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                                                                   Exhibit 10.42

                             THIRD AMENDMENT TO THE
                            PARTNERSHIP AGREEMENT OF
             TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP

            THIRD AMENDMENT TO THE PARTNERSHIP AGREEMENT OF TIME WARNER
ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP, dated as of March 1, 1999 (this
"Amendment") among Time Warner Entertainment Company, L.P., a Delaware limited
partnership ("TWE"), Advance/Newhouse Partnership, a New York general
partnership ("Advance/Newhouse"), and Paragon Communications, a Colorado general
partnership ("Paragon").

            WHEREAS, Time Warner Entertainment-Advance/Newhouse Partnership, a
New York general partnership (the "Partnership"), was formed between TWE and
Advance/Newhouse pursuant to a Partnership Agreement dated as of September 9,
1994 (the "Original Agreement"), as amended by the First Amendment to the
Partnership Agreement of the Partnership dated as of February 12, 1998 (the
"First Amendment" and the Second Amendment to the Partnership Agreement dated as
of December 31, 1998 (the "Second Amendment" and together with the Original
Agreement and the First Amendment, the "Partnership Agreement");

            WHEREAS, pursuant to a Transaction Agreement No. 2, dated as of June
23, 1998 (the "Second Transaction Agreement") and a Transaction Agreement No. 3
dated September 15, 1998 (the "Third Transaction Agreement"), each among Advance
Publications, Inc., Newhouse Broadcasting Corporation, Advance/Newhouse, TWE,
Paragon and the Partnership, Paragon has agreed to contribute to the Partnership
certain assets and Advance/Newhouse has agreed to contribute to the Partnership
additional cash;

            WHEREAS, pursuant to Section 15.4 of the Partnership Agreement, the
Partnership Agreement may be amended by an instrument in writing signed by TWE,
Advance/Newhouse and Paragon; and

            WHEREAS, the parties hereto desire to enter into this Amendment in
connection with the transactions contemplated by the Third Transaction
Agreement.

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:

                                       I.

                             AMENDMENTS TO SECTION 1

            (1) The following definitions shall be deleted in their entirety:
"Advance/Newhouse Contribution Amount"; "Effective Date"; "Paragon Preferred

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Capital Contribution"; "Paragon Preferred Partnership Unit"; "Priority Return";
and "Transaction Agreement."

            (2) The following definitions shall be added to the Partnership
Agreement:

                  "First Advance/Newhouse Contribution Amount" has the meaning
            ascribed to "Advance/Newhouse Contribution Amount" in Section 5 of
            the First Transaction Agreement.

                  "First Effective Date" has the meaning ascribed to "Effective
            Date" in Section 6 of the First Transaction Agreement.

                  "First Transaction Agreement" means the Amended and Restated
            Transaction Agreement, dated as of October 27, 1997, among Advance,
            Newhouse, Advance/Newhouse, TWE, TW Holding Co. and the Partnership.

                  "Priority Return" shall mean the sum of the Series A Priority
            Return and the Series B Priority Return.

                  "Series A Preferred Capital Contribution" means, with respect
            to Paragon, a Capital Contribution by Paragon pursuant to this
            Agreement (other than cash deemed contributed in exchange for
            Preferred Partnership Units pursuant to Section 4.1(e)) of assets
            having a fair market value of $1,000 for each Series A Preferred
            Partnership Unit issued to Paragon pursuant to Section 4.2(b)(i).

                  "Series A Preferred Partnership Unit" means Paragon's right to
            distributions in an amount equal to the Series A Priority Return
            allocable to the Series A Preferred Capital Contribution of $1,000
            and the right to a return of such Series A Preferred Capital
            Contribution in redemption thereof, all of which shall be payable in
            accordance with Section 5, together with all allocations of income
            attributable thereto, as specified in Section 5.

                  "Series A Priority Return" means, with respect to each
            outstanding Series A Preferred Partnership Unit, a sum equal to 10
            1/4 percent for the actual number of days in the period for which
            the Series A Priority Return is being calculated, cumulative and
            compounded annually, on the amount of $1,000 plus any accrued and
            unpaid Series A Priority Return with respect to such Series A
            Preferred Partnership Unit, commencing on the First Effective Date.

                  "Series B Preferred Capital Contribution" means with respect
            to Paragon, a Capital Contribution by Paragon pursuant to this
            Agreement (other than cash deemed contributed in exchange for
            Preferred Partnership Units pursuant to Section 4.1(e)) of assets
            having a fair market value of $1,000 for each Series B Preferred
            Partnership Unit issued to Paragon pursuant to Section 4.2(b)(ii).

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                  "Series B Preferred Partnership Unit" means, with respect to
            Paragon, such Partner's right to distributions in an amount equal to
            the Series B Priority Return allocable to such Partner's Series B
            Preferred Capital Contribution of $1,000 and the right to a return
            of such Series B Preferred Capital Contribution in redemption
            thereof, all of which shall be payable in accordance with Section 5,
            together with all allocations of income attributable thereto, as
            specified in Section 5.

                  "Series B Priority Return" means, with respect to each
            outstanding Series B Preferred Partnership Unit, a sum equal to 2%
            plus the Partnership's cost of borrowing under its senior credit
            facility for the actual number of days in the period for which the
            Series B Priority Return is being calculated, cumulative and
            compounded annually, on the amount of $1,000 plus any accrued and
            unpaid Series B Priority Return with respect to such Series B
            Preferred Partnership Unit, commencing on the (i) Texas Effective
            Date, in the case of Series B Preferred Partnership Units issued
            pursuant to Section 4.2(b)(ii) or (ii) the Winston Salem Effective
            Date, in the case of Series B Preferred Partnership Units issued
            pursuant to Section 4.2(b)(iii).

                  "TCI Contribution Agreement" has the meaning ascribed thereto
            in the Texas Transaction Agreement.

                  "Texas Advance/Newhouse Contribution Amount" has the meaning
            ascribed to "Advance/Newhouse Contribution Amount" in Section 4 of
            the Texas Transaction Agreement.

                  "Texas Effective Date" has the meaning ascribed to "Effective
            Date" in Section 5 of the Texas Transaction Agreement.

                  "Texas Transaction Agreement" means the Transaction Agreement
            No. 2, dated as of June 23, 1998, among Advance, Newhouse,
            Advance/Newhouse, TWE, Paragon and the Partnership.

                  "Winston Salem Advance/Newhouse Contribution Amount" has the
            meaning ascribed to "Advance/Newhouse Contribution Amount" in
            Section 4 of the Winston Salem Transaction Agreement.

                  "Winston Salem Effective Date" has the meaning ascribed to
            "Effective Date" in Section 5 of the Winston Salem Transaction
            Agreement.

                  "Winston Salem Transaction Agreement" means the Transaction
            Agreement No. 3, dated as of September 15, 1998 among Advance,
            Newhouse, Advance/Newhouse, TWE, Paragon and the Partnership.

            (3) The following defined terms shall be deleted in their entirety
and the following substituted therefor:

                  "Capital Account" means an account to be maintained for each
            Partner which, subject to any contrary requirements of the Code,
            shall 

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            equal the aggregate value of such Partner's Partnership Interest on
            the Winston Salem Effective Date,

                        (A) increased by (i) the amount of cash contributed by
                  such Partner to the Partnership after the Winston Salem
                  Effective Date (not including interest paid by such Partner
                  pursuant to Section 4.1(b)(ii), Section 4.1(b)(iii), Section
                  4.1(b)(iv), Section 5.1(a)(iii)(z) or Section 5.1(b)(iii)(z)
                  and not including cash deemed contributed by any Partner
                  pursuant to Section 4.1(e)); (ii) the fair market value
                  without regard to Code Section 7701(g) of property contributed
                  by such Partner to the Partnership after the Winston Salem
                  Effective Date (net of liabilities secured by such contributed
                  property that the Partnership is considered to assume or take
                  subject to under Code Section 752) (treating any Subsidiary
                  Beneficial Assets and other Beneficial Assets as if they had
                  been contributed on the Initial Closing Date, the First
                  Effective Date, the Texas Effective Date or the Winston Salem
                  Effective Date, as applicable, and disregarding any subsequent
                  actual contribution of such Subsidiary Beneficial Assets and
                  other Beneficial Assets and any cash flow related thereto);
                  (iii) allocations to it after the Winston Salem Effective Date
                  of Preferred Profit, Gross Profit and Net Profit pursuant to
                  Section 5; (iv) the amount of any liabilities of the
                  Partnership that are assumed by such Partner pursuant to
                  Treasury Regulations Section 1.704-1(b)(2)(iv)(c); and (v)
                  other additions made in accordance with the Code and the
                  provisions of Treasury Regulations Section 1.704-1(b)(2)(iv);
                  and

                        (B) decreased by (i) the amount of cash distributed to
                  such Partner by the Partnership after the Winston Salem
                  Effective Date; (ii) allocations to the Partner after the
                  Winston Salem Effective Date of Preferred Loss, Gross Loss and
                  Net Loss pursuant to Section 5; (iii) the fair market value
                  without regard to Code Section 7701(g) of property distributed
                  to such Partner by the Partnership after the Winston Salem
                  Effective Date (net of liabilities secured by such distributed
                  property or that such Partner is considered to assume or take
                  subject to under Code Section 752) (taking into account any
                  deemed distributions of Subsidiary Beneficial Assets and other
                  Beneficial Assets); (iv) the amount of such Partner's
                  individual liabilities that are assumed by the Partnership
                  after the Winston Salem Effective Date pursuant to Treasury
                  Regulations Section 1.704-1(b)(2)(iv)(c); and (v) other
                  deductions made in accordance with the Code and the provisions
                  of Treasury Regulations Section 1.704-1(b)(2)(iv).

            Notwithstanding the foregoing, for purposes of determining Capital
            Accounts, (v) all of the adjustments, contributions or distributions
            required pursuant to the Contribution Agreement to be made
            subsequent to the Initial Closing Date and the contribution of TWE
            pursuant to Section 4.1(c)(ii) hereof shall be treated as if they
            had been made on the Initial Closing Date, (w) the Paragon
            Adjustment Amount and the TWE 

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            Adjustment Amount (as such terms are defined in Section 11 of the
            First Transaction Agreement) shall be treated as if they had been
            made on the First Effective Date, (x) all of the adjustments,
            contributions or distributions required pursuant to the Texas
            Transaction Agreement or the TCI Contribution Agreement shall be
            treated as if they had been made on the Texas Effective Date, (y)
            all of the adjustments, contributions or distributions required
            pursuant to the Winston Salem Transaction Agreement shall be treated
            as if they had been made on the Winston Salem Effective Date, and
            (z) such adjustments, contributions, distributions, and Adjustment
            Amounts shall not give rise to any adjustments to Capital Account
            balances or redetermination of amounts contributed by or distributed
            to any Partner.

                  "Capital Contribution" means either a Common Capital
            Contribution, a Preferred Capital Contribution, a Series A Preferred
            Capital Contribution or a Series B Preferred Capital Contribution.

                  "Common Capital Contribution" means, (i) with respect to TWE
            and Advance/Newhouse, the amount of cash contributed by such Partner
            to the Partnership pursuant to this Agreement (other than cash
            deemed contributed in exchange for Preferred Partnership Units
            pursuant to Section 4.1(e)) plus the fair market value without
            regard to Code Section 7701(g) of property contributed by such
            Partner to the Partnership pursuant to this Agreement (net of
            liabilities that are secured by such contributed property or that
            either Partner is considered to assume under Code Section 752); and
            (ii) with respect to Paragon, the excess of (A) the amount of cash
            contributed by such Partner to the Partnership pursuant to this
            Agreement (other than cash deemed contributed in exchange for
            Preferred Partnership Units pursuant to Section 4.1(e)) plus the
            fair market value without regard to Code Section 7701(g) of property
            contributed by such Partner to the Partnership pursuant to this
            Agreement (net of liabilities that are secured by such contributed
            property or that either Partner is considered to assume under Code
            Section 752), over (B) the sum of the Series A Preferred Capital
            Contribution and the Series B Preferred Capital Contribution; and
            (iii) with respect to all Partners treating any Subsidiary
            Beneficial Assets and other Beneficial Assets as if they had been
            contributed on the Initial Closing Date, the First Effective Date,
            the Texas Effective Date or the Winston Salem Effective Date, as
            applicable, and disregarding any subsequent actual contribution of
            such Subsidiary Beneficial Assets or other Beneficial Assets and any
            cash flow related thereto).

                  "Determined Percentage" means 35%.

                  "Partnership Unit" means either a "Common Partnership Unit," a
            "Preferred Partnership Unit," a "Series A Preferred Partnership Unit
            or a "Series B Preferred Partnership Unit," as defined in this
            Agreement.

<PAGE>   6

                                       II.

                                OTHER AMENDMENTS

            (1) Section 4 of the Partnership Agreement shall be deleted in its
entirety and new Section 4 in the form attached hereto as Exhibit A shall be
substituted therefor.

            (2) Section 5 of the Partnership Agreement shall be deleted in its
entirety and new Section 5 in the form attached hereto as Exhibit B shall be
substituted therefor.

            (3) Section 8.2 of the Partnership Agreement shall be deleted in its
entirety and new Section 8.2 in the form attached hereto as Exhibit C shall be
substituted therefor.

            (4) The last sentence of Section 9(d) of the Partnership Agreement
shall be amended by deleting the words "Paragon Preferred Partnership Units" and
substituting therefor the words "Series A Preferred Partnership Units and Series
B Preferred Partnership Units."

            (5) Section 12.3(b) of the Partnership Agreement shall be amended by
deleting "Section 5.1(c)" and substituting therefor the words "Section 5.1(d)."

                                      III.

                               GENERAL PROVISIONS

            (1) Governing Law; Venue; Disputes. This Amendment shall be governed
by the internal laws of the State of New York. Any action, suit or proceeding
shall be prosecuted as to any party hereto in the County of New York, State of
New York.

            (2) Captions. Section headings contained in this Amendment are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Amendment.

            (3) Other Provisions. Except as amended hereby, the Partnership
Agreement shall in all respects continue in full force and effect and the
parties ratify and confirm that they continue to be bound by the terms and
conditions thereof.

            (4) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.

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

                              ADVANCE/NEWHOUSE PARTNERSHIP

                              By: Advance Communication Corp.,
                                  General Partner

                                  By: /s/ Robert J. Miron
                                      -------------------------------
                                      Name: Robert J. Miron
                                      Title: President

                              By: Newhouse Broadcasting
                                  Corporation, General Partner

                                  By: /s/ Robert J. Miron
                                      -------------------------------
                                      Name: Robert J. Miron
                                      Title: Vice President


                              TIME WARNER ENTERTAINMENT COMPANY, L.P.

                              By: /s/ Spencer B. Hays
                                  -----------------------------------
                                  Name: Spencer B. Hays
                                  Title: Vice President


                              PARAGON COMMUNICATIONS

                              By: KBL Communications, Inc.,
                                  Managing General Partner

                                  By: /s/ Spencer B. Hays
                                      -------------------------------
                                      Name: Spencer B. Hays
                                      Title: Senior Vice President

<PAGE>   8

                                                                       EXHIBIT A
                                                            (to Third Amendment)

SECTION 4 PARTNERSHIP CAPITAL

      4.1 Capital Contributions.

            (a) Initial Contributions. Upon the execution of the Partnership
Agreement, Advance/Newhouse contributed to the Partnership cash in the amount of
$30.00 and TWE contributed to the Partnership cash in the amount of $60.00.

            (b) Additional Contributions by Advance/Newhouse.

                  (i) On the Initial Closing Date and from time to time
thereafter as provided in the Contribution Agreement, and in accordance with the
terms and conditions of the Contribution Agreement, Advance/Newhouse contributed
or caused to be contributed to the Partnership those assets (including the
Beneficial Assets and the Subsidiary Beneficial Assets) specified to be so
contributed in the Contribution Agreement. The Partners agree that as of the
Initial Closing Date the fair market value of the assets contributed by
Advance/Newhouse pursuant to this Section 4.1(b) shall be determined in
accordance with Section 2.4 of the Contribution Agreement, or as otherwise
agreed to by the parties, and included in the Partnership's records.

                  (ii) At any time after the date that is six months following
the First Effective Date and on or before the earlier of the fourth anniversary
of the First Effective Date, a restructuring of the Partnership pursuant to
Section 8.2, or the purchase and sale of Common Partnership Units pursuant to
Section 9(g)(ii), Advance/Newhouse shall contribute to the Partnership cash in
the amount of the First Advance/Newhouse Contribution Amount. In addition,
Advance/Newhouse shall pay interest on the First Advance/Newhouse Contribution
Amount at the Interest Rate (as defined in Section 5 of the First Transaction
Agreement) compounded (to the extent not paid) on a quarterly basis, from July
1, 1996 until the date on which the First Advance/Newhouse Contribution Amount
is paid. On the First Effective Date, Advance/Newhouse executed the
Advance/Newhouse Note (as defined in Section 5 of the First Transaction
Agreement) which is not an asset of the Partnership but secures
Advance/Newhouse's obligation to contribute the First Advance/Newhouse
Contribution Amount to the Partnership, plus interest, as provided in this
Section 4.1(b)(ii).

                  (iii) At any time after the date that is six months following
the Texas Effective Date and on or before the earlier of the fourth anniversary
of the Texas Effective Date, a restructuring of the Partnership pursuant to
Section 8.2, or the purchase and sale of Common Partnership Units pursuant to
Section 9(g)(ii), Advance/Newhouse shall contribute to the Partnership cash in
the amount of the Texas Advance/Newhouse Contribution Amount. In addition,
Advance/Newhouse shall pay interest on the Texas Advance/Newhouse Contribution
Amount at the Interest Rate (as defined in Section 4 of the Texas Transaction
Agreement) compounded (to the extent not paid) on a quarterly basis, from the
Texas Effective Date until the date on which the Texas Advance/Newhouse
Contribution Amount is paid. On the Texas Effective 

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Date, Advance/Newhouse shall execute the Advance/Newhouse Note (as defined in
Section 4 of the Texas Transaction Agreement) which shall not be an asset of the
Partnership but shall secure Advance/Newhouse's obligation to contribute the
Texas Advance/Newhouse Contribution Amount to the Partnership, plus interest, as
provided in this Section 4.1(b)(iii).

                  (iv) At any time after the date that is six months following
the Winston Salem Effective Date and on or before the earlier of July 1, 2000, a
restructuring of the Partnership pursuant to Section 8.2, or the purchase and
sale of Common Partnership Units pursuant to Section 9(g)(ii), Advance/Newhouse
shall contribute to the Partnership cash in the amount of the Winston Salem
Advance/Newhouse Contribution Amount. In addition, Advance/Newhouse shall pay
interest on the Winston Salem Advance/Newhouse Contribution Amount at the
Interest Rate (as defined in Section 4 of the Winston Salem Transaction
Agreement) compounded (to the extent not paid) on a quarterly basis, from July
1, 1998 until the date on which the Winston Salem Advance/Newhouse Contribution
Amount is paid in full, subject to a prepayment penalty if paid prior to July 1,
2000 as described in Section 4 of the Winston Salem Transaction Agreement. On
the Winston Salem Effective Date, Advance/Newhouse shall execute the
Advance/Newhouse Note (as defined in Section 4 of the Winston Salem Transaction
Agreement) which shall not be an asset of the Partnership but shall secure
Advance/Newhouse's obligation to contribute the Winston Salem Advance/Newhouse
Contribution Amount to the Partnership, plus interest, as provided in this
Section 4.1(b)(iv).

            (c) Additional Contributions by TWE.

                  (i) On the Initial Closing Date and from time to time
thereafter as provided in the Contribution Agreement, and in accordance with the
terms and conditions of the Contribution Agreement, TWE contributed to the
Partnership those assets (including the Beneficial Assets and the Subsidiary
Beneficial Assets) specified to be so contributed in the Contribution Agreement.
The Partners agree that as of the Initial Closing Date the fair market value of
the assets contributed by TWE pursuant to this Section 4.1(c) shall be
determined in accordance with Section 2.4 of the Contribution Agreement, or as
otherwise agreed to by the parties, and included in the Partnership's records.

                  (ii) On the First Effective Date and from time to time
thereafter as provided in the First Transaction Agreement and in accordance with
the terms and conditions of the First Transaction Agreement, TWE contributed to
the Partnership those assets specified in Section 2(a) of the Transaction
Agreement, subject to the liabilities set forth in the First Transaction
Agreement. Such contribution by TWE was in satisfaction of certain of its
obligations, including under the Contribution Agreement, as provided in Section
2(d) of the Transaction Agreement.

            (d) Contributions by Paragon.

                  (i) On the First Effective Date and from time to time
thereafter as provided in the First Transaction Agreement and in accordance with
the terms and conditions of the First Transaction Agreement, Paragon contributed
to the Partnership those assets specified on Schedule 1 of the First Transaction
Agreement and in Section 2(b) of the First Transaction Agreement, subject to the
liabilities set forth in the First Transaction Agreement. For purposes of
establishing Capital Accounts, the Partners 

<PAGE>   10

agree that as of the First Effective Date, the fair market value of the assets
contributed by Paragon pursuant to this Section 4.1(d)(i) shall be determined in
accordance with the First Transaction Agreement.

                  (ii) On the Texas Effective Date and from time to time
thereafter as provided in the Texas Transaction Agreement and in accordance with
the terms and conditions of the Texas Transaction Agreement, Paragon contributed
to the Partnership those assets specified on Schedule 1 of the Texas Transaction
Agreement, subject to the liabilities set forth in the Texas Transaction
Agreement. For purposes of establishing Capital Accounts, the Partners agree
that as of the Texas Effective Date, the fair market value of the assets
contributed by Paragon pursuant to this Section 4.1(d)(ii) shall be determined
in accordance with the Texas Transaction Agreement.

                  (iii) On the Winston Salem Effective Date and from time to
time thereafter as provided in the Winston Salem Transaction Agreement and in
accordance with the terms and conditions of the Winston Salem Transaction
Agreement, Paragon shall contribute to the Partnership those assets specified on
Schedule 1 of the Winston Salem Transaction Agreement, subject to the
liabilities set forth in the Winston Salem Transaction Agreement. For purposes
of establishing Capital Accounts, the Partners agree that as of the Winston
Salem Effective Date, the fair market value of the assets contributed by Paragon
pursuant to this Section 4.1(d)(iii) shall be determined in accordance with the
Winston Salem Transaction Agreement.

            (e) Preferred Capital Contributions.

                  (i) Prior to the Winston Salem Effective Date, no Preferred
Partnership Units were issued to Advance/Newhouse in exchange for Preferred
Capital Contributions pursuant to Section 4.2(c).

                  (ii) At any time that TWE, Advance/Newhouse or Paragon elects
not to receive a proposed distribution from the Partnership pursuant to Section
5.1(c), the amount of such proposed distribution shall be treated as a
contribution to the Partnership, in increments of $1,000, in exchange for
Preferred Partnership Units as provided in Section 4.2(c); provided, however,
that, notwithstanding the foregoing, if at such time TWE, Advance/Newhouse and
Paragon are all treated as having made a concurrent contribution to the
Partnership in accordance with this Section 4.1(e)(ii), then the amount of the
proposed distribution to TWE, Advance/Newhouse and Paragon shall be treated as
Common Capital Contributions and no Preferred Partnership Units shall be issued
therefor.

                  (iii) Any Distributable Cash retained by the Partnership and
treated as a Preferred Capital Contribution in accordance with Section 4.1(e)(i)
or 4.1(e)(ii) shall be invested by the Partnership in debt securities in the
manner directed by the holder of the applicable Preferred Partnership Units and
any amounts received on such debt securities (as interest or otherwise), to the
extent not distributed pursuant to Sections 5.1(a)(i), 5.1(b)(i) or 5.2, shall
be reinvested in debt securities in the manner directed by the holder of the
applicable Preferred Partnership Units. All such debt securities, together with
any uninvested amounts received thereon, shall be referred to herein as the
"Preferred Investment Pool" with respect to the Preferred Partnership Units held
by such Partner.

<PAGE>   11

            (f) Other Additional Capital Contributions. Except as agreed to by
the Partners in accordance with Section 3.2 hereof, there shall be no further
assessments for additional Common Capital Contributions, Series A Preferred
Capital Contributions or Series B Preferred Capital Contributions by the
Partners to the Partnership.

      4.2 Partnership Units.

            (a) Advance/Newhouse and TWE.

                  (i) On September 9, 1994, the Partnership issued:

                        (A) to Advance/Newhouse, 300 Common Partnership Units in
exchange for Advance/Newhouse's agreement to make the Common Capital
Contributions described in Section 4.1(a) and Section 4.1(b)(i); and

                        (B) to TWE, 600 Common Partnership Units in exchange for
TWE's agreement to make the Common Capital Contributions described in Section
4.1(a) and Section 4.1(c).

                  (ii) Following the determination of the First Advance/Newhouse
Contribution Amount pursuant to Section 5 of the First Transaction Agreement,
the Partnership shall issue to Advance/Newhouse the number of Common Partnership
Units equal to fifty percent (50%) of the number of Common Partnership Units
issued to Paragon pursuant to Section 4.2(b)(i) hereof. Such Common Partnership
Units shall be issued to Advance/Newhouse in exchange for Advance/Newhouse's
agreement to make the Capital Contribution described in Section 4.1(b)(ii).

                  (iii) On the Texas Effective Date, the Partnership issued to
Advance/Newhouse the number of Common Partnership Units equal to fifty percent
(50%) of the number of Common Partnership Units issued to Paragon pursuant to
Section 4.2(b)(ii) hereof. Such Common Partnership Units were issued to
Advance/Newhouse in exchange for Advance/Newhouse's agreement to make the
Capital Contribution described in Section 4.1(b)(iii).

                  (iv) On the Winston Salem Effective Date, the Partnership
shall issue to Advance/Newhouse the number of Common Partnership Units equal to
fifty percent (50%) of the number of Common Partnership Units issued to Paragon
pursuant to Section 4.2(b)(iii) hereof. Such Common Partnership Units shall be
issued to Advance/Newhouse in exchange for Advance/Newhouse's agreement to make
the Capital Contribution described in Section 4.1(b)(iv).

            (b) Paragon.

                  (i) As soon as practicable following the determination of the
Net CVI Contribution and the Net Paragon Contribution (as such terms are defined
in Sections 1(c) and 2(d) of the First Transaction Agreement), the Partnership
shall issue to Paragon the number of Series A Preferred Partnership Units and
the number of Common Partnership Units provided in Sections 1(c) and 2(d) of the
First Transaction Agreement. Such Series A Preferred Partnership Units and
Common Partnership Units shall be issued to Paragon in exchange for Paragon's
agreement to make the Capital Contribution described in Section 4.1(d)(i).

<PAGE>   12

                  (ii) On the Texas Effective Date, the Partnership shall issue
to Paragon the number of Series B Preferred Partnership Units and the number of
Common Partnership Units provided in Section 1(c) of the Texas Transaction
Agreement. Such Series B Preferred Partnership Units and Common Partnership
Units shall be issued to Paragon in exchange for Paragon's agreement to make the
Capital Contribution described in Section 4.1(d)(ii).

                  (iii) As soon as practicable following the determination of
the Net Winston Salem Contribution (as defined in Section 1(c) of the Winston
Salem Transaction Agreement), the Partnership shall issue to Paragon the number
of Series B Preferred Partnership Units and the number of Common Partnership
Units provided in Section 1(c) of the Winston Salem Transaction Agreement. Such
Series B Preferred Partnership Units and Common Partnership Units shall be
issued to Paragon in exchange for Paragon's agreement to make the Capital
Contribution described in Section 4.1(d)(iii).

            (c) Preferred Partnership Units. At any time that a Partner is
treated as having made a contribution to the Partnership pursuant to Section
4.1(e) (unless all Partners are treated as having made such a contribution as
provided in the proviso to Section 4.1(e)(ii)), the Partnership shall issue to
such Partner, on the date on which such contribution is deemed made, one
Preferred Partnership Unit for each $1,000 deemed contributed by such Partner on
such date.

      4.3 Indebtedness.

            (a) (i) In accordance with the First Transaction Agreement, the
Partnership has assumed and otherwise taken subject to, the Assumed CVI
Liabilities and the Assumed Paragon Liabilities (as such terms are defined in
Sections 1(a) and 2(b) of the First Transaction Agreement).

                  (ii) In accordance with the Texas Transaction Agreement, the
Partnership assumed or otherwise took subject to, the Assumed Texas Liabilities
(as such terms are defined in Section 1(a) of the Texas Transaction Agreement).

                  (iii) In accordance with the Winston Salem Transaction
Agreement, the Partnership shall assume or otherwise take subject to, the
Assumed Winston Salem Liabilities (as such terms are defined in Section 1(a) of
the Winston Salem Transaction Agreement).

            (b) Subject to Sections 3.2(e) and 3.2(f), from time to time upon
the written request of any Partner, the Partnership shall incur Indebtedness
which, in the good faith judgment of the Managing Partner is available on
commercially reasonable terms, provided such Indebtedness expressly is
non-recourse to any Partner.

            (c) Subject to the limitation in Section 5.1(a)(iv), in the event
the Partnership incurs Indebtedness pursuant to this Section 4.3, the proceeds
of such Indebtedness shall be distributed to the Partners in accordance with
Section 5.1 below.

            (d) As promptly as practicable after the Managing Partner determines
to cause the Partnership to incur, create or assume any Indebtedness, but not
less than 10 days before the incurrence, creation or assumption by the
Partnership of such 

<PAGE>   13

Indebtedness, the Managing Partner shall give Advance/Newhouse notice and a
reasonably detailed description thereof, including a description of any
restrictions on distributions of the type referred to in the next sentence
contained in the agreement governing such Indebtedness (the "Indebtedness
Notice"). The Managing Partner shall use reasonable best efforts in negotiating
such agreement to exclude from the credit (or other) agreement(s) entered into
by the Partnership in connection with such Indebtedness any restrictions on
distributions by the Partnership with respect to any Preferred Partnership Units
(it being understood that, subject to Section 3.2(g), the Partnership shall not
be required to exclude any restrictions on distributions with respect to any
Preferred Partnership Units from any such agreement if as a result of such
exclusion the Indebtedness governed by such agreement would bear a higher rate
of interest or such agreement would contain more restrictive covenants than if
such agreement did not exclude such restrictions, assuming for such purpose that
the Partnership did not own the assets held in the Preferred Investment Pool).
<PAGE>   14

                                                                       EXHIBIT B
                                                            (to Third Amendment)

SECTION 5 CASH DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES

      5.1 Distributions.

            (a) Distributions Prior to Sixth Anniversary. Except as provided in
Sections 5.1(d), 5.1(e), 5.2 and 8.2, prior to the sixth anniversary of the
First Effective Date, all distributions by the Partnership shall be made as
follows:

                  (i) The Partnership shall, at least quarterly, distribute (to
the extent not prohibited by any applicable contractual restrictions) to the
holders of the Preferred Partnership Units all cash received with respect to the
Preferred Investment Pool associated with such Preferred Partnership Units,
until each holder of Preferred Partnership Units shall have received aggregate
distributions pursuant to this Section 5.1(a)(i) in an amount equal to the
product of the Effective Tax Rate times the Net Cumulative Taxable Preferred
Income allocated to such holder of Preferred Partnership Units during the period
commencing on the Initial Closing Date and ending on the last day of the fiscal
quarter immediately preceding the date of distribution.

                  (ii) With respect to any Fiscal Year in which Paragon is
expected (based on the Managing Partner's good faith estimate) to be allocated
Net Profit pursuant to Section 5.3(b)(ii), the Partnership shall, at least
quarterly, distribute (to the extent not prohibited by any applicable
contractual restrictions) to Paragon all Distributable Cash, until Paragon shall
have received distributions, with respect to the Series A Preferred Partnership
Units and the Series B Preferred Partnership Units held by it in an amount equal
to the excess of (A) the sum of (I) such estimated Net Profit expected to be
allocated pursuant to Section 5.3(b)(ii) and (II) the Net Profit allocated
pursuant to Section 5.3(b)(ii) for all prior Fiscal Years, over (B) the
distributions to Paragon pursuant to this Section 5.1(a)(ii) for all prior
Fiscal Years, which distributions shall be allocated among the Series A
Preferred Partnership Units and the Series B Preferred Partnership Units held by
Paragon, pari passu, in proportion to such excess amount calculated for each of
them.

                  (iii) After the Partnership has made distributions with
respect to the Preferred Partnership Units, the Series A Preferred Partnership
Units and Series B Preferred Partnership Units in accordance with clauses (i)
and (ii), the Partnership shall, at least quarterly, distribute (to the extent
not prohibited by any applicable contractual restrictions) to the Partners
Distributable Cash, in proportion to the respective amounts required to be
distributed to each such Partner pursuant to this Section 5.1(a)(iii), in an
amount equal to 25 percent of such Partner's Net Tax Amount for the taxable year
that includes such calendar quarter (as estimated in good faith by the Managing
Partner). The Managing Partner's estimate of such Partner's Net Tax Amount for
such year shall be revised prior to each distribution for such year and upon the
filing of the Partnership's Federal income tax return for such year, and
following such revision, (y) the Partnership shall distribute to such Partner
the excess (if any) of the amount that should have been distributed to such
Partner pursuant to this Section 5.1(a)(iii) based on such revised

<PAGE>   15
                                                                               2


estimate, over the amount actually distributed to such Partner pursuant to this
Section 5.1(a)(iii), plus interest thereon at the rate paid by the Partnership
on its senior Indebtedness, or (z) such Partner shall contribute to the
Partnership the excess (if any) of the amount actually distributed to such
Partner pursuant to this Section 5.1(a)(iii) over the amount that should have
been distributed to such Partner pursuant to this Section 5.1(a)(iii) based on
such revised estimate, plus interest thereon at the rate paid by the Partnership
on its senior Indebtedness. To the extent there is insufficient available cash
to make distributions pursuant to this Section 5.1(a)(iii) at the time required,
the Partnership shall pay interest on such shortfall at the rate paid by the
Partnership on its senior Indebtedness, and such interest shall be paid out of
the Partnership's first available Distributable Cash.

                  (iv) After the Partnership has made the distributions required
by clauses (i), (ii) and (iii), any remaining Distributable Cash shall, at least
quarterly, be distributed to the Partners in accordance with their Percentage
Interests, unless they make the election provided in Section 5.1(c); provided,
however, that during the period ending on the third anniversary of the Texas
Effective Date, distributions to any Partner pursuant to this Section 5.1(a)(iv)
shall not, without the consent of TWE, exceed an amount which, when added to the
distributions to such Partner pursuant to Section 5.1(a)(iii), exceed the sum of
(x) such Partner's permitted "operating cash flow distribution," as determined
pursuant to Treasury Regulation Section 1.707-4(b), and (y) the amount of
Partnership indebtedness incurred by the Partnership during the taxable year
that includes such calendar quarter and the proceeds of which are distributed to
the Partners, to the extent such indebtedness is included in such Partner's
basis in its interest in the Partnership pursuant to Code Section 752 and
Treasury Regulation Section 1.707-5(a)(2).

            (b) Distributions After Sixth Anniversary. Except as provided in
Sections 5.1(d), 5.1(e), 5.2 and 8.2, on and after the sixth anniversary of the
First Effective Date, all distributions by the Partnership shall be made as
follows:

                  (i) The Partnership shall, at least quarterly, distribute (to
the extent not prohibited by any applicable contractual restrictions) to the
holders of the Preferred Partnership Units all cash received with respect to the
Preferred Investment Pool associated with such Preferred Partnership Units,
until each holder of Preferred Partnership Units shall have received aggregate
distributions pursuant to Section 5.1(a)(i) and this Section 5.1(b)(i) in an
amount equal to the product of the Effective Tax Rate times the Net Cumulative
Taxable Preferred Income allocated to such holder of Preferred Partnership Units
during the period commencing on the Initial Closing Date and ending on the last
day of the fiscal quarter immediately preceding the date of distribution.

                  (ii) With respect to any Fiscal Year in which Paragon is
expected (based on the Managing Partner's good faith estimate) to be allocated
Net Profit pursuant to Section 5.3(b)(ii), the Partnership shall, at least
quarterly, distribute (to the extent not prohibited by any applicable
contractual restrictions) to Paragon all Distributable Cash, until Paragon shall
have received distributions, with respect to the Series A Preferred Partnership
Units and the Series B Preferred Partnership Units held by it in an amount equal
to the excess of (A) the sum of (I) such estimated Net Profit expected to be
allocated pursuant to Section 5.3(b)(ii) and (II) the Net Profit allocated
pursuant to Section 5.3(b)(ii) for all prior Fiscal Years, over (B) the
distributions to 

<PAGE>   16
                                                                               3


Paragon pursuant to this Section 5.1(b)(ii) for all prior Fiscal Years, which
distributions shall be allocated among the Series A Preferred Partnership Units
and the Series B Preferred Partnership Units held by Paragon, pari passu, in
proportion to such excess amount calculated for each of them.

                  (iii) After the Partnership has made distributions with
respect to the Preferred Partnership Units, the Series A Preferred Partnership
Units and the Series B Preferred Partnership Units in accordance with clauses
(i) and (ii), the Partnership shall, at least quarterly, distribute (to the
extent not prohibited by any applicable contractual restrictions) to the
Partners Distributable Cash, in proportion to the respective amounts required to
be distributed to each such Partner pursuant to this Section 5.1(b)(iii), in an
amount equal to 25 percent of such Partner's Net Tax Amount for the taxable year
that includes such calendar quarter (as estimated in good faith by the Managing
Partner). The Managing Partner's estimate of such Partner's Net Tax Amount for
such year shall be revised prior to each distribution for such year and upon the
filing of the Partnership's Federal income tax return for such year, and
following such revision, (y) the Partnership shall distribute to such Partner
the excess (if any) of the amount that should have been distributed to such
Partner pursuant to this Section 5.1(b)(iii) based on such revised estimate,
over the amount actually distributed to such Partner pursuant to this Section
5.1(b)(iii), plus interest thereon at the rate paid by the Partnership on its
senior Indebtedness, or (z) such Partner shall contribute to the Partnership the
excess (if any) of the amount actually distributed to such Partner pursuant to
this Section 5.1(b)(iii) over the amount that should have been distributed to
such Partner pursuant to this Section 5.1(b)(iii) based on such revised
estimate, plus interest thereon at the rate paid by the Partnership on its
senior Indebtedness. To the extent there is insufficient available cash to make
distributions pursuant to this Section 5.1(b)(iii) at the time required, the
Partnership shall pay interest on such shortfall at the rate paid by the
Partnership on its senior Indebtedness, and such interest shall be paid out of
the Partnership's first available Distributable Cash.

                  (iv) After the Partnership has made the distributions required
by clauses (i), (ii) and (iii), the Partnership shall distribute (to the extent
not prohibited by any applicable contractual restrictions) any remaining
Distributable Cash to Paragon in redemption of outstanding Series A Preferred
Partnership Units and Series B Preferred Partnership Units, at a redemption
price of $1,000 per Series A Preferred Partnership Unit or Series B Preferred
Partnership Unit, as the case may be, so that the Partnership shall have
redeemed such Series A Preferred Partnership Units and Series B Preferred
Partnership Units in accordance with the following:

                        (A) Prior to the seventh anniversary of the First
Effective Date, the Partnership shall have redeemed one-third of the number of
Series A Preferred Partnership Units and Series B Preferred Partnership Units
originally issued pursuant to Section 4.2(b);

                        (B) Prior to the eighth anniversary of the First
Effective Date, the Partnership shall have redeemed, in the aggregate,
two-thirds of the number of Series A Preferred Partnership Units and Series B
Preferred Partnership Units originally issued pursuant to Section 4.2(b); and


<PAGE>   17
                                                                               4


                        (C) On and after the eighth anniversary of the First
Effective Date, the Partnership shall have redeemed all outstanding Series A
Preferred Partnership Units and Series B Preferred Partnership Units.

Each distribution pursuant to this Section 5.1(b)(iv) shall be made with respect
to the Series A Preferred Partnership Units and the Series B Preferred
Partnership Units held by Paragon, pari passu, in proportion to the number of
each outstanding.

                  (v) After the Partnership shall have made all distributions
required by clauses (i), (ii), (iii) and (iv), any remaining Distributable Cash
shall, at least quarterly, be distributed to the Partners in accordance with
their Percentage Interests, unless they make the election provided in Section
5.1(c).

            (c) Election Not to Receive Distribution. Notwithstanding Section
5.1(a)(iv) or Section 5.1(b)(v), at any time that the Partnership proposes to
make distributions to Advance/Newhouse, TWE or Paragon pursuant to Section
5.1(a)(iv) or Section 5.1(b)(v), any of such Partners may elect not to receive
the distribution proposed to be distributed to it, and the amount of such
proposed distribution shall be treated as a contribution to the Partnership by
such Partner pursuant to Section 4.1(d), and shall no longer be considered to be
part of Distributable Cash for purposes of Section 5.1.

            (d) Net Proceeds of Sale. Following the sale, exchange, or other
disposition of all or substantially all of the assets of the Partnership, or
upon the liquidation of the Partnership within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(g), and after payment of, or adequate
provision for, the debts and obligations of the Partnership, the remaining
assets of the Partnership shall be distributed (or deemed distributed in the
event of a termination under Code Section 708(b)(1)(B)) to the Partners (after
giving effect to all contributions, distributions, allocations, and other
Capital Account adjustments for all taxable years, including the year during
which such liquidation occurs) as follows:

                  (i) First, the applicable Preferred Investment Pool shall be
distributed to the holder of Preferred Partnership Units in redemption of all
such Preferred Partnership Units;

                  (ii) Second, the Priority Return accrued and unpaid as of the
date of liquidation shall be distributed to Paragon;

                  (iii) Third, all outstanding Series A Preferred Partnership
Units and Series B Preferred Partnership Units shall be redeemed at a redemption
price of $1,000 per Series A Preferred Partnership Unit or Series B Partnership
Unit, as the case may be; and

                  (iv) Finally, the remaining assets of the Partnership shall be
distributed to the Partners so as to effectuate the agreement among the Partners
that the distributions remaining after paying taxes on the Partners' Special
Income and Gross Profit and Gross Loss allocated under Section 5.3(d)(ii) with
respect to the year of such distribution are in proportion to their respective
Percentage Interests, assuming all Partners are taxed at the Special Effective
Tax Rate and taking into account any 

<PAGE>   18
                                                                               5


additional tax paid by Advance/Newhouse due to the inability of it (or the
Persons that are the taxpayers with respect to income of it) to use all Taxable
Loss allocable to it.

            (e) Withholding. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to a Partner shall be treated as amounts distributed to such
Partner pursuant to Section 5.1 for all purposes of this Agreement.

      5.2 Redemption of Preferred Partnership Units. Upon an Advance/Newhouse
Redemption Event, TWE Redemption Event, or Paragon Redemption Event,
Advance/Newhouse, TWE or Paragon, respectively, shall have the option to require
the Partnership to redeem all or some of the Preferred Partnership Units held by
such Partner. Such redemption option shall be exercisable by delivery of a
written notice (the "Redemption Notice") to the Partnership indicating that an
Advance/Newhouse Redemption Event, TWE Redemption Event or Paragon Redemption
Event, as applicable, has occurred, and setting forth the number of Preferred
Partnership Units to be redeemed by the Partnership (the "Redeemed Preferred
Partnership Units"). As soon as reasonably practicable, but no later than five
business days following the delivery of the Redemption Notice, the Partnership
shall distribute to Advance/Newhouse, TWE, or Paragon, as applicable, the
applicable Preferred Investment Pool (or pro rata portion thereof based on the
ratio of the number of Redeemed Preferred Partnership Units to the total number
of Preferred Partnership Units held by Advance/Newhouse, TWE or Paragon, as
applicable).

      5.3 Allocations of Preferred Profit; Preferred Loss; Net Profit and Net
Loss.

            (a) Priority Allocations. All Preferred Profit and Preferred Loss
with respect to a Preferred Investment Pool for any Fiscal Year (or portion
thereof) shall be allocated to the holder of Preferred Partnership Units to
which such Preferred Investment Pool relates.

            (b) Allocations of Net Profit. Except as otherwise provided in
Sections 5.3(d) and 5.3(e), after giving effect to the allocations provided in
Sections 5.3(a), 5.5 and 5.8, the Net Profit for each Fiscal Year (or portion
thereof) shall be allocated to the Partners as follows:

                  (i) First, Net Profit shall be allocated to Paragon until
Paragon shall have been allocated, with respect to the Series A Preferred
Partnership Units and the Series B Preferred Partnership Units, Net Profit in an
amount equal to the excess, if any, of (A) the aggregate Net Loss allocated to
Paragon pursuant to Section 5.3(c)(ii) for all prior Fiscal Years over (B) the
aggregate Net Profit allocated to them pursuant to this Section 5.3(b)(i) for
all prior Fiscal Years, which allocation shall be divided among the Series A
Preferred Partnership Units and the Series B Preferred Partnership Units held by
Paragon, pari passu, in proportion to such excess amount calculated for each of
them;

                  (ii) Second, Net Profit shall be allocated to Paragon until
Paragon shall have been allocated, with respect to the Series A Preferred
Partnership Units and the Series B Preferred Partnership Units, Net Profit in an
amount equal to the excess, if any, of (A) the cumulative Series A Priority
Return and the cumulative Series B Priority Return, in each case accrued through
the end of such Fiscal Year (or portion 

<PAGE>   19
                                                                               6


thereof) over (B) the aggregate Net Profit allocated to such Partners pursuant
to this Section 5.3(b)(ii) for all prior Fiscal Years, which amount of Net
Profit shall be allocated among the Series A Preferred Partnership Units and the
Series B Preferred Partnership Units held by Paragon, pari passu, in proportion
to such excess amount calculated for each of them;

                  (iii) Third, Net Profit shall be allocated to the Partners, in
proportion to and to the extent of the amount required to be allocated pursuant
to this Section 5.3(b)(iii), until each such Partner has been allocated Net
Profit pursuant to this Section 5.3(b)(iii) in an amount equal to the excess of
(y) such Partner's aggregate Maximum Income Amount for such Fiscal Year and all
prior Fiscal Years, over (z) the aggregate Net Profit allocated to such Partner
pursuant to this Section 5.3(b)(iii) for all prior Fiscal Years; and

                  (iv) Thereafter, Net Profit shall be allocated to the Partners
in accordance with their Percentage Interests.

            (c) Allocations of Net Loss. Except as otherwise provided in
Sections 5.3(d) and 5.3(e), after giving effect to the allocations provided in
Sections 5.3(a), 5.5 and 5.8, Net Loss for each Fiscal Year (or portion thereof)
shall be allocated as follows:

                  (i) First, Net Loss for such Fiscal Year (or portion thereof)
shall be allocated to the Partners in accordance with their Percentage Interests
until TWE's and Advance/Newhouse's Capital Accounts are reduced to the excess,
if any, of the aggregate Net Profit allocated to such Partners pursuant to
Section 5.3(b)(iii) for all prior Fiscal Years, over the aggregate Special Tax
Amounts distributed to such Partners pursuant to Sections 5.1(a)(iii) and
5.1(b)(iii) for all prior Fiscal Years;

                  (ii) Second, Net Loss for such Fiscal Year (or portion
thereof) shall be allocated to Paragon with respect to the Series A Preferred
Partnership Units and the Series B Preferred Partnership Units, until Paragon's
Capital Account has been reduced to the excess, if any, of the aggregate Net
Profit allocated to Paragon pursuant to Section 5.3(b)(iii) for all prior Fiscal
Years, over the aggregate Special Tax Amounts distributed to pursuant to
Sections 5.1(a)(iii) and 5.1(b)(iii) for all prior Fiscal Years, which
allocation shall be divided among the Series A Preferred Partnership Units and
the Series B Preferred Partnership Units held by Paragon, pari passu, in
proportion the amount calculated with respect to each of them; and

                  (iii) Thereafter, Net Loss for such Fiscal Year (or portion
thereof) shall be allocated to the Partners in accordance with their Percentage
Interests.

            (d) Allocation of Gain or Loss Upon Sale. Notwithstanding Section
5.3(b) and Section 5.3(c), and after giving effect to the allocations provided
in Section 5.3(a), in the event of a sale, exchange, or other disposition of all
or substantially all of the assets of the Partnership, or upon the liquidation
of the Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g), beginning in the year in which the contract or agreement
for such sale is entered into or, if such contract or agreement is entered into
on or prior to the date on which the Partnership's Federal income tax return
with respect to the prior year is required to be filed (not including any
extensions), beginning in such prior year:

<PAGE>   20
                                                                               7


                  (i) First, Gross Profit shall be allocated to Paragon until
Paragon shall have been allocated Gross Profit in an amount equal to the excess,
if any, of (A) the sum of (I) the aggregate Net Loss allocated to Paragon
pursuant to Section 5.3(c)(ii) for all prior Fiscal Years, and (II) the
cumulative Priority Return accrued through the end of such Fiscal Year (or
portion thereof), over (B) the aggregate Net Profit allocated to Paragon
pursuant to Sections 5.3(b)(i) and Section 5.3(b)(ii) for all prior Fiscal
Years, which allocation shall be divided among the Series A Preferred
Partnership Units and the Series B Preferred Partnership Units held by Paragon,
pari passu, in proportion to such excess amount calculated for each of them;

                  (ii) Finally, Gross Profit and Gross Loss shall be allocated
to the Partners so as to cause the credit balance in each Partner's Capital
Account to equal, as nearly as possible, the amount each Partner would receive
in a distribution on dissolution, if the distribution were made in accordance
with Section 5.1(d).

In the event that such sale or liquidation does not take place within the year
following the year of the signing of the contract or agreement, or upon the
termination of such contract or agreement, if earlier, allocations of Gross
Profit or Gross Loss shall be made to reverse, as rapidly as possible, the
effect of any such allocations made pursuant to this Section 5.3(d).

      5.4 Section 754 Adjustment. To the extent any adjustment to the adjusted
tax basis of any asset of the Partnership pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Treasury
Regulations. Any Partner may cause the Partnership to make any election
permitted under Code Section 754.

      5.5 Other Allocation Rules.

            (a) In the event that the Partnership is entitled to an income tax
deduction for the excess of the Closing Price of a unit of TWX Securities on the
Initial Closing Date over the exercise price paid by the Eligible Option Holder
for such unit of TWX Securities, such deduction and an equal amount of Gross
Loss shall be specifically allocated to TWE or Paragon, as appropriate, and TWE
or Paragon, as appropriate, shall be deemed to have made a capital contribution
to the Partnership in the same amount.

            (b) In the event that, pursuant to any Final Determination of the
Partnership's Taxable Income or Taxable Loss or the Partner's distributive
shares thereof, (i) the Partnership's Taxable Income or Taxable Loss is adjusted
or (ii) the Partners' distributive shares of the Partnership's Taxable Income or
Taxable Loss are adjusted, Gross Profit or Gross Loss shall be allocated to the
Partners to reflect the adjustments to the Partnership's Taxable Income or
Taxable Loss or the Partners' distributive shares thereof so as to place the
Partners as rapidly as possible, in conjunction with any distribution or
contribution pursuant to Section 5.1(a)(iii) and Section 5.1(b)(iii), in the
same relative positions they would have been in had the Taxable 

<PAGE>   21
                                                                               8


Income or Taxable Loss or distributive shares thereof as adjusted been taken
into account originally (including any interest with respect to any deficiency
or any refund).

            (c) In the event that interest is paid by the Partnership to a
Partner pursuant to Section 5.1(a)(iii) or Section 5.1(b)(iii), a special
allocation of Gross Profit shall be made to such Partner in an amount equal to
the amount of such interest.

            (d) If any fees or other payments deducted for federal income tax
purposes by the Partnership are recharacterized by a final determination of the
Internal Revenue Service as nondeductible distributions to any Partner, then,
notwithstanding all other allocation provisions, Gross Profit shall be allocated
to such Partner (for each Fiscal Year in which such recharacterization occurs)
in an amount equal to the fees or payments recharacterized.

            (e) All items of Partnership income, gain, loss, deduction, and any
other allocations not otherwise provided for shall be allocated among the
Partners in the same proportion as they share the Preferred Profits, Preferred
Losses, Net Profits or Net Losses to which such items relate for the Fiscal
Year. Any credits against income tax shall be allocated among the Partners in
accordance with their Percentage Interests.

            (f) For any year with respect to which the Partnership is required
to pay New York City Unincorporated Business Tax, such tax shall be allocated
among the Partners in a manner so that the benefit of any deduction, credit,
exemption or exclusion that is available to the Partnership as a result of the
activities, income or status of or payments by a particular Partner (a "Credit
Partner") shall be allocated entirely to such Credit Partner. The foregoing
shall be accomplished by charging the amount of such tax to the Capital Account
of any Partner that is not a Credit Partner and by distributing to any Credit
Partner an amount that bears the same proportion to such tax as such Credit
Partner's Percentage Interest bears to the Percentage Interests of the Partners
that are not Credit Partners.

            (g) Notwithstanding Section 5.3(b), in the event that the Net Profit
allocated to the Partners pursuant to Section 5.3(b)(iii) results in an
allocation of Taxable Loss to Advance/Newhouse, then Net Profit shall be
reallocated among the Partners so as to effectuate the agreement of the Partners
that on an annual basis the distributions pursuant to Sections 5.1(a)(iii),
5.1(a)(iv), 5.1(b)(iii) and 5.1(b)(v) remaining after paying taxes on Special
Income and Net Profit allocated pursuant to Sections 5.3(b)(iii) and 5.3(b)(iv)
shall be in proportion to their respective Percentage Interests, assuming all
Partners are taxed at the Special Effective Tax Rate and taking into account any
additional tax paid by Advance/Newhouse due to the inability of it (or the
Persons that are the taxpayers with respect to income of it) to use all Taxable
Loss allocable to it.

      5.6 Tax Allocations.

            (a) Income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership, including property purchased with
cash contributed to the capital of the Partnership by a Partner shall, solely
for tax purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
Federal income tax purposes and its initial 

<PAGE>   22
                                                                               9


Gross Asset Value in accordance with the remedial allocation method set forth in
Treasury Regulations Section 1.704-3(d).

            (b) If the Gross Asset Value of any asset of the Partnership is
adjusted pursuant to paragraph (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for Federal income tax purposes and its Gross Asset Value in accordance
with Section 704(c) and the Treasury Regulations promulgated thereunder,
including Treasury Regulations Sections 1.704-1(b)(4)(i) and 1.704-3(d).

            (c) Subject to Section 11.8, any election or other decision relating
to any allocations pursuant to this Section 5.6 shall be made by the
Partnership, upon the approval of such election or other decision by the
Managing Partner, in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 5.6 are solely
for purposes of Federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Partner's Capital Account or share
of Net Profit, Net Loss, other items, or distributions pursuant to any provision
of this Agreement.

            (d) For purposes of Sections 5.1(d) and 5.5, within 45 days after
the end of each Fiscal Year, Advance/Newhouse shall provide the Managing Partner
with the Advance/Newhouse Loss Amount for such Fiscal Year.

      5.7 Allocation in Event of Transfer. If any Partnership Units are
transferred in accordance with Section 6.1, the Preferred Profit, Preferred
Loss, Net Profit and Net Loss of the Partnership shall be allocated between the
periods before and after the transfer by the closing of the books method. As of
the date of such transfer, the transferee shall succeed to the Capital Account,
Common Capital Contribution, Preferred Capital Contribution, Series A Preferred
Capital Contribution and Series B Preferred Capital Contribution of the
transferor Partner, to the extent that the transferor's Capital Account, Common
Capital Contribution, Preferred Capital Contribution, Series A Preferred Capital
Contribution and Series B Preferred Capital Contribution relate to the
transferred interest. This Section shall apply for purposes of computing a
Partner's Capital Account and for federal income tax purposes.

      5.8 Beneficial Assets and Subsidiary Beneficial Assets. The Partnership
shall (and the Partners shall not, except as Partners of the Partnership)
report, for Federal income tax purposes, the income, gain, deduction and loss
with respect to the Beneficial Assets that are not Subsidiary Beneficial Assets,
and the Partners shall (and the Partnership shall not) report, for Federal
income tax purposes, the income, gain, deduction and loss with respect to the
Subsidiary Beneficial Assets. In the event that, pursuant to any Final
Determination (as defined below), the Partnership either (x) is treated as the
beneficial owner of any of the Subsidiary Beneficial Assets prior to the actual
contribution of such Subsidiary Beneficial Assets to the Partnership or (y) is
treated as not the beneficial owner of any of the Beneficial Assets that are not
Subsidiary Beneficial Assets prior to the actual contribution of such Beneficial
Assets to the Partnership, to the extent necessary, appropriate adjustments
shall be made to the distributions provided for in Section 5.1 so as to place
the Partners and the Partnership in the same positions they would have been in
had the Partnership's beneficial ownership of 

<PAGE>   23
                                                                              10


the Subsidiary Beneficial Assets or lack of beneficial ownership of such other
Beneficial Assets been taken into account originally.

      5.9 Set-off. If (a) by the earlier of the fourth anniversary of the First
Effective Date, a restructuring of the Partnership pursuant to Section 8.2, or
the purchase and sale of Common Partnership Units pursuant to Section 9(g)(ii),
Advance/Newhouse shall not have contributed to the Partnership cash in an amount
equal to the First Advance/Newhouse Contribution Amount plus interest thereon in
accordance with Section 4.1(b)(ii), (b) by the earlier of the fourth anniversary
of the Texas Effective Date, a restructuring of the Partnership pursuant to
Section 8.2, or the purchase and sale of Common Partnership Units pursuant to
Section 9(g)(ii), Advance/Newhouse shall not have contributed to the Partnership
cash in an amount equal to the Texas Advance/Newhouse Contribution Amount, or
(c) by the earlier of July 1, 2000, a restructuring of the Partnership pursuant
to Section 8.2 or the purchase and sale of Common Partnership Units pursuant to
Section 9(g)(ii), Advance/Newhouse shall not have contributed to the Partnership
cash in the amount equal to the Winston Salem Advance/Newhouse Contribution
Amount, then, in addition to any other rights and remedies which the Partnership
may have, the Partnership is hereby authorized at any time and from time to
time, to the fullest extent permitted by law and without prior notice to
Advance/Newhouse (or any successor to or transferee of its Partnership
Interests), to recoup, set-off and apply any and all amounts at any time owing
or otherwise payable by the Partnership to Advance/Newhouse (or any successor to
or transferee of its Partnership Interests), including, without limitation, any
distributions payable in accordance with Section 5 and any distributions to, or
Partnership liabilities assumed by, Advance/Newhouse in accordance with Section
8.2, and any amounts payable to Advance/Newhouse pursuant to Section 9, to
satisfy Advance/Newhouse's obligations to make such contribution. To the extent
that any amounts distributable in accordance with Section 5 or Section 8.2 are
applied in accordance with the preceding sentence rather than distributed to
Advance/Newhouse (or any successor to or transferee of its Partnership
Interests), then such amounts shall be deemed distributed by the Partnership to
Advance/Newhouse (or such successor or transferee) and recontributed by
Advance/Newhouse (or such successor or transferee) to the Partnership and the
Capital Account of Advance/Newhouse (or such successor or transferee) shall be
adjusted to reflect such deemed distribution and recontribution.

<PAGE>   24
                                                                               1


                                                                       EXHIBIT C
                                                            (to Third Amendment)


      8.2 Restructuring of Partnership.

            (a) Upon delivery of a Restructuring Notice in accordance with
Section 8.1 above, Advance/Newhouse and TWE shall negotiate in good faith the
restructuring of the Partnership in a manner intended to minimize federal, state
and local taxes. Within 60 days after delivery of a Restructuring Notice, upon
the request of any Partner, the Managing Partner shall provide all Partners with
a report listing all assets of the Partnership, including all projects in
development and/or for which the Partnership has been charged.

            (b) If, after a period of three months from the date of delivery of
the Restructuring Notice, Advance/Newhouse and TWE have failed to agree on the
terms of the restructuring of the Partnership, the Partnership shall be
restructured by the withdrawal of Advance/Newhouse from the Partnership as
follows:

                  (i) Within 15 days following the expiration of such
three-month period, (A) if at such time Advance/Newhouse holds Preferred
Partnership Units the Partnership shall distribute the Preferred Investment Pool
attributable to such Preferred Partnership Units in redemption of all Preferred
Partnership Units then held by Advance/Newhouse, (B) the Partnership shall
calculate the "Restructuring Indebtedness Amount" (as defined in Section
8.2(b)(v) and the "Excess Tax Amount" (as defined in Section 8.2(b)(vi)) of
Advance/Newhouse, if any, (C) subject to obtaining any required governmental or
other third-party consents or approvals, the Partnership shall distribute
33-1/3% of the Pro Rata Assets (as defined below) to Advance/Newhouse, and (D)
TWE shall (1) divide the remaining assets (and related liabilities) of the
Partnership into three pools (the "Asset Pools") which shall meet the Asset Pool
Criteria (as defined below) but which shall in any event be of equal value (in
TWE's judgment), and (2) deliver a written notice to Advance/Newhouse setting
forth the cable television systems and other assets contained in each such Asset
Pool (the "Asset Pool Notice"). To the extent physically possible without
impairing their inherent operability, assets of the Partnership which relate to
more than one cable television system or to the Partnership as a whole shall be
allocated either equally to every pool or on a 2/3:1/3 basis to the Partnership
and Advance/Newhouse, respectively. Prior to making any distribution under this
Section 8.2(b) or delivering the Asset Pool Notice, the Partnership or TWE, as
applicable, shall contribute the assets comprising all developmental projects in
which the Partnership has an interest and/or for which the Partnership has been
charged (subject to the associated liabilities) to a separate legal entity or
otherwise reconstitute such assets (subject to the associated liabilities) in a
form (on terms agreed upon by Advance/Newhouse, TWE, and Paragon) that allows an
allocation of such assets (subject to the associated liabilities) to
Advance/Newhouse and the

<PAGE>   25
                                                                               2


Partnership as described in the previous sentence. For the purposes of the
foregoing, "Pro Rata Assets" shall mean those assets of the Partnership,
including without limitation those Beneficial Assets and Subsidiary Beneficial
Assets, that are readily divisible into three identical pools without any
material diminution in the aggregate value of such assets resulting from such
division (such as stock, partnership interests and similar investments). For
purposes of the foregoing, "Asset Pool Criteria" shall mean (I) no Preferred
Cluster Area may be allocated to more than one Asset Pool, except in accordance
with the following: (A) if the number of Subscribers in the Preferred Cluster
Area having the largest number of Subscribers exceeds the product of the
Determined Percentage and the number of all Subscribers in all Preferred Cluster
Areas, then such excess may be allocated to more than one Asset Pool; and (B) if
the Preferred Cluster Area having the largest number of Subscribers has been
allocated to more than one Asset Pool, and if the number of Subscribers in the
Preferred Cluster Area having the second largest number of Subscribers exceeds
33-1/3% of all Subscribers of all the Partnership Systems, then such excess may
be allocated to more than one Asset Pool, and (II) (A) Subscribers in the same
ADI in a Preferred Cluster Area may not be allocated to more than one pool,
except to the extent that any one ADI in a Preferred Cluster Area is permitted
to be split under clause (I) above, and (B) to the extent any ADI's are split
they shall be split only along the lines of operable units.

                  (ii) Within 30 days following the delivery by TWE of the Asset
Pool Notice, Advance/Newhouse shall select and retain ownership of one of the
Asset Pools and the Partnership shall retain ownership of the remaining Asset
Pools; provided that if Advance/Newhouse fails to make such selection within
such 30-day period, then the Partnership shall be entitled to select and retain
ownership of two of the Asset Pools and Advance/Newhouse shall retain ownership
of the remaining Asset Pool. The Asset Pools allocated to Advance/Newhouse and
the Partnership in accordance with this paragraph (ii) are referred to herein as
the "Advance/Newhouse Asset Pool" and the "TWE Asset Pools," respectively.

                  (iii) As promptly as practical following the determination of
the Advance/Newhouse Asset Pool and the TWE Asset Pools in accordance with
paragraph (ii), subject to obtaining any required governmental or other
third-party consents or approvals, the Partnership shall distribute the cable
television systems and other assets comprising the Advance/Newhouse Asset Pool
to Advance/Newhouse in complete liquidation of its Common Partnership Units;
provided that with respect to any assets in the Advance/Newhouse Pool that for
Federal income tax purposes were deemed contributed to the Partnership within
the immediately preceding Applicable Contribution Period by TWE or Paragon and
with respect to any assets in the TWE Asset Pools that for Federal income tax
purposes were deemed contributed to the Partnership within the immediately
preceding Applicable Contribution Period by Advance/Newhouse, the Partners shall
cooperate to cause such liquidation of the Advance/Newhouse Common Partnership
Units to be effectuated in a manner, and agree to defer the distribution of
assets to such time, as will minimize the taxes payable in connection with such
liquidation.

<PAGE>   26
                                                                               3


                  (iv) As the cable television systems and other assets
comprising the Advance/Newhouse Asset Pool are distributed or deemed distributed
for Federal income tax purposes, (A) if there is an Excess Tax Amount with
respect to Advance/Newhouse, the Partnership shall be allocated liabilities
otherwise allocable to the Advance/Newhouse Pool (the "Excess Tax Amount
Indebtedness") equal to the product of (y) one (1) minus the Advance/Newhouse
Percentage Interest, and (z) such Excess Tax Amount of Advance/Newhouse, (B)
Advance/Newhouse shall execute an assumption agreement pursuant to which it will
assume (or to the extent necessary, in the case of clause (II) below, will
refinance or repay) (I) all liabilities relating to, arising out of or otherwise
attributable to the Advance/Newhouse Asset Pool (as reduced by the Excess Tax
Amount Indebtedness, if any), and (II) liabilities otherwise allocable to the
TWE Asset Pools (the "Restructuring Indebtedness") in an amount equal to the
Restructuring Indebtedness Amount and will further agree to indemnify the
Partnership for any losses the Partnership might suffer with respect to any of
such liabilities, and (C) the Partnership shall agree to indemnify
Advance/Newhouse for any losses Advance/Newhouse might suffer with respect to
any liabilities relating to, arising out of or otherwise attributable to the TWE
Asset Pools or the Excess Tax Amount Indebtedness. The assumption agreement to
be executed by Advance/Newhouse shall contain the terms contained in the
Assumption Agreement executed by the Partnership in accordance with Section
3.4(a) of the Contribution Agreement and the indemnity of Advance/Newhouse and
the Partnership shall be in the form of Sections 8.2 and 8.3 of the Contribution
Agreement. As Advance/Newhouse assumes liabilities relating to, arising out of
or otherwise attributable to the Advance/Newhouse Asset Pool, Paragon shall
guarantee remaining liabilities of the Partnership and take other steps
reasonably necessary so as to reduce, to the greatest extent possible, the Debt
Shift Tax Amount arising from the restructuring; provided however, that Paragon
shall not be required to guarantee remaining liabilities of the Partnership to
the extent such guarantee would cause TWE to recognize income pursuant to Code
Sections 731 and 752. To the extent possible, liabilities assumed by
Advance/Newhouse shall be qualified liabilities (as defined in Treasury
Regulation Section 1.707-6(b)(2)) of the Partnership.

                  (v) The "Restructuring Indebtedness Amount" shall equal the
product of (A) the Advance/Newhouse Percentage Interest, and (B) the sum of (i)
the Priority Return accrued and unpaid as of the date of distribution with
respect to the Series A Preferred Partnership Units and the Series B Preferred
Partnership Units held by Paragon, (ii) the redemption price for all outstanding
Series A Preferred Partnership Units and Series B Preferred Partnership Units
held by Paragon, and (iii) the sum of the Excess Tax Amount for the Partners
other than Advance/Newhouse and other than the Satisfied Partner.

                  (vi) The "Excess Tax Amount" means, for each of two Partners,
the Tax Amount that would be remaining for such Partners if the Partnership were
to distribute the aggregate Tax Amounts of all Partners to the Partners in
accordance with their Percentage Interests until one Partner (the "Satisfied
Partner") shall have received its entire Tax Amount.

<PAGE>   27
                                                                               4


                  (vii) The "Tax Amount" means, for any Partner, the sum of the
following amounts determined for such Partner, as applicable:

                        (A) If the restructuring has occurred as a result of the
delivery by Advance/Newhouse of a Restructuring Notice that is not a Spin-Off
Restructuring Notice:

                              (I) with respect to Paragon, the Paragon
704(c)(1)(B) Tax Amount with respect to assets deemed for Federal income tax
purposes contributed to the Partnership within the immediately preceding
Applicable Contribution Period by Paragon that are allocated to the
Advance/Newhouse Asset Pool,

                              (II) with respect to TWE, if the distribution of
the Advance/Newhouse Asset Pool occurs after April 1, 2000, the TWE 704(c)(1)(B)
Tax Amount with respect to assets deemed for Federal income tax purposes
contributed to the Partnership by TWE pursuant to the First Transaction
Agreement within the immediately preceding Applicable Contribution Period that
are allocated to the Advance/Newhouse Asset Pool,

                              (III) with respect to each Partner, the
Restructuring Deferred Tax Amount with respect to assets contributed by such
Partner (other than, in the case of TWE and Paragon, the assets referred to in
clauses (I) and (II)), and

                              (IV) with respect to Paragon, the Debt Shift Tax
Amount.

                        (B) If the restructuring has occurred as a result of the
delivery by TWE of the Restructuring Notice or the delivery by Advance/Newhouse
of a Restructuring Notice that is a Spin-Off Restructuring Notice:

                              (I) with respect to Paragon, the Paragon
704(c)(1)(B) Tax Amount with respect to assets deemed for Federal income tax
purposes contributed to the Partnership within the immediately preceding
Applicable Contribution Period by Paragon that are allocated to the
Advance/Newhouse Asset Pool,

                              (II) with respect to each Partner, the
Restructuring Deferred Tax Amount with respect to assets contributed by such
Partner (other than, in the case of Paragon, the assets referred to in clause
(I) above), and

                              (III) with respect to Paragon, the Debt Shift Tax
Amount.

            (c) During the period from the date of delivery of a Restructuring
Notice in accordance with Section 8.1 to the date of determination of the
Advance/Newhouse Asset Pool and TWE Asset Pools in accordance with 

<PAGE>   28
                                                                               5


Section 8.2(b)(ii), the Partnership shall conduct its business in the ordinary
course, consistent with past practice, and shall not engage in any extraordinary
transactions that were not contemplated by a previously approved Long Term
Strategic Plan or approved by the Executive Committee with the consent of
Advance/Newhouse's representatives. Following the determination of the
Advance/Newhouse Asset Pool and the TWE Asset Pools in accordance with Section
8.2(b)(ii), to the extent permitted by law, (i) the assets comprising such Asset
Pools shall for all purposes be deemed to be owned by Advance/Newhouse and the
Partnership, respectively, (ii) the Restructuring Indebtedness shall for all
purposes be deemed to be an obligation of Advance/Newhouse and Advance/Newhouse
shall have no obligation with respect to the Excess Tax Amount Indebtedness
which shall for all purposes be deemed to be an obligation of TWE and Paragon as
Partners of the Partnership following the restructuring of the Partnership
hereunder, and (iii) until the Advance/Newhouse Asset Pool is actually
distributed to Advance/Newhouse, (1) Advance/Newhouse's Partnership Interest
shall entitle it only to (A) a distributive share of the income, gain, losses
and deductions related to the Advance/Newhouse Asset Pool, (B) a distributive
share of the assets comprising the Advance/Newhouse Asset Pool (subject to the
related liabilities and the Restructuring Indebtedness) and (C) management
rights relating to the business and affairs of the Advance/Newhouse Asset Pool,
and (2) TWE's and Paragon's Partnership Interest shall entitle them only to (A)
a distributive share of the income, gain, losses and deductions related to the
TWE Asset Pools, (B) a distributive share of the assets comprising the TWE Asset
Pools (subject to the related liabilities and the Excess Tax Amount
Indebtedness) and (C) management rights relating to the business and affairs of
the TWE Asset Pools.