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                                                              As of May 16, 1996

                                TIME WARNER INC.
                               RETIREMENT PLAN FOR
                                OUTSIDE DIRECTORS

        1. PURPOSE. The purpose of the Plan is to recognize the service and
contributions of the members of the Board of Directors to Time Warner Inc. (the
"Company") by providing retirement income benefits and to attract and retain
persons of outstanding ability as members of the Board of Directors.

        2. DEFINITIONS. Except as otherwise expressly provided herein, the terms
defined in this Section 2 shall have the meanings assigned to them herein, and
shall include the plural as well as the singular.

               (a) "Annual Retainer" shall mean the value of the basic annual
retainer payable to Outside Directors and shall include (i) cash, (ii) the value
on the date of grant of any shares of Restricted Stock awarded to Outside
Directors pursuant to the 1988 Restricted Stock Plan for Non-Employee Directors
or any successor thereto, and (iii) any portion of the basic annual retainer
which is deferred pursuant to the Deferred Compensation Plan for Directors of
Time Warner Inc. or any successor thereto, but shall not include (x) fees
payable for services as the Chairman of a Committee of the Board and (xi)
attendance fees for Committee meetings and special Board meetings.

               (b) "Beneficiary" shall mean the person or persons entitled to
receive payments under the Plan pursuant to Section 10 hereof after the death of
a Participant.

               (c)  "Board" shall mean the Board of Directors of
the Company.

               (d) "Company" shall mean Time Warner Inc., a Delaware
corporation, and any successor thereto.

               (e)  "Outside Director" shall mean a member of the
Board of Directors of the Company who is not an employee of

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the Company or any subsidiary of the Company. For the purposes hereof, a
subsidiary of the Company shall mean any corporation, partnership or other
entity in which the Company owns, directly or indirectly, an equity interest of
50% or more. For the purposes hereof, a Director who is or was an employee of
the Company or any subsidiary of the Company will be considered an Outside
Director only for those periods when he or she was a member of the Board and was
not such an employee.

               (f) "Participant" shall mean a person who has at least three
Service Credit Years and who was an Outside Director on or after January 1,
1987.

               (g)  "Plan" shall mean this Retirement Plan for
Outside Directors of the Company.

               (h) "Service Credit Years" shall mean the number of years,
including quarters of a year calculated as described below, a member of the
Board (i) served as an Outside Director, plus (ii) the number of years, if any,
that such member served as a director of Warner prior to July 24, 1989 but, for
these purposes, counting only those years during such service when such member
was not also an employee of Warner or any of its subsidiaries. If the total of
all such service includes a portion of a year, Service Credit Years shall be
calculated by rounding up any portion of a year to the next whole quarter of a
year.

               (i) "Warner" shall mean Warner Communications Inc., a Delaware
corporation, and its predecessor corporations.

        3.  AUTHORITY.

               (a) Approval. The Board originally approved this Plan on October
20, 1988. The Plan may be amended from time to time as provided in Section 9
hereof.

               (b) Administration. The Plan shall be administered by the Office
of the Secretary of the Company (the "Corporate Secretary") and such other
person or persons from time to time designated by the Secretary of the Company.

               (c) Legal Opinions. The Company and the Corporate Secretary may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to their

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obligations or duties hereunder, or with respect to any action or proceeding or
any questions of law, and shall not be liable with respect to any action taken
or omitted by them in good faith pursuant to the advice of such counsel.

               (d) Liability. Any decision made or action taken by the Company,
the Board, the Chief Executive Officer of the Company or the Corporate Secretary
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan shall be within the absolute discretion of
all and each of them, as the case may be, and will be conclusive and binding on
all parties. No member of the Board and no employee of the Company shall be
liable for any act or action hereunder, whether of omission or commission, by
any other member or employee or by any agent to whom duties in connection with
the administration of the Plan have been delegated or, except in circumstances
involving his or her bad faith, for anything done or omitted to be done by
himself or herself.

        4. AMOUNT OF BENEFITS. The annual retirement benefit payable to any
Participant under the Plan shall be an amount equal to one-half of the Annual
Retainer payable to Outside Directors for the earlier of (a) the year in which
the Participant ceases to be an Outside Director and (b) the year ended December
31, 1995.

        5. DURATION OF BENEFITS. Annual retirement benefits payable under the
Plan shall be paid for the number of Service Credit Years earned by an Outside
Director through May 16, 1996 and shall include Series Credit Years earned prior
to the adoption of the Plan.

        6. PAYMENT OF BENEFITS. Except as otherwise provided in Sections 7, 8,
11 and 13, retirement benefits payable to the Participant under the Plan shall
be payable quarterly on the first day of the calendar quarter, commencing on the
first day of the calendar quarter following the later to occur of (a) the day
the Participant retires from the Board or (b) the day the Participant attains
age 60.

        7. DEATH. In the event the Participant shall die prior to the
commencement of benefits under the Plan, the Participant's Beneficiary shall be
entitled to receive in one lump-sum cash payment an amount equal to the total
benefits a Participant would have been entitled to receive pursuant to

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Sections 4 and 5 had the Participant not died. In the event the Participant
shall die after commencement of retirement benefits under the Plan but prior to
the completion thereof, the Participant's Beneficiary shall be entitled to
receive in one lump-sum cash payment an amount equal to the total remaining
benefits that would have been paid to the Participant had he or she not died. In
each case, such lump-sum payment shall be made as soon as practicable after
receipt by the Corporate Secretary of satisfactory evidence of the death of the
Participant.

        8. DISABILITY. In the event the Participant shall suffer a permanent and
total disability within the meaning of Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended from time to time, or any successor thereto (a
"Disability") prior to the commencement of benefits under the Plan, then
benefits under the Plan shall commence on the first day of the calendar quarter
following receipt by the Corporate Secretary of satisfactory evidence of the
occurrence of such Disability.

        9. AMENDMENT AND TERMINATION. The Board of Directors of the Company may
modify or amend, in whole or in part, any or all of the provisions of the Plan,
or suspend or terminate it entirely; provided, however, that any such
modification, amendment, suspension or termination may not, without the
Participant's consent, adversely affect any benefits accrued to him or her prior
to the effective date of such modification, amendment, suspension or
termination. The Plan shall remain in effect until terminated pursuant to this
Section 9.

        10. BENEFICIARIES. Each Participant 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
Corporate Secretary or his or her designee and may be revoked or changed by a
Participant at any time by filing written notice of such revocation or change
with the Corporate Secretary or his or her designee. If no person shall be
designated by a Participant as his or her Beneficiary or if no person designated
by such Participant as his or her Beneficiary survives such Participant, the
Participant's Beneficiary shall be his or her estate.

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        11. ACCELERATION OF BENEFITS. Notwithstanding any other provisions of
the Plan to the contrary, the Chief Executive Officer of the Company, in his or
her sole discretion, is empowered to accelerate the payment of the annual
retirement benefits accrued to a Participant under the Plan, whether in a
lump-sum payment or otherwise, for any reason the Chief Executive Officer shall
deem appropriate in the circumstances.

        12. NO RIGHT TO NOMINATION. Nothing contained in the Plan shall confer
upon any Outside Director the right to be nominated for reelection to the Board.

        13. EFFECTIVE DATE. The Plan shall be effective October 20, 1988.
Persons who ceased to be Outside Directors after January 1, 1987 and before
October 20, 1988 shall be entitled to their first quarterly payment on January
1, 1989 if they are otherwise eligible to receive payments under the Plan.

        14.  MISCELLANEOUS.

               (a)  Expenses.  All expenses and costs in connection
with the operation of the Plan shall be borne by the Company.

               (b) Withholding. The Company shall have the right to deduct from
any payment to be made pursuant to the Plan any Federal, state or local taxes
required by law to be withheld.

               (c) Governing Law. The Plan shall be construed and its provisions
enforced and administered in accordance with the laws of the State of New York
except as such laws may be superseded by any Federal law.

               (d) Assignment. A Participant may not assign, anticipate or
alienate in any manner any interest arising under the Plan and any attempt to
assign, anticipate or alienate any such interest shall be void. In addition, no
interest hereunder shall be subject to attachment, bankruptcy proceedings or to
any other legal processes or to the interference or control of creditors or
others.

               (e) Incompetency. If the Chief Executive Officer determines that
any Participant or Beneficiary, as the case may be, to whom a payment is due
hereunder is an incompetent by reason of physical or mental disability, or is a
minor, the Chief Executive Officer shall have the power to cause the payments
becoming due to such Participant or Beneficiary to be

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made to another for the benefit of the incompetent or minor, without
responsibility of the Company, the Chief Executive Officer or the Corporate
Secretary to see to the application of any such payment. Payments made pursuant
to such power shall operate as a complete discharge of the Company's liability
under this Plan.

               (f) Notice. All notices, elections, consents, directions and
other communications required or permitted under the Plan must be in writing and
if sent to the Company, shall be addressed to the Corporate Secretary at the
Company's principal executive offices, currently the Time & Life Building,
Rockefeller Center, New York, New York 10020 and if sent to the Participant,
shall be addressed to the Participant at the address appearing on the
designation of Beneficiary form, or absent such an address, at the address
appearing on the records of the Corporate Secretary or at such other address as
may be supplied by the Participant by written notice to the Corporate Secretary
from time to time.

               (g) Nonexclusivity. The adoption of the Plan shall not be
construed as creating any limitations on the power of the Board to adopt such
other retirement, incentive or compensation arrangements as it may deem
desirable, and any such arrangements may be either generally applicable or
applicable only in specific cases.




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