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                                                              As Amended through
                                                                   July 18, 1996

                                TIME WARNER INC.
                             1994 STOCK OPTION PLAN

1.  PURPOSE OF THE PLAN

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

2.  CERTAIN DEFINITIONS

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

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

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


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

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

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

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

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

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

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

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

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

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        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

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

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

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

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

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

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

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

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

3.  STOCK SUBJECT TO THE PLAN

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


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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

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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.

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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.

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        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

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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

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

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

7.  ACCELERATION OF OPTIONS AND SARS

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

8.  TERMINATION OF EMPLOYMENT

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

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(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.

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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

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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

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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

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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

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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.

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