respect to TWI prior to the Diamond Implementation for purposes of Section 6.4(I)(c), the ratio of Consolidated Total Debt of TWI as of such date to Consolidated Cash Flow of TWI for such Four Quarter Period. For purposes of calculating the Leverage Ratio, in the event of any material acquisition or disposition by any Company during any Four Quarter Period, Consolidated Cash Flow shall be adjusted to give effect to such acquisition or disposition by including or excluding, as the case may be, from Consolidated Cash Flow of such Person all Consolidated Cash Flow derived from the asset acquired or disposed of for that portion of such Four Quarter Period occurring before such acquisition or disposition.

"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, including any agreement to give any of the foregoing.

"Loans" shall mean the loans made by the Lenders to the Borrowers pursuant to this Agreement.

"Management Fees" shall mean (i) the management fees payable by TWE to TWI in an amount equal to $5.0 million per month, as adjusted to reflect increases in the Consumer Price Index from January 1, 1991, (ii) without duplication of any amounts paid under clause (iii) below, the management fees payable by TWE to USW pursuant to Section 8(h) of the Admission Agreement dated as of May 16, 1993 between TWE and USW, in an aggregate amount equal to $60.0 million, (iii) the management fees payable by TWEAN to TWE pursuant to Section 3.1(h) of the TWEAN Partnership Agreement and (iv) the management fees paid by TWIC to TWE in consideration of TWE's managing and providing other services to the Cable Businesses owned by TWIC, which fees shall be determined on an arms' length basis.

"Margin Stock" shall have the meaning provided in Regulation U.

"Material Adverse Effect" shall mean a material adverse effect on (i) the condition (financial or other), business, results of operations, properties or liabilities of any Borrower and its Subsidiaries, taken as a whole, or of TWI and its Subsidiaries, taken as a whole, (ii) the ability of any Credit Party to perform its obligations to the Lenders under any Credit Document to which it is, or will be, a party or (iii) the rights of or benefits available to the Lenders under any Credit Document.

"Material Beneficial Asset" shall mean a TWE Material Beneficial Asset or a TWEAN Material Beneficial Asset.

"Material Plan" shall have the meaning provided in Section 7.6.

"Material Subsidiary," of any Person, at any date, shall mean each Subsidiary of such Person which, either alone or together with the Subsidiaries of such Subsidiary, meets any of the following conditions:

(i) as of the last day of such Person's most recently ended fiscal quarter for which financial statements have been filed with the SEC or have become generally available the investments of such Person and its Subsidiaries in, or their proportionate share (based on their equity interests) of the fair market or book value of the total assets (after intercompany eliminations) of, the Subsidiary in question exceeds 5% of the fair market or book value, respectively, of the total assets of such Person and its consolidated Subsidiaries;

(ii) for the Four Quarter Period ended on the last day of such Person's most recently ended fiscal quarter for which financial statements have been filed with the SEC or have become generally available, the equity of such Person and its Subsidiaries in the revenues from continuing operations of the Subsidiary in question exceeds 5% of the revenues from continuing operations of such Person and its consolidated Subsidiaries; or

(iii) for the Four Quarter Period ended on the last day of such Person's most recently ended fiscal quarter for which financial statements have been filed with the SEC or have become generally available, the equity of such Person and its Subsidiaries in the Consolidated Cash Flow of the Subsidiary in question exceeds 5% of the Consolidated Cash Flow of such Person.

For purpose of Section 7.4, "Material Subsidiary" shall include any Person that is defined as such under the Indenture dated as of April 30, 1992 among TWI, TWE, the TWE Partners signatory thereto and The Bank of New York, as trustee.

"Maturity Date" shall mean the fifth anniversary of the Closing Date and, if such day is not a Business Day, the next preceding Business Day.

"Maximum Permitted Indebtedness" shall mean, with respect to any Borrower at any time, the maximum amount of Indebtedness that such Borrower could then have outstanding pursuant to this Agreement without giving rise to a Default.

"Minimum Borrowing Amount" shall mean $20.0 million.

"Moody's" shall mean Moody's Investors Service, Inc.

"Multiemployer Plan" shall mean a "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, (i) to which any ERISA Entity is contributing, or at any time within the immediately preceding five calendar years has contributed, (ii) to which any ERISA Entity has, or, at any time within the immediately preceding five calendar years has had, an obligation to contribute or (iii) with respect to which any ERISA Entity retains any liability.

"Negative Pick-Up Facilities" shall mean (i) the Loan and Security Agreement dated as of June 27, 1997 among LIS Financing, Inc. and the other borrowers from time to time party thereto, ABN AMRO Bank N.V., as agent and as enhancer, the liquidity providers from time to time party thereto and Amsterdam Funding Corporation, as in effect on the date hereof, and (ii) facilities substantially similar to the foregoing (with appropriate modifications for single picture facilities).

"Net Total Debt" shall mean, for any Borrower, the excess, if any, over the Cash Balance of the sum of, without duplication, (i) Consolidated Total Debt of such Borrower, (ii) in the case of TWE, any unpaid Tax Distributions of such Person, whether or not accrued or required to be accrued under applicable accounting principles and (iii) in the case of TWE or TWEAN, any Indebtedness of any holder of TWE Material Beneficial Assets or TWEAN Material Beneficial Assets, as the case may be, other than (x) the Specified Holders and (y) in the case of TWEAN, TWE and its Restricted Subsidiaries (other than TWEAN and its Restricted Subsidiaries) or TWIC and its Restricted Subsidiaries; provided that any Indebtedness of any holder of TWE Material Beneficial Assets or TWEAN Material Beneficial Assets included in the Net Total Debt of TWE or TWEAN, as applicable, shall be excluded from the Net Total Debt of the Borrower of which such holder of Material Beneficial Assets is legally a Subsidiary.

"Newhouse" shall mean Newhouse Broadcasting Corporation, a New York corporation.

"Non-Recourse Purchase Money Indebtedness" shall mean Purchase Money Indebtedness for which the sole legal recourse for collection of principal and interest on such Indebtedness is against the property acquired with the proceeds thereof, which property is specifically identified in the instruments evidencing or securing such Indebtedness.

"Obligations" shall mean all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing to the Administrative Agent or any Lender pursuant to any Credit Document.

"Officers' Certificate" shall mean, with respect to any Person, a certificate executed on behalf of such Person by one of its Authorized Officers and by a Financial Officer; provided that every Officers' Certificate with respect to the compliance with a condition precedent to any Credit Event shall include (i) a statement that the officer or officers making or giving such Officers' Certificate have read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that they have made or have caused to be made such examination or investigation as is necessary, in the opinion of the signers, to enable them to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signers, such condition has been complied with.

"Officer's Solvency Certificate" shall mean a solvency certificate signed by the Chief Financial Officer (or its equivalent) of a Borrower, substantially in the form of Exhibit C.

"Organizational Documents" shall mean (i) the Certificate of Limited Partnership of TWE filed with the Secretary of State of the State of Delaware, (ii) the Partnership Agreements, (iii) the TWEAN Contribution Agreement, (iv) the articles of incorporation of each Credit Party that is a corporation, which for purposes of Section 4.1(e) shall be certified as of a recent date by the Secretary of State of the state of incorporation of such Credit Party, (v) the bylaws of each Credit Party that is a corporation, which for purposes of Section 4.1(e) shall be certified as of a recent date by the secretary or any assistant secretary of such Credit Party, and (vi) the organizational documents of each Credit Party (other than any Borrower) that is not a corporation.

"Other Taxes" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, any Credit Document.

"Paragon" shall mean Paragon Communications, a Colorado general partnership.

"Paragon Guarantee" shall mean a guarantee by Paragon of all of the Obligations of TWIC and of TWEAN, substantially in the form of Exhibit D-5.

"Partner" shall mean a TWE Partner or a TWEAN Partner.

"Partnership Agreements" shall mean the TWE Partnership Agreement and the TWEAN Partnership Agreement; and "Partnership Agreement" shall mean any of them.

"Partnership Borrowers" shall mean TWE and TWEAN.

"Partnership Interest" shall mean a TWE Partnership Interest or a TWEAN Partnership Interest.

"Payment Office" shall mean 270 Park Avenue, New York, New York 10017 or such other place as shall be designated by the Administrative Agent to the Borrowers in writing.

"PBGC" shall mean Pension Benefit Guaranty Corporation.

"Permitted Intercompany Indebtedness" shall mean:

(a) prior to the Diamond Implementation, Indebtedness for money borrowed of any Borrower or any of its Restricted Subsidiaries owing to such Borrower or any of its Restricted Subsidiaries; and

(b) at or after the Diamond Implementation, Indebtedness for money borrowed of any Test Party or any of its Restricted Subsidiaries owing to such Test Party or any of its Restricted Subsidiaries;

provided that for purposes of this definition only, (i) TWE and its Restricted Subsidiaries shall be deemed not to be Restricted Subsidiaries of TWI and (ii) TWEAN and its Restricted Subsidiaries shall be deemed not to be Restricted Subsidiaries of TWE or TWI.

"Permitted Lien" shall mean any of the Liens described in Section 6.3(b).

"Person" shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

"Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and (i) which is maintained or contributed to by any Credit Party or any of their respective ERISA Affiliates or (ii) with respect to which any Credit Party retains any liability.

"Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by Chase as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

"Purchase Money Indebtedness" of any Person shall mean Indebtedness of such Person Incurred for the purpose of financing all or any part of the purchase price, or the cost of construction or improvement, of any property to be used in the ordinary course of business by such Person and its Restricted Subsidiaries; provided that (i) the aggregate principal amount of such Indebtedness shall not exceed such purchase price or cost and (ii) such Indebtedness shall be Incurred no later than 90 days after the acquisition of such property or completion of such construction or improvement.

"Rating Agency" shall mean each of Moody's and S&P.

"Register" shall have the meaning provided in Section 9.4(c).

"Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.

"Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

"Related Parties" shall mean, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.

"Requesting Borrower" shall mean the Borrower requesting a Loan or a conversion or a continuation of a Loan.

"Required Lenders" shall mean, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and the Total Unutilized Commitment at such time.

"Restricted Companies" shall mean the Companies other than any Unrestricted Subsidiaries.

"Restricted Material Subsidiary" is a Material Subsidiary that is a Restricted Subsidiary.

"Restricted Payments" shall mean, with respect to any Person, any direct or indirect (i) dividend or other payment or distribution on account of or with respect to any Capital Stock (including, in the case of TWE, A, B, C or D sub-accounts, senior sub-accounts, special sub-accounts or common sub-accounts) of such Person, (ii) redemption, purchase, retirement, sinking fund or similar payment or other acquisition for value of any Capital Stock (including, in the case of TWE, A, B, C or D sub-accounts, senior sub-accounts, special sub-accounts or common sub-accounts) of such Person, or (iii) entering into any obligation to effect any of the foregoing, except in each case

any made (or, in the case of clause (iii), permitted to be made) solely by the issuance of additional common equity of the issuer of such Capital Stock (including, in the case of TWE, payments under Article VIII, XIII or XV of the TWE Partnership Agreement). Notwithstanding the foregoing, so long as no Default is continuing or would occur after giving effect to such transaction, the following shall not constitute Restricted Payments: (a) the payment of Management Fees and Tax Distributions in accordance with the definitions thereof; and (b) any payment by any Borrower (or any Test Party, as applicable) to the extent of any cash common equity contributions made to such Borrower (or such Test Party, as applicable) following the Closing Date (including such contributions consisting of the cash received as the exercise price of stock options (other than any applied toward repayment of Stock Option Loans)).

"Restricted Subsidiaries" of any Borrower as of any date shall mean all Subsidiaries of such Borrower that have not been designated as Unrestricted Subsidiaries by such Borrower pursuant to Section 6.12 or have been so designated as Unrestricted Subsidiaries by such Borrower but prior to such date have been (or have been deemed to be) redesignated by such Borrower as Restricted Subsidiaries pursuant to Section 6.12.

"Revolving Credit Exposure" shall mean, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Revolving Loans and its Swingline Exposure at such time.

"Revolving Loan" shall mean a Loan made pursuant to Section 2.3.

"S&P" shall mean Standard & Poor's Ratings Group.

"SEC" shall mean the Securities and Exchange Commission.

"Securities Act" shall mean the Securities Act of 1933.

"Specified Holders" shall mean Advance, Newhouse and Advance/Newhouse.

"Specified Indebtedness" shall mean Indebtedness described in clauses
(i), (ii) and (vii) of the definition thereof, other than any Permitted Intercompany Indebtedness or Convertible Intercompany Debt.

"Statutory Reserve Rate" shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board of Governors of the Federal Reserve System to which the Administrative Agent is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board of Governors of the Federal Reserve System). Such reserve percentages shall include those

imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

"Stock Option Loans" shall mean (i) borrowings under that certain Credit Agreement dated as of May 23, 1996 between TWI, The Chase Manhattan Bank, as administrative agent, and the lenders party thereto, as such agreement is in effect on the date hereof or as amended hereafter in any manner not materially less favorable either to the lenders thereunder or to the other creditors of TWI; provided the lenders thereunder shall not have the benefit of any Lien other than on the Capital Stock of TWI and proceeds therefrom or (ii) borrowings under substantially similar facilities.

"Subsidiary" of any Person shall mean and include (a) (i) any corporation more than 50% of whose Capital Stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (ii) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than a 50% equity interest at the time, and (b) with respect to TWIC, Paragon so long as Paragon shall be consolidated with TWIC pursuant to Section 9.16(c)(iii).

"Subsidiary Guarantee" shall mean a guarantee by a Subsidiary Guarantor of the Obligations of the Borrower that is its most immediate direct or indirect parent, substantially in the form of Exhibit D-1.

"Subsidiary Guarantor" shall mean any Person that is required to execute and deliver a Subsidiary Guarantee pursuant to Section 5.13.

"Summit" shall mean Summit Communications Group, Inc., a Delaware corporation.

"Swingline Borrowers" shall mean TWE and, following the Diamond Implementation, TWI.

"Swingline Exposure" shall mean, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

"Swingline Lender" shall mean Chase, in its capacity as lender of Swingline Loans hereunder.

"Swingline Loan" shall mean a Loan made pursuant to Section 2.4.

"Swingline Loan Commitment" shall mean $50.0 million for each Swingline Borrower.