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S-4/A
RENAISSANCE MEDIA GROUP LLC filed this Form S-4/A on 08/06/1998
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<PAGE>
 
                                                                    EXHIBIT 10.5


                                  APPENDIX B



================================================================================






                              SOCIAL CONTRACT FOR

                               TIME WARNER CABLE






================================================================================

<PAGE>
 
                                TABLE OF CONTENTS
                                -----------------

<TABLE> 
                                                                                    PAGE
<S>                                                                                 <C> 

I.     BACKGROUND AND SUMMARY......................................................  1

II.    DEFINITIONS.................................................................  2

III.   TERMS AND CONDITIONS OF THE SOCIAL CONTRACT.................................  4

       A.     Basic Service Tier Rate Relief.......................................  4

              1.     Creation of a Low-Cost, Lifeline Basic Service Tier...........  4

              2.     BST Price Cap.................................................  5

              3.     Additions To Basic Service Tier...............................  6

       B.     Equipment Rates......................................................  7

       C.     Resolution Of Existing CPST Rate Cases...............................  8

       D.     Migrated Product Tiers...............................................  9

       E.     Customer Refunds and CPST Rate Reductions............................ 11

       F.     Infrastructure Upgrade Requirement................................... 12

              1.     Upgrade Requirement........................................... 12

              2.     No Impairment Of Local Authority.............................. 13

              3.     Reporting Requirements........................................ 13

              4.     CPST Rates Subject To Price Cap............................... 14

              5.     Failure To Meet Target........................................ 15

              6.     Adjustments To Systems Subject To Contract.................... 15

       G.     BST And CPST Rate Stability.......................................... 16

       H.     Additional Consumer Benefits......................................... 17

              1.     Service To Public Schools..................................... 17

              2.     Home Wiring................................................... 19
</TABLE>
 

<PAGE>
 
                                    - ii -


I.     Miscellaneous Provisions............................................. 20

       1.     Modification And Termination.................................. 20

       2.     Authority To Enforce Contract................................. 21

       3.     All Necessary Waivers And Preemptions Deemed Granted.......... 23

       4.     Effect On Other Proceedings................................... 24

       5.     No Admission Of Wrongdoing.................................... 25

       6.     Contract In Public Interest................................... 25

       7.     Legal Challenges.............................................. 25

       8.     Effective Date And Term....................................... 26

       9.     Public Notice................................................. 28

       10.    Force Majeure................................................. 28

       11.    Severability.................................................. 28

       12.    Entire
 Understanding.......................................... 29

<PAGE>
 
                     SOCIAL CONTRACT FOR TIME WARNER CABLE



I.   BACKGROUND AND SUMMARY.
     ---------------------- 

     The "Social Contract" set out in this document (the "Contract") relates to
certain services and equipment offered by Time Warner Cable ("TWC") actually or
potentially subject to regulation under the terms of the applicable provisions
of Title VI of the Communications Act of 1934, as amended ("Act").

     The Federal Communications Commission ("FCC" or "Commission") finds that
this Contract will advance the public interest by:  (i) assuring fair and
reasonable rates for TWC's cable service customers; (ii) facilitating the
creation of a low-cost, lifeline basic service level; (iii) improving TWC's
cable service by substantially upgrading the channel capacity and technical
reliability of its cable systems; and (iv) reducing the administrative burden
and cost of regulation for local governments, the FCC and TWC.

     The Contract has been negotiated between TWC and the FCC in accordance with
the FCC's authority to consider and adopt "social contracts" as an alternative
to other regulatory approaches applicable to cable television rates, /1// as
                                                                      -
modified and amplified in the Order adopting the Continental Social Contract,
/2// and its authority to regulate TWC's cable services under the Act,
 -
particularly in light of the Statement of Policy set forth in Section 2(b) of
the Cable Television Consumer Protection and Competition Act of 1992, Pub. L.
No. 102-385, 106 Stat. 1460 ("1992 Cable Act"). Except as otherwise provided for
herein, this Contract covers all of TWC's cable systems as of the Publication
Date (as hereinafter


- --------------------------

/1//Cost of Service Order, 9 FCC Rcd 4527, (P)(P) 295-304 (1994); Public
 -  ---------------------                                         ------
    Notice, FCC 95-137 (April 3, 1995).
    ------                             

/2//Memorandum Opinion and Order, FCC 95-335 (released August 3, 1995).
 -  ----------------------------                                       

<PAGE>
 
                                      -2-



defined).  Until such time as there is a final decision permitting the transfer
of the Laredo, Texas cable television franchise to TWC, this Contract shall not
apply to the affected cable system serving Laredo, Texas.

II.    DEFINITIONS.
       ----------- 

       The following terms shall have the meanings set forth below. Certain
other terms are defined elsewhere herein.

       A. "Basic Service Tier" or "BST" means the cable service level which
includes the signals of any local television broadcast stations and any public,
educational or governmental access channel required by the relevant franchise to
be carried on the BST.

       B. "Cable Programming Service Tier" or "CPST" means any tier of video
programming service, but shall not include (i) video programming carried on BST;
(ii) video programming when offered on a per channel, multiplexed, a la carte or
per program basis; (iii) any Migrated Product Tier; or (iv) any New Product Tier
("NPT") as defined by the Going Forward Rules and 47 C.F.R. (S) 76.987.

       C. "Cost" means that the prices so designated have been designed to
recover actual costs, including a reasonable rate of return as defined in the
FCC Cost of Service Order, supra, at (P) 207.
                           -----             

       D. "Current Rates" means those TWC system rates that are in effect as of
the Publication Date, or rates that will become effective after the Publication
Date and for which notice was given to subscribers on or before the Publication
Date.

       E. "CVI" means Cablevision Industries Inc., its subsidiaries and
affiliates.

<PAGE>
 
                                      -3-

       F. "Effective Date" means the date on which the FCC releases an order
approving this Contract.

       G. "Eligible Subscribers" means those CPST subscribers to any of TWC's
cable systems listed on Appendix A to this Contract at the time Refunds are
issued.

       H. "Going Forward Rules" means the FCC's rules adopted in the Sixth Order
                                                                     -----------
on Reconsideration, 76 RR 2d 859 (1994), including all subsequent clarifications
- ------------------                                                              
and amendments.

       I. "Migrated Product Tier" or "MPT" means (a) a tier consisting of up to
four services moved from a system's existing BST or CPST(s) as described in
Section III.D.5. or (b) any Superstation Tier or any tier consisting of those
services remaining on a Preferred Tier, as defined in Section III.D.1., after
any excess channels have been shifted to CPST as described in Section III.D.3.

       J. "Publication Date" means the date on which the Commission releases its
initial Public Notice relating to this Contract.

       K. "Refund" means a prospective bill credit issued to Eligible
Subscribers.

       L. "Time Warner Cable" or "TWC" means the collective reference to Time
Warner Entertainment Company, L.P. ("TWE"), TWI Cable Inc. ("TWI Cable") and
Time Warner Entertainment-Advance/Newhouse Partnership ("TWE-A/N"), or any
subsidiary, division or affiliate thereof, or, where consistent with the
context, any cable system owned or managed by TWE, TWI Cable or TWE-A/N, except
where particular provisions of this Contract specify a more limited scope.

<PAGE>
 
                                      -4-

III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT.
     ------------------------------------------- 

     A.   BASIC SERVICE TIER RATE RELIEF.
          ------------------------------ 

          1.   CREATION OF A LOW-COST, LIFELINE BASIC SERVICE TIER.
               --------------------------------------------------- 

               a.  In order to provide its subscribers with the option to
purchase a low-cost BST, no later than six months after the Effective Date, TWC
will reduce its BST rates on systems serving at least 85% of TWC's total
subscribers to a level 10% below the Current Rates. In any system where the BST
rates are initially reduced by 10% as described above, but where BST rates are
pending review on the Publication Date, TWC will reduce its BST rates further by
10% from the level ultimately determined to be reasonable, after such
determination is no longer subject to review or appeal. TWC may increase its
CPST rate(s) in any system by an amount necessary to recoup the reduction in
revenues due to the 10% adjustment in the BST rate in that system. Such
adjustment to CPST rates shall be submitted to the FCC for review. A local
franchising authority ("LFA") may elect not to have TWC implement the BST rate
reduction and corresponding CPST adjustment described in this paragraph in its
franchise area by providing notice to TWC and the Commission no later than 45
days following the Effective Date. Such notice shall (a) be in writing, (b) be
addressed to the Office of the Secretary, Federal Communications Commission,
1919 M Street, N.W., Washington, D.C. 20554, with a copy to Time Warner Cable,
300 First Stamford Place, Stamford, CT 06902-6732, attention: General Counsel,
(c) identify the local franchising authority, the community unit identification
number for the franchise area, and (d) reflect the clear intent to not have TWC
implement the BST rate reduction described in Section III.A.1.a of this
Contract. However, such notice need not meet any other requirements and may be
in letter form. An election by a LFA to opt out of the provisions

<PAGE>
 
                                      -5-


of this paragraph shall not otherwise affect the applicability of the remaining
provisions of this Contract in such community.

       b. In order to achieve its goal of creating low-cost BSTs, TWC will
restructure the BST on the remaining systems where the BST has not been reduced
by 10% as described above so as to create a lifeline-type service.  Such
restructuring will involve shifting channels from the BST to an existing or
newly created CPST (or MPT as permitted by Section III.D.5.) and not to any
service level which would not be subject to rate review upon the receipt of a
valid complaint under current FCC rules.  Such restructuring will not be deemed
by the FCC to be a "fundamental change" of any affected service tier.  At the
time of such restructuring, the BST rate will be reduced by an amount equal to
the percentage of the BST channels shifted to CPST.  Where the BST channels are
shifted to a newly created CPST, the rate for the CPST will be equal to the
amount of the reduction in the BST rate.  Where the BST channels are shifted to
an existing CPST, the rate of the existing CPST will be increased by an amount
necessary to recoup the reduction in revenues resulting from the reduction in
the BST rate as described above.  The 10% BST rate reduction, with CPST offset,
will be implemented upon restructuring of such remaining systems.  Nothing
herein shall be deemed to affect any otherwise enforceable franchise provision
relating to programming services to be provided by TWC.

          2.   BST PRICE CAP.
               ------------- 

          After implementation of the 10% BST rate reduction described above,
all such reduced BST rates will be subject to a price cap, even in currently
unregulated TWC systems.  TWC will continue to be permitted to adjust BST rates
for changes in external costs and inflation, subject to any necessary LFA
approval.  The BST rate reduction referred

<PAGE>
 
                                      -6-


to above will have no adverse effect on any Form 1210 BST rate adjustment
request which may be pending before an LFA as of the Publication Date or
thereafter.  Nothing herein shall authorize review of the reasonableness of any
BST rate adjustments in communities where the LFA has not elected to certify in
accordance with Section 76.910 of the Commission's rules.

          3.   ADDITIONS TO BASIC SERVICE TIER.
               ------------------------------- 

          TWC shall not add any additional channels to any BST for the term of
this Contract, except where required by applicable law, regulation or contract
lawfully entered into pursuant to such law or regulation, or to provide
additional local origination channels or other non-satellite delivered channels.
In the event that the FCC's must-carry rules are repealed or rendered invalid or
inapplicable to TWC by a court of competent jurisdiction, TWC will have the
right to substitute any programming service not then carried by such system for
up to an average (weighted by BST subscribers) of three local television
broadcast stations deleted from carriage per system covered by this Contract,
but no more than five such substitutions on any given system, even if more than
five television broadcast stations are deleted.  Such substitutions shall have
no impact on BST rates other than due to the net change in programming costs.
In the absence of must-carry requirements, however, any local television
broadcast stations which TWC continues to carry will be carried on the BST.  Any
such changes to BST will be made only upon provision of thirty days advance
notice to the Commission and to affected LFAs and subscribers.  Upon receipt of
any necessary LFA approval, TWC will be permitted to implement appropriate BST
rate adjustments to reflect any such added or substituted channels.  Such
adjustments (other than adjustments to BST

<PAGE>
 
                                      -7-

required by any retransmission consent agreement) shall not be subject to the
annual BST adjustment limitation set forth in Section III.G.1.

     B.   EQUIPMENT RATES.
          --------------- 

          TWC will be permitted to establish a blended rate, averaged for each
of the following equipment basket categories:  (1) hourly service charge, (2)
installations, (3) remote control devices, (4) non-addressable converters, (5)
addressable converters, (6) other leased equipment, and (7) customer tier
changes, by geographic region as reflected on Appendix B to this Contract (and
any reasonable modifications to such regions).  Equipment rates will be adjusted
annually to reflect changes in regional equipment Costs in each category.  At
least thirty days prior to implementation of the first CPST adjustment
authorized pursuant to Section III.F.4., but not sooner than December 1, 1995,
TWC will submit a single Form 1205, or equivalent reasonably acceptable to the
Commission, for each region to the FCC, and will submit annual updates to such
filings thereafter for Commission review.  Any data required to support such
annual equipment rate adjustments may be based on the four most recent available
quarterly financial figures.  TWC may begin charging revised equipment and
installation rates to customers based upon the updated filing upon thirty days'
notice.  These revised equipment and installation rates will be subject to
refund if the Commission later concludes that lower region-wide rates are called
for by such filings and applicable rules.  Such region-wide equipment and
installation charges as TWC establishes and the Commission approves pursuant to
this Contract shall be subject to enforcement by local franchising authorities.
Should any LFA find that TWC's equipment and installation rates charged exceed
those permitted by the Commission, the LFA may order

<PAGE>
 
                                      -8-


TWC to make refunds of any excess charges as necessary to comply with the
equipment and installation charges permitted by the Commission.

     C.   RESOLUTION OF EXISTING CPST RATE CASES.
          -------------------------------------- 

          1. All CPST cases or complaints currently pending before the
Commission are resolved pursuant to and as a result of the adoption of this
Contract, as set forth in Appendix A to this Contract.

          2. The Commission has reviewed TWC's pending CPST filings. In light of
its review, the covenants and representations contained in this Contract, and in
express reliance thereon, and in order to conserve Commission resources, avoid
litigation costs, and achieve the other benefits to the public contained in this
Contract, the Commission agrees to resolve all CPST cases and complaints
involving TWC currently pending before it.

          3. In addition to those CPST rates which are subject to proceedings
that are being settled as set forth in Appendix A to this Contract, all other
Current Rates, as adjusted for inflation and changes in external costs as of the
Publication Date, charged by TWC for CPSTs are deemed reasonable under the Act
and the Commission's rules.

          4. At such time as TWC makes its first CPST rate adjustment authorized
by this Contract, such increase shall be netted against any Current Rate which
requires reduction in accordance with the CPST settlements approved by this
Contract, provided, however, all such required reductions to Current Rates shall
          --------  -------
be implemented no later than the final date for issuance of Refunds pursuant to
Section III.I.8.d of this Contract.

          5. BST rate disputes will continue to be resolved in the ordinary
course, pursuant to applicable FCC rules.

<PAGE>
 
                                      -9-

     D.   MIGRATED PRODUCT TIERS.
          ---------------------- 

          1. The Commission and TWC acknowledge (i) that certain TWE-A/N systems
(the "Migration Systems") have been providing collective offerings of a la carte
channels which were created between April 1, 1993 and September 30, 1994 and
which consist of one or more (a) low-priced collective offerings, containing
primarily superstations, at an average price of less than $0.29 per channel,
excluding copyright fees (a "Superstation Tier"), and (b) low-penetrated
collective offerings predominantly containing channels which had been
affirmatively marketed as a separate tier before being offered on an a la carte
basis (a "Preferred Tier") and (ii) that such offerings provided by such
Migration Systems cumulatively contain in excess of six channels migrated from
BST and/or CPST.

          2. Any Superstation Tier offered by a Migration System shall be
treated as a separate MPT. The initial price of such MPT will be based on the
Current Rate of the Superstation Tier. Where neighboring TWC systems each offer
an NPT or MPT consisting primarily of superstations and such NPT or MPT would be
priced differently under the Commission's regulations and this Contract, an
adjustment may be made between or among such Current Rates on a revenue neutral
basis so that a uniform rate for such NPTs/MPTs may be established. In selecting
services to be returned to a CPST in accordance with paragraph 3 below, the
Migration System serving Charlotte, North Carolina and surrounding areas may
move services from a Superstation Tier in an effort to achieve a more uniform
line-up among such adjacent NPTs and MPTs. All such uniformly priced NPTs/MPTs
shall be subject to the price cap set forth in paragraph 7 below.

          3. Any Migration System shall select services from the Preferred
Tier(s) to return to a CPST so that the cumulative number of migrated services
remaining on any

<PAGE>
 
                                      -10-


Preferred Tier(s) and any Superstation Tier is no greater than six.  The
subscriber's bill shall be adjusted by no more than 25 cents per such channel
returned to the CPST.  The services not returned to a CPST from the Preferred
Tier(s) shall be offered as a single MPT, separate from any Superstation Tier.
The initial price of any such MPT will be based on the Current Rate of the
Preferred Tier(s), reduced by an amount equal to the percentage of channels
shifted to a CPST.  Eligible Subscribers shall be issued a CPST Refund as
reflected in Appendix A.

          4. On its own motion, the Cable Services Bureau, consistent with the
terms set forth herein, hereby reconsiders any Letter of Inquiry ("LOI") rulings
involving any Migration System (LOI-93-24; LOI-93-32; LOI-93-47; LOI-93-48), and
TWE-A/N hereby petitions to withdraw its Applications for Review of such LOI
rulings and such petitions are hereby granted by the Commission.  The principles
in this Section III.D. relating to the unregulated treatment, for benchmark
calculation purposes, of up to six migrated channels, as incorporated in such
reconsidered LOI rulings, shall be binding on any LFA decision relating to BST
rates charged by any Migration System.

          5. On each of its systems which does not, as of the Publication Date,
offer a collective offering of a la carte channels created between April 1, 1993
and September 30, 1994, TWC may move a maximum of four existing BST or CPST
services to a single MPT per system.  TWC will set the initial rate for any new
MPT created pursuant to this paragraph at the same level, on a per channel
basis, that is set for that franchise's CPSTs under the Contract.  The rates for
any BST or CPST from which such channels are moved shall be reduced on a per
channel basis so that the initial creation of any such MPT shall be revenue
neutral.

<PAGE>
 
                                      -11-

          6. TWC may not require the subscription to any tier, other than the
BST, as a condition for subscribing to an MPT, and may not require subscription
to an MPT as a condition for subscribing to a CPST. Because the restructuring
involved in the creation of MPT(s) as described herein does not fundamentally
change the service provided to subscribers, TWC will not be required to re-
market any of the affected services to existing subscribers. Any services
migrated may be offered on an a la carte basis as well as in a package.

          7. For the period prior to April 1, 1997, the price of any MPT
established pursuant to this Section III.D. may be adjusted solely to reflect
unrecovered inflation and external cost increases, including that currently
accrued but uncharged, in the manner permitted by the Commission's rules for
CPSTs.  There will be no limitation on the number of new services TWC may add to
an MPT.  The price of any such MPT may be increased to reflect new services
added to the MPT by an amount not to exceed $.20 per added channel, plus the
actual license fee(s) for the added channel(s).

          8. On or after April 1, 1997, TWC may convert any MPT into an NPT, as
defined in 47 C.F.R. (S) 76.987, including subsequent clarifications or
amendments.  Because customers will be able to subscribe to CPST(s) and an MPT
on a stand-alone basis, as of April 1, 1997 the Commission will regulate MPT
rates in the same manner in which the Commission currently regulates NPT prices.
Such NPTs will be treated as all other NPTs under the Commission's rules,
provided such NPT is offered without a buy-through requirement of any tier other
than the BST.

     E.   CUSTOMER REFUNDS AND CPST RATE REDUCTIONS.  Pursuant to the settlement
          -----------------------------------------                             
of TWC's existing CPST rate cases as described in this section, TWC will provide
Refunds,

<PAGE>
 
                                      -12-

which in the aggregate total in excess of $4.7 Million, plus interest computed
in accordance with FCC requirements for subscriber refunds, and shall implement
CPST rate reductions, on the terms and conditions, and in the manner, set forth
below.

          1. In settlement of all CPST complaints involving the review of an FCC
Form 393 and/or FCC Form 1200 submitted by TWC which are pending as of the
Publication Date, TWC will provide a Refund to each Eligible Subscriber as set
forth in Appendix A to this Contract.

          2. TWC agrees to waive its right to a credit for the franchise fee
paid to the LFA on the CPST Refund amount.

          3. Communities which receive CPST reductions to Current Rates, in
accordance with Section III.C.4. of this Contract, are set forth in Appendix A
to this Contract.

     F.   INFRASTRUCTURE UPGRADE REQUIREMENT.
          ---------------------------------- 

          1.   UPGRADE REQUIREMENT.
               ------------------- 

          TWC will upgrade all its cable systems so as to meet the following
technical standards:  each TWC cable system with a present capacity of at least
550 MHz will have a bandwidth capacity of at least 750 MHz within five years
after the Effective Date; all other TWC cable systems will have a bandwidth
capacity of at least 550 MHz within five years after the Effective Date.  At
least 50% of all TWC subscribers will be served by a system with a capacity of
at least 750 MHz, of which at least 200 MHz is expected to be allocated to
digital distribution.  Fiber-to-the-node architecture will be deployed to
improve signal quality and reliability of such systems.  At least 60% of the new
analog services added

<PAGE>
 
                                      -13-

during the term of the Contract will be added to the CPST and not to BST, NPT or
MPT.  On average (weighted by CPST subscribers), CPST service offered on the
upgraded systems will contain at least 15 additional channels by the end of the
Contract.  TWC agrees to invest $4 Billion in capital costs in connection with
the upgrade of its cable systems.  At least 60% of all capital expended in
connection with the upgrade commitment described herein shall be applied for the
benefit of BST and CPST subscribers.  TWC has selected, and will select, its
systems to be upgraded without discrimination based on socio-economic status.

          2.   NO IMPAIRMENT OF LOCAL AUTHORITY.
               -------------------------------- 
          Nothing herein shall restrict the legal authority of LFAs to negotiate
upgrades for their particular franchise areas which exceed the scope of this
Contract.

          3.   REPORTING REQUIREMENTS.
               ---------------------- 

          No later than 90 days following the end of each calendar year during
     all of which the Contract is in effect, and within 90 days following the
     end of the last month following expiration of this Contract other than
     calendar year end, TWC will provide a progress report to the FCC, for the
     year or such shorter period then ended during which this Contract was in
     effect, setting forth the extent of progress TWC has made to upgrade
     systems in compliance with Section III.F.1.; the number of BST and CPST
     subscribers benefitting from such upgrades; system reliability and service
     improvements resulting from such upgrades completed during the previous
     calendar year; and TWC's projected system upgrade activities during the
     following year of the Contract.  Such report will be served on each LFA.
     The FCC reserves the right to inspect the books and records of TWC and
     interview corporate employees for the purpose of determining compliance
     with this Contract.

<PAGE>
 
                                      -14-

     4.   CPST RATES SUBJECT TO PRICE CAP.
          ------------------------------- 

          a.  Beginning January 1, 1996, TWC will be permitted to increase the
monthly rates for the most highly penetrated CPST on each of its systems by
$1.00 during each year of this Contract.  These rate increases have been
established at a level designed to recover solely those costs allocable to BST
and CPST subscribers.

          b. During the life of this Contract, the only other permitted
increases to CPST rates will be for inflation and increases in external costs.
In particular, during the term of this Contract, TWC will not avail itself of
any additional per-channel adjustment permitted by the Going Forward Rules for
any programming services added to the CPST after the Effective Date hereof.
Except as to TWC systems which had already commenced a roll out of the addition
of channels to CPST and associated per channel adjustments pursuant to the Going
Forward Rules prior to the Publication Date, any per channel adjustments
implemented pursuant to the Going Forward Rules by any TWC systems for services
added by such systems after the Publication Date, but prior to the Effective
Date, shall be netted against the initial CPST adjustment authorized by Section
III.F.4.a. above. Upon implementation of any such initial CPST adjustment, net
of any per channel adjustment taken by such TWC systems which have added
services after the Publication Date, such TWC systems will be allowed to
concurrently adjust CPST rates to reflect any license fees not already passed
through to subscribers associated with any such services added to such systems
after the Publication Date. TWC will not seek to pass through to subscribers any
additional capital costs relating to the upgrade requirement in this Contract
pursuant to any provision of the Commission's rules, including, but not limited
to, any rules or policies adopted by the Commission relating to the pass through
of external costs, upgrade

<PAGE>
 
                                      -15-

incentives, or cost-of-service.  TWC reserves the right to seek to pass through
additional capital costs associated with any upgrades specified by any franchise
agreement, local law, regulation or ordinance which exceed the requirements of
this Contract.  Nothing herein shall affect the ability of TWC to implement any
New Product Tier ("NPT"), add channels to any such NPT, or establish rates for
any such NPT, subject to the FCC Going Forward Rules, or to implement any MPT
permitted by the terms of this Contract.

          5.   FAILURE TO MEET TARGET.
               ---------------------- 

          If TWC fails to meet the upgrade requirement so as to provide the
bandwidth capacities described in Section III.F.1. of this Contract within the
term provided for therein, the then existing CPST subscribers to the cable
systems as to which such commitment has not been met will be entitled to refunds
(in the form of prospective bill credits) of the increases (net of inflation and
external cost adjustments) in CPST rates taken under Section III.F.4.a. of this
Contract, plus interest computed in accordance with FCC requirements for
subscriber refunds, and a liquidated damages penalty of 15% of such refund
amount.

          6.   ADJUSTMENTS TO SYSTEMS SUBJECT TO CONTRACT.
               ------------------------------------------ 

               a. TWC shall include any cable systems acquired from CVI within
the provisions of this Contract, provided that the CPST settlement provisions of
this Contract shall not apply until any applicable settlements are mutually
agreed upon between TWC and the Commission. Addition of any other TWC systems
within the provisions of this Contract shall be subject to FCC approval, which
will be expeditiously decided and not be unreasonably withheld. Each LFA
representing any such system to be added to the provisions of this Contract
shall be served with a copy of the Contract and shall be afforded a 45-day
opportunity to opt out of the lifeline BST provisions in accordance with Section

<PAGE>
 
                                      -16-

III.A.1.a. of this Contract.  The provisions of this Contract will become
effective as to any such additional system upon such notification to affected
LFAs, which date shall become the Publication Date as to such system, and the
provisions of this Contract shall extend for a period of five years from that
date.

          b. In the event of a sale of any system during the period of
applicability of this Contract, the purchaser may elect, with the concurrence of
the FCC, for the provisions of this Contract to continue to apply to such
system.  Such FCC concurrence shall be expeditiously decided and not be
unreasonably withheld.  In the event the purchaser elects not to have the
provisions of this Contract apply to any such system, the CPST subscribers to
such system shall be eligible for the refunds calculated pursuant to Section
III.F.5. in the event the upgrade commitment described in Section III.F.1. has
not been completed prior to the consummation of such sale.

          c. The upgrade capital costs set forth in Section III.F.1. of this
Contract shall be adjusted, as mutually agreed to by TWC and the Commission, to
reflect any addition or deletion of systems subject to this Contract.  The
approval from the Commission of such adjustment shall be expeditiously decided
and not be unreasonably withheld.

     G.   BST AND CPST RATE STABILITY.
          --------------------------- 

          1. In the event the FCC establishes regulations allowing annual
adjustments to BST and CPST rates, with procedures designed to reduce regulatory
lag, TWC agrees to be bound by such regulations and to elect to adjust BST and
CPST rates on an annual basis pursuant to such regulations, provided, however,
                                                            --------  ------- 
TWC shall not be delayed 

<PAGE>
 
                                      -17-

in implementing its annual adjustments to CPST rates as set forth in Section
III.F.4. due to regulatory lag related to the BST rate approval process.

          2. TWC will not elect to file cost-of-service showings to justify BST
or CPST rate levels above the level authorized by this Contract for any system
subject to this Contract for the term hereof.

    H.    ADDITIONAL CONSUMER BENEFITS.
          ---------------------------- 

          1.   SERVICE TO PUBLIC SCHOOLS.
               ------------------------- 

               a. TWC shall offer service connections at one outlet in 100% of
the public schools (Grades K-12) located within 200 feet from the activated
plant of its cable systems. Such connections will be made free of charge and as
promptly as possible to all such schools requesting connections. TWC will offer
such service connections to any other such public schools located within its
franchised service areas at Cost. If any internal wiring installation is
requested to serve additional outlets in such schools, it will be provided at
TWC's Cost of materials and labor at the applicable Hourly Service Charge;
provided, however, that such internal wiring will be provided without charge if
- --------  -------
TWC is able to coordinate with other comparable electrical wiring installation
in cases of new construction or substantial rehabilitation of existing schools.
Any such public school may elect to install its own internal wiring and to bear
the cost thereof. BST and CPST service will be provided to each outlet in such
schools free of any charges.

               b. TWC shall offer service connections, including any requested
internal wiring for additional outlets, at Cost to any private Secondary School,
as defined by, and which receives funding pursuant to, Title 1 of the Elementary
and Secondary Education Act of 1965, 20 U.S.C. (S) 241a et seq., and which is
located within 200 feet from the 

<PAGE>
 
                                      -18-

activated plant of its cable systems. BST and CPST service will be provided to
each outlet in such schools free of any charges. TWC will offer such service
connections to any other such private Secondary Schools located within its
franchised service areas at Cost. Any such private Secondary School may elect to
install its own internal wiring and to bear the cost thereof.

          c. TWC will provide a free monthly educational program listing to each
connected school.  Additional copies of such program listings will be provided,
if requested by a school, at Cost.  Such educational program listing will
identify and describe programming on the TWC system that is appropriate for use
in the classroom and will provide suggested curriculum support ideas.

          d. TWC will develop and provide to connected schools materials for
teachers that explain the educational applications of TWC's broadband cable
systems.  The materials will include a self-explanatory notebook and video.  One
copy of such materials will be provided at no charge to all school districts
with connected schools in franchise areas served by TWC.  Additional copies of
such materials will be provided, upon request, at Cost.

          e. Upon successful development by TWC and Time Inc. of an on-line
service for personal computers, TWC will provide each connected school with a
free connection to this on-line service to the extent it is available on the
local TWC cable system. Upon request, each connected school will receive one
free modem and free access to the TWC/Time Inc. on-line service for use during
the school year. Additional modems will be made available, upon request, at
Cost. Free access to the TWC/Time Inc. on-line service will be provided through
each such modem for use during the school year. In addition,

<PAGE>
 
                                      -19-

TWC will sponsor a workshop in each franchise area to educate teachers about the
TWC/Time Inc. on-line service and to provide them with an opportunity for hands-
on training.

          f. To the extent a local franchise agreement contains an obligation to
provide connections to schools as agreed to herein, TWC agrees not to seek to
recover any such costs for these connections as external or other costs.

          2.   HOME WIRING.
               ----------- 

               a. Prior to a customer's termination of cable service, TWC will
not restrict the ability of a customer to remove, replace, rearrange or maintain
any cable wiring located within the interior space of the customer's dwelling
unit, so long as such actions do not interfere with the ability of such TWC
system to meet FCC technical standards or to provide services to, and collect
associated revenues from, that customer or any neighboring customer in a
multiple dwelling context.

               b. TWC will provide customers with a notification upon
commencement of service, and annually thereafter, advising them of their rights
relating to home wiring. Such notice will advise customers that they may either
(i) remove, replace, rearrange or maintain the home wiring themselves, (ii)
select a qualified third party contractor, or (iii) request the TWC system
provide such service at standard hourly installation rates, plus materials at
Cost.

               c. Such notice will inform customers that if any home wiring is
improperly installed or rearranged by anyone other than TWC, and any harmful or
improper signal leakage occurs as a result, the customer may be held responsible
for the Cost of 

<PAGE>
 
                                      -20-

rectifying the problem. Pursuant to FCC rules, TWC recognizes that it is
required to terminate service to any location where signal leakage problems are
not corrected.

          d. TWC customers will be encouraged to use high quality home wiring
materials to avoid signal leakage and to maintain signal quality.  Such notice
will offer to supply such materials to subscribers at Cost.

          e. TWC will provide a model of this notice to the FCC for approval
prior to its dissemination to its customers, such approval not to be
unreasonably withheld.

     I.   MISCELLANEOUS PROVISIONS.
          ------------------------ 

          1.   MODIFICATION AND TERMINATION.
               ---------------------------- 

               a. Except as otherwise provided herein, this Contract may not be
terminated or modified without the mutual agreement of TWC and the Commission.

               b. TWC may petition the Commission to modify or terminate this
Contract based on any relevant change in applicable laws, regulations or
circumstances. TWC will serve a copy of any such modification or termination
petition, and the FCC Public Notice relating thereto, on the LFAs for the
affected systems. In no event shall TWC be required to make more than one
mailing to each LFA for any given modification or termination request.
Interested persons will have 30 days after the FCC releases an appropriate
Public Notice to comment and 15 days for reply comments before the FCC acts on
any such TWC petition. The FCC's consent to any such termination or modification
petition shall be demonstrated by an order issued by the FCC's Cable Services
Bureau or at the FCC's option by the Commission itself. The FCC shall act
expeditiously on such petition and grant of the petition shall not be
unreasonably withheld.

<PAGE>
 
                                      -21-

          c. In the event of any changes to the provisions of the Act or any
material changes to the FCC rules thereunder relating to rates (BST, CPST or
equipment) that are favorable to TWC, any TWC system may elect to be relieved
from the relevant rate provisions (Sections III.A.2., III.A.3., III.B., III.D.,
III.F.4. and III.G.) of this Contract accordingly, but shall remain bound by all
other provisions of this Contract. In the event any such system elects to be
relieved from such contract provisions in favor of such favorable regulatory
provisions such system will only be allowed to recover any incremental amount
that results under such favorable regulatory provisions in excess of any amount
already recovered pursuant to Section III.F.4.a. of this Contract. Nothing
herein shall restrict the ability of any TWC system to adjust CPST rates in the
event CPST rates are not regulated based upon changes to the Act or FCC
regulations.

          d. The Commission expressly recognizes that TWC has relied on the
current federal law and FCC regulations governing cable television programming
and rates in entering into this Contract, and that the Contract represents an
accommodation between the FCC and TWC that generates substantial public interest
benefits. Consequently, the Commission agrees not to find any CPST or equipment
rate adjustments implemented in accordance with this Contract to be
"unreasonable" under any subsequently-modified FCC regulations or under any
subsequently-modified applicable statute, to the extent the Commission has
discretion under such statute in determining whether any such rate adjustments
are unreasonable.

          2.   AUTHORITY TO ENFORCE CONTRACT.
               ----------------------------- 

               a. Nothing in this Contract shall restrict the ability of LFAs to
enforce the provisions of otherwise valid local franchise agreements, local
laws, regulations

<PAGE>
 
                                      -22-

and ordinances that are not the subject of or affected by the terms of this
Contract, except that LFAs may not regulate rates or order refunds for the
services and equipment subject to this Contract except in accordance with the
terms of this Contract. Nothing herein shall affect the enforceability of any
otherwise valid preexisting local franchise agreement, ordinance, local law or
regulation which provides benefits which exceed those provided in this Contract
relating to system upgrades or the wiring of schools, nor shall LFAs be
restricted in their authority to negotiate for such additional benefits after
the Effective Date of this Contract. It is not the intent of either the FCC or
TWC that this Contract create any judicially enforceable rights in any other
parties. This Contract shall be enforceable against TWC by the FCC exclusively
and no other party may seek to enforce this Contract as a third party
beneficiary or otherwise, except that subscribers to TWC systems which increase
their CPST rates will still have the right to file complaints with the FCC to
the extent permitted under applicable FCC rules.

               b. For purposes of the Commission's authority to enforce any
provision of this Contract against TWC, including enforcement actions brought in
U.S. District Court, TWC agrees that any breach of this Contract by TWC shall be
considered the equivalent of a violation of an order of the FCC, entitling the
Commission to exercise any rights and remedies attendant to the enforcement of a
Commission order. However, aside from this limited purpose, TWC and the FCC
agree that a breach of this Contract by TWC is not to be considered by any other
party as the equivalent of a violation of an otherwise-valid FCC regulation or
FCC order. In particular, any failure to comply with this Contract shall not be
a basis for any denial of a franchise renewal by, or other enforcement action
of, any LFA.

<PAGE>
 
                                      -23-


          3.   ALL NECESSARY WAIVERS AND PREEMPTIONS DEEMED GRANTED.
               ---------------------------------------------------- 

               a. In addition to the specific waivers of the Commission's rules
identified in the Contract, the Commission order adopting this Contract shall
affirmatively state that any and all waivers of the Commission's rules, and any
and all modifications to Commission forms, necessary to effectuate the terms of
this Contract are deemed to be granted thereby.  The Commission finds that the
concurrent exercise of non-federal regulatory authority over the subject matter
of this Contract is an impermissible interference with the FCC's regulatory
authority and with its ability to accomplish its objectives in entering into
this Contract.  Accordingly, the Commission hereby expressly preempts any state
or local law, regulation, ordinance or franchise that is inconsistent or
conflicts with this Contract.  The Commission will not assert in any proceeding
that TWC's compliance with the terms of the Contract violates any Commission
rule or order and, in any proceeding before the Commission brought by a third
party, a showing by TWC that it has complied with the terms of the Contract
shall constitute a defense to any claim that TWC's actions in meeting the terms
of the Contract constitute a violation of any applicable Commission rule or
order.

               b. CPST rate increases referenced in Section III.F.4. of this
Contract will not be subject to prior FCC approval pursuant to Section 76.960 of
the FCC rules or otherwise, even if an adverse decision has been issued by the
FCC as to any TWC CPST rate in the year prior to the Publication Date.
Subscribers to TWC systems which increase their CPST rates still have the right
to file complaints with the FCC to the extent permitted under applicable FCC
rules.

<PAGE>
 
                                      -24-


          4.   EFFECT ON OTHER PROCEEDINGS.
               --------------------------- 

               a. The Commission agrees that it will not institute, on its own
motion, any proceedings against TWC based upon the information obtained during
the consideration of the Contract. In addition, in the absence of additional
facts, the Commission agrees that any allegations and other circumstances
involved in consideration of this Contract or settlement of the pending rate
cases will not be used against TWC with respect to any future proceedings at the
Commission. Nor may they be used against TWC as evidence of any refund liability
due subscribers in any proceeding conducted by any LFA.

               b. This Contract is intended to resolve the CPST complaints being
settled in accordance with Section III.C.; to provide certainty regarding the
CPST rate adjustments determined to be reasonable in accordance with Section
III.F.4., and to otherwise cover those matters expressly set forth herein. The
Commission and TWC acknowledge the existence of various lawsuits to which they
are both parties. The Commission and TWC agree that this Contract shall have no
effect on any pending lawsuit to which TWC is a party or, subject to Section
III.I.7., on any future challenges to the Commission's regulatory authority that
TWC may elect to initiate, other than a challenge to the Commission's regulatory
authority to enter into and enforce this Contract.

               c. The Commission expressly recognizes that this Contract is of
limited duration and scope, and may be modified or terminated before its term
has ended as provided for in Section III.I.1. of this Contract. Accordingly, the
Commission and TWC agree that this Contract does not moot any legal challenge or
defense relating to any provision of the Act or to the Commission's regulatory
authority that TWC has brought or may bring in the future, other than a
challenge to the Commission's regulatory authority to

<PAGE>
 
                                      -25-

enter into and enforce this Contract.  The Commission will not seek to dismiss
any such legal challenge on grounds that this Contract renders such challenge
moot and will actively oppose any assertion in court that this Contract moots
any such challenge.

          5.   NO ADMISSION OF WRONGDOING.
               -------------------------- 

          This settlement is without a finding by the Commission of any
wrongdoing by TWC or any of its systems, subsidiaries or affiliates.  Neither
this Contract nor any aspect of the settlement contained herein constitutes an
admission by TWC of any violation of, or failure to conform to or comply with,
any law, rule or policy applicable to TWC or any of its systems, subsidiaries or
affiliates.

          6.   CONTRACT IN PUBLIC INTEREST.
               --------------------------- 

          In consideration of the Commission entering into this Contract, and
resolving and terminating pending CPST cases and complaints in accordance with
the terms of this Contract, TWC hereby agrees to the terms, conditions and
procedures contained in this Contract.  TWC and the Commission each acknowledge
that it believes this Contract, and the terms, conditions and procedures hereof,
provide for and will facilitate a fair and expeditious resolution of the cases
and complaints that are the subject hereof in a manner that serves the public
interest.

          7.   LEGAL CHALLENGES.
               ---------------- 

          TWC waives any right it may have to any judicial review or appeal, or
any other right to otherwise challenge or contest the validity of any order by
the Commission adopting this Contract, or to use this Contract as evidence in
any such proceeding.  TWC agrees that the provisions of this Contract shall be
incorporated by reference in the Commission's order formally approving this
Contract.  TWC and the

<PAGE>
 
                                      -26-


Commission agree that they will each actively defend, before any forum, any
Commission order adopting the provisions of this Contract against any appeal of
or other legal challenge by any third party to any such order.  TWC and the
Commission each agree that they will reasonably cooperate with the other in any
such defense of the Contract and any such order.

               b. If the Commission, or the United States on behalf of the
Commission, brings an action in any United States District Court to enforce the
terms of any Commission order adopting this Contract, TWC agrees, subject to the
terms of the immediately preceding paragraph, that it will not contest the
validity of such Commission order, or the Commission's authority to enter into
the Contract. TWC reserves the right, in defense of such an enforcement action,
to demonstrate that it has complied with the provisions of the Contract or to
assert its own interpretation regarding any performance obligations imposed by
the Contract which may be subject to dispute.

           8.  EFFECTIVE DATE AND TERM.
               ----------------------- 

               a. The term of this Contract shall commence on the Effective Date
and, subject to Section III.I.1. above regarding modification and termination
and Section III.F.6. above regarding adjustments to systems covered, shall
continue in effect for five (5) years.

               b. TWC and the Commission agree to execute this Contract as of
the Effective Date promptly upon issuance by the Commission of an order
approving this Contract.

               c. The Commission and TWC expressly acknowledge and agree that
the effectiveness of this Contract is contingent upon resolution and termination
of TWC's CPST proceedings; issuance by the Commission of an order approving the
Contract, and

<PAGE>
 
                                      -27-


TWC's compliance with the terms, conditions, and procedures set forth in the
Contract.  If this Contract is not approved by Commission order and accepted by
TWC, or if the Contract is otherwise rendered invalid, in whole or in part, by
final order of any court of competent jurisdiction, the Contract or such part
may not be used in any fashion by the FCC in any legal proceeding.

               d. TWC may commence any necessary or appropriate actions to
initiate the rate adjustment processes embodied in this Contract at any time
after the Effective Date, provided, however, as to any system listed on Appendix
                          --------  -------
A, TWC shall not implement any rate adjustment pursuant to Section III.F.4.a. of
this Contract unless the Refund provided for in Section III.E. has been issued
as to such system, or the issuance of such Refund begins simultaneously with
such rate adjustment. All Refunds will be issued within six months of the first
rate adjustment implemented pursuant to Section III.F.4.a. To facilitate prompt
initiation of the refunds and rate adjustments authorized by this Contract, any
local franchise agreement or any state or local law or regulation is preempted
on a one-time basis to the extent that it requires TWC to give advance notice of
rate and service changes to subscribers. Such notice shall be provided by the
best means practicable, such as newspaper announcements and/or on-screen
messages. Such preemption shall be limited to the period prior to February 1,
1996. If TWC is unable to commence implementation of such refunds and rate
adjustments by January 1, 1996, but commences such implementation on or before
February 1, 1996, it shall provide at least thirty days notice to LFAs and
subscribers. If any subscribers cancels his or her subscription to the relevant
CPST within thirty days after the date of the first bill reflecting the CPST
adjustment authorized by this Contract, TWC will refund to that subscriber the
incremental amount attributable to such increase.

<PAGE>
 
                                      -28-


          9.   PUBLIC NOTICE.
               ------------- 

          The Commission will issue promptly a Public Notice in which the
Commission proposes to adopt the Contract as a final order, and shall provide
interested parties with thirty (30) days to comment on the Contract and an
additional fifteen (15) days in which to file reply comments.

          10.  FORCE MAJEURE.
               ------------- 

          TWC shall not be deemed in breach of its commitments under this
Contract in the event of any delay or failure in performance by any TWC system
from any cause beyond its reasonable control and without its fault or
negligence, including, but not limited to, acts of God, acts of civil or
military authority, government regulations, embargoes, epidemics, war, terrorist
acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, strikes, power blackouts, unusually severe weather conditions, or
inability to secure local permits after all diligent efforts by TWC to secure
such permits.

          11.  SEVERABILITY.
               ------------ 

          If any provision, clause or part of this Contract is invalidated by
order of any court having proper jurisdiction over the subject matter of this
Contract, the remainder of this Contract shall not be affected thereby and shall
remain in full force and effect; provided, however, that, if either party
reasonably determines that such invalidation is material to this Contract, the
parties shall negotiate in good faith to reconstitute the Contract in a form
that is, to the maximum extent possible, consistent with both the original
intent of both parties in entering into this Contract and the rationale of such
invalidation order.

<PAGE>
 
                                      -29-


          12.  ENTIRE UNDERSTANDING.
               -------------------- 

          This Contract and its appendices, as either or both may be amended in
accordance with the terms herein, constitute the entire agreement between TWC
and the Commission with respect to the subject matter of this Contract and
supersede all prior agreements and understandings, whether oral or written,
between TWC and the Commission with respect to the subject matter of this
Contract.  No representation, warranty, promise, inducement, or statement of
intention has been made by TWC or the Commission which is not embodied in this
Contract, and neither party shall be bound by, or be liable for, any alleged
representation, warranty, promise, inducement, or statement of intention not
embodied in this Contract or its appendices.

     IN WITNESS WHEREOF, this Social Contract has been duly executed and
delivered by or on behalf of the parties hereto as of the Effective Date as
defined herein.

TIME WARNER ENTERTAINMENT COMPANY, L.P.        FEDERAL COMMUNICATIONS COMMISSION

By: American Television and                    By: /s/ William F. Caton
    Communications Corporation,                    -----------------------------
    its general partner                            Name:  William F. Caton
                                                   Title: Acting Secretary
By: /s/ James H. Doolittle
    ----------------------------------
    Name:  James H. Doolittle
    Title: Vice President


TWI CABLE INC.

By: /s/ Marc Apfelbaum
    ----------------------------------
    Name:  Marc Apfelbaum
    Title: Vice President


TIME WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP

By: Time Warner Entertainment Company, L.P.
    Managing Partner

By: American Television and Communications
    Corporation, its general partner

By: /s/ James H. Doolittle
    ----------------------------------
    Name:  James H. Doolittle
    Title: Vice President

<PAGE>
 

<TABLE> 
<CAPTION> 
                                              APPENDIX A

COMMUNITY                                        CUID                               REFUND
- ---------                                        ----                               ------
<S>                                              <C>                                <C> 

Rockledge........................................FL0007...............................$5,171
Indian Harbor Beach..............................FL0009................................2,384
Melbourne........................................FL0013...............................14,362
Melbourne........................................FL0014...............................30,759
Volusia County...................................FL0015...............................12,505
Palm Bay*........................................FL0017...............................89,135
West Melbourne...................................FL0021................................2,198
Cape Canaveral...................................FL0163................................1,557
Melbourne........................................FL0165..................................717
Orlando..........................................FL0181...............................18,770
St. Petersburg...................................FL0196...............................63,508
Brooksville......................................FL0240................................3,270
Orlando..........................................FL0252...............................34,089
Lakeland.........................................FL0290................................6,200
Brooksville......................................FL0312................................6,500
Brooksville......................................FL0314................................8,217
Sandford.........................................FL0322...............................14,787
Brooksville......................................FL0597................................3,107
Belleview........................................FL0622................................7,763
Salem............................................MA0063...............................11,274
Melrose..........................................MA0097................................5,080
Stoneham.........................................MA0101..................................322
Kansas City......................................MO0198...............................78,801
Jackson*.........................................MS0080..............................164,400
Clinton*.........................................MS0128...............................54,208
Salisbury, including:............................NC0015...............................22,981
   East Spencer..................................NC0285
   Spencer.......................................NC0158
   Granite Quarry................................NC0407
   Rowan County (central)........................NC0385
   Rockwell......................................NC0677
   Faith.........................................NC0676
   Cleveland.....................................NC0574
Wilmington, including:...........................NC0016..............................106,115
   Wrightsville Beach............................NC0041
   New Hanover County............................NC0140
   Leland........................................NC0695
   Navasa........................................NC0692
Shelby, including:...............................NC0027...............................20,516
   Cleveland County..............................NC0279
   Polkville.....................................NC0521

*CPST rate reduction required.

</TABLE>
 
                                                                     Page 1 of 6


<PAGE>
 

<TABLE> 
<CAPTION> 

COMMUNITY                                        CUID                               REFUND
- ---------                                        ----                               ------
<S>                                              <C>                                <C> 

   Patterson Springs.............................NC0522
   Lawndale......................................NC0523
   Fallston......................................NC0524
   Boiling Springs...............................NC0529
   Grover........................................NC0694
   Earl..........................................NC0693
   Waco..........................................NC0756
   Lattimore.....................................NC0757
   Mooresboro....................................NC0816
   Belwood.......................................NC0839
   Casar.........................................NC0843
Wilmington-Southport, including:.................NC0167...............................29,732
   Caswell Beach.................................NC0228
   Holden Beach..................................NC0294
   Long Beach....................................NC0227
   Ocean Isle Beach..............................NC0270
   Yaupon Beach..................................NC0172
   Boiling Springs Lakes.........................NC0862
   Brunswick County..............................NC0229
Morehead City, including:........................NC0168...............................39,706
   Atlantic Beach................................NC0197
   Beaufort......................................NC0196
   Cape Carteret.................................NC0200
   Cedar Point...................................NC0815
   Cartaret County...............................NC0202
   Emerald Isle..................................NC0199
   Newport.......................................NC0201
   Pine Knoll Shores.............................NC0198
   Swansboro.....................................NC0203
   Indian Beach..................................NC0282
   Onslow County.................................NC0384
   Craven County.................................NC0205
   Havelock......................................NC0170
   Maysville.....................................NC0585
   Pollocksville.................................NC0583
   Jones County..................................NC0584
Kannapolis, including:...........................NC0193...............................41,358
   Cabarrus County...............................NC0174
   China Grove...................................NC0284
   Concord.......................................NC0173
   Harrisburg....................................NC0287
   Landis........................................NC0288
   Rowan County..................................NC0194
   Mt. Pleasant..................................NC0455
</TABLE>
 


                                                                     Page 2 of 6


<PAGE>
 

<TABLE> 
<CAPTION> 

COMMUNITY                                        CUID                               REFUND
- ---------                                        ----                               ------
<S>                                              <C>                                <C> 

Albemarle, including:............................NC0286...............................15,990
   Stanly County.................................NC0515
   Norwood.......................................NC0519
   Mt. Gilead....................................NC0530
   Locust........................................NC0518
   Richfield.....................................NC0508
   Oakboro.......................................NC0517
   New London....................................NC0507
   Stanfield.....................................NC0520
Mecklenburg, including:..........................NC0405..............................121,204
   Charlotte.....................................NC0755
   Mint Hill.....................................NC0504
   Pineville.....................................NC0505
   Matthews......................................NC0691
   Weddington....................................NC0720
   Lancaster County..............................SC0372
   Cabarrus County...............................NC0174
Wilmington-Burgaw, including:....................NC0408................................8,719
   Pender County.................................NC0409
Weddington.......................................NC0720................................3,042
Lincoln..........................................NE0032..............................233,263
Nashua...........................................NH0034...............................60,935
Fort Lee, including: ............................NJ0082..............................129,719
   Cliffside Park................................NJ0232
   Edgewater.....................................NJ0092
   Englewood.....................................NJ0251
   Englewood Cliffs..............................NJ0208
   Fairview......................................NJ0253
   Guttenberg....................................NJ0338
   Leonia........................................NJ0431
   Little Ferry..................................NJ0339
   Moonachie.....................................NJ0427
   Palisades Park................................NJ0252
   Ridgefield....................................NJ0203
   Ridgefield Park...............................NJ0254
   Teterboro.....................................NJ0484
Upper Manhattan*.................................NY0104..............................599,837
Binghamton, including:...........................NY0133..............................219,198
   Town of Binghamton............................NY0132
   Chenango......................................NY0134
   Conklin.......................................NY0135
   Dickinson.....................................NY0136
   Fenton........................................NY0137
   Kirkwood......................................NY0139

</TABLE>
 

*CPST rate reduction required.
                                                                     Page 3 of 6


<PAGE>
 

<TABLE> 
<CAPTION> 

COMMUNITY                                        CUID                               REFUND
- ---------                                        ----                               ------
<S>                                              <C>                                <C> 

   Maine.........................................NY0251
   Nanticoke.....................................NY0983
   Owego.........................................NY0403
   Union.........................................NY0402
   Vestal........................................NY0260
   Newark Vly....................................NY1650
   Endicott......................................NY0249
   Johnson City..................................NY0138
   Port Dickinson................................NY0140
Lower Manhattan..................................NY0234..............................180,360
Colonie..........................................NY0336................................4,219
Albany...........................................NY0338................................6,141
E. Syracuse, including:..........................NY0329..............................300,822
   Brutus........................................NY0955
   Town of Camillus..............................NY0333
   Town of Cato..................................NY1501
   Cicero........................................NY0372
   Clay..........................................NY0373
   De Witt.......................................NY0328
   Town of Elbridge..............................NY0883
   Geddes........................................NY0327
   Ira...........................................NY1504
   LaFayette.....................................NY0881
   Lysander......................................NY1367
   Town of Manlius...............................NY0330
   Town of Marcellus.............................NY0847
   Mentz.........................................NY1366
   Onondaga......................................NY0707
   Otisco........................................NY1533
   Pompey........................................NY1057
   Salina........................................NY0346
   Skaneateles...................................NY1211
   Town of Tully.................................NY1368
   Van Burken....................................NY0715
   Village of Camillus...........................NY0334
   Village of Cato...............................NY1503
   Village of Elbridge...........................NY0884
   Fayetteville..................................NY0332
   Jordan........................................NY0882
   Liverpool.....................................NY0326
   Village of Manlius............................NY0369
   Village of Marcellus..........................NY0848
   Meridian......................................NY1502
   Minoa.........................................NY0331
   N. Syracuse...................................NY0546
   Phoenix.......................................NY0720
</TABLE>
 
                                                                     Page 4 of 6


<PAGE>
 

<TABLE> 
<CAPTION> 

COMMUNITY                                        CUID                               REFUND
- ---------                                        ----                               ------
<S>                                              <C>                                <C> 

   Port Byron....................................NY0981
   Solvay........................................NY0671
   Village of Tully..............................NY1194
   Weedsport.....................................NY0915
Troy, including:.................................NY0352..............................182,844
   Cohoes........................................NY0582
   Mechanicville.................................NY0643
   Brunswick.....................................NY0509
   Clifton Park..................................NY0668
   E. Greenbush..................................NY0596
   Halfmoon......................................NY0742
   Pittstown.....................................NY1534
   Town of Schaghticoke..........................NY0796
   Town of Stillwater............................NY0836
   Town of Waterford.............................NY0589
   Village of Schaghticoke.......................NY0996
   Village of Stillwater.........................NY0837
   Valley Falls..................................NY1167
   Village of Waterford..........................NY0588
Penfield.........................................NY0414................................6,662
Gates............................................NY0415................................5,089
Greece...........................................NY0416...............................21,079
Rochester........................................NY0769...............................42,908
Ogden............................................NY1062................................2,704
Brooklyn/Queens*.................................NY1340, 1280, 1281, 1402 .........1,210,552
Irondequoit......................................NY0751...............................13,789
Perinton.........................................NY0413................................9,787
Brighton.........................................NY0764................................8,071
Columbus.........................................OH0239...............................32,330
Westerville......................................OH0517................................3,727
Columbus.........................................OH0532................................1,703
Reading..........................................PA0006...............................34,753
Shillington......................................PA0011................................1,821
Monroeville*.....................................PA1775...............................25,324
Florence, including:.............................SC0015...............................97,072
   Darlington....................................SC0014
   Darlington County.............................SC0115
   Florence County...............................SC0057
   Quinby........................................SC0191
   Timmonsville..................................SC0192
Sumter, including:...............................SC0017...............................58,020
   Shaw AFB......................................SC0102
   Sumter County.................................SC0116
</TABLE>
 

*CPST rate reduction required.

                                                                     Page 5 of 6


<PAGE>
 

<TABLE> 
<CAPTION> 

COMMUNITY                                        CUID                               REFUND
- ---------                                        ----                               ------
<S>                                              <C>                                <C> 

   Pinewood......................................SC0390
   Mayesville....................................SC0431
Austin...........................................TX0029..............................111,633
Wichita Falls....................................TX0483...............................16,033
Leander..........................................TX1422................................7,533
Reston...........................................VA0046...............................17,421
Williamsburg*....................................VA0074...............................23,940
Green Bay........................................WI0234...............................37,857
Greenfield.......................................WI0323................................4,903
Hale's Corner....................................WI0420................................1,823
Charleston.......................................WV0104................................5,762
                                                                                 -----------
                                                                                  $4,768,081
</TABLE>
 

*CPST rate reduction required.


                                                                     Page 6 of 6

<PAGE>
 
                                      -36-



                                  APPENDIX B

                          REGIONAL EQUIPMENT AREAS
                          ------------------------


          Appleton/Green Bay, WI            Milwaukee, WI                
          Bakersfield, CA                   Minneapolis, MN              
          Birmingham, AL                    National Division - East     
          Boston, MA                        National Division - West     
          Eastern Pennsylvania Division     Maine Division               
          Florida Divisions                 New York City Division       
          Hawaii Division                   New York State Divisions     
          Illinois/Indiana Division         North Carolina Divisions     
          Indianapolis, IN                  Ohio Divisions               
          Jackson/Monroe, MS                Portland, OR                 
          Kansas City, MO                   San Diego, CA                
          Lincoln, NE                       Shreveport, LA               
          Los Angeles, CA                   Texas Divisions              
          Memphis, TN                       Western Pennsylvania Division