Asset Exchange Agreement

EXECUTION COPY


ASSET EXCHANGE AGREEMENT


DATED AS OF NOVEMBER 18, 1998


AMONG


TCI OF EAST SAN FERNANDO VALLEY, L.P.


AND


CENTURY-TCI CALIFORNIA, L.P.


ASSET EXCHANGE AGREEMENT


THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into effective as of the 18th day of November, 1998, by and between TCI of East San Fernando Valley, L.P., a Colorado limited partnership ("TCI") and Century-TCI California, L.P., a Delaware limited partnership (the "Partnership").


RECITALS


A. Century owns and operates cable television systems which are franchised or hold other operating authority and operate in and around San Pablo, Benicia, Fairfield and Rohnert Park, California and the other communities in California listed on EXHIBIT A (the "Century Systems"). EXHIBIT A lists each Century System, the headends for such System, the franchises served by such System and the owner of such System. Pursuant to a Contribution Agreement dated of even date herewith among the Partnership, Century Exchange LLC ("Century Exchange"), certain of its Affiliates, and certain Affiliates of TCI (the "Contribution Agreement"), Century Exchange has agreed to contribute substantially all the assets of the Century Systems to the Partnership.


B. TCI owns and operates cable television systems which are franchised or hold other operating authority and operate in and around East San Fernando Valley, California and the other communities in California listed on EXHIBIT B (the "TCI Systems"). EXHIBIT B lists each TCI System, the headends for such System, the franchises served by such System and the owner of such System.


C. This Agreement sets forth the terms and conditions on which the Partnership will convey to TCI substantially all of the assets held for use or used in connection with Century's Cable Business and TCI will convey to the Partnership substantially all of the assets held for use or used in connection with TCI's Cable Business, all in such a manner as to effect, to the extent reasonably possible, a like-kind exchange of such assets under Section 1031 of the United States Internal Revenue Code, as amended (the "Code").


D. This Agreement amends and restates in its entirety the original Asset Exchange Agreement dated as of November 18, 1998 among the parties hereto.


AGREEMENTS


In consideration of the mutual covenants and promises set forth herein, the parties agree as follows:


SECTION 1. DEFINITIONS


In addition to terms defined elsewhere in this Agreement, the following capitalized terms or terms otherwise defined in this Section 1 shall have the meanings set forth below:


1.1 1992 Cable Act. The Cable Television Consumer Protection and Competition Act of 1992, as amended, and the FCC rules and regulations promulgated thereunder.


1.2 Affiliate. With respect to any Person, any Person controlling, controlled by or under common control with such Person; "control" means the ownership, directly or indirectly, of voting securities representing the right generally to elect a majority of the directors (or similar officials) of a Person or the possession, by contract or otherwise, of the authority to direct the management and policies of a Person.


1.3 Annualized Cash Flow. As of any date of determination, four times Cash Flow for the most recent three full calendar months ended prior to such date.


1.4 Assets. The Century Assets or the TCI Assets, as the context requires.


1.5 Basic Services. The lowest tier of cable television service offered to subscribers of a System that includes the retransmission of local broadcast signals as defined by the 1992 Cable Act.


1.6 Business Day. Any day other than a Saturday, Sunday or a day on which the banking institutions in Denver, Colorado or New York, New York are required or authorized to be closed.


1.7 Cable Act. The Cable Communications Policy Act of 1984, as amended, and the FCC rules and regulations promulgated thereunder.


1.8 Cable Business. Century's Cable Business or TCI's Cable Business, as the context requires.


1.9 Cash Flow. For any period (a) for any TCI System, the "Operating Income/Loss Before Corporate Overhead" of such System as reported on such System's profit and loss statement for such period and (b) for any Century System, the "Net Operating Income and Loss" of such System as reported on such System's profit and loss statement for such period, in each case without taking into account any interest income or nonrecurring items of income, gain or expense and as further adjusted for the matters identified on SCHEDULE 1.9, it being agreed that Cash Flow and the line items identified above for any System shall continue to be calculated in a manner consistent with that used for such System as of the date of this Agreement.


1.10 Century. The Partnership and those predecessors in interest with respect to the Century Systems that are Affiliates of Century Communications Corp., a Texas corporation.


1.11 Century Assets. All assets, properties, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description that are owned, leased, held for use or used in connection with Century's Cable Business that are to be contributed to the Partnership pursuant to the Contribution Agreement, including Century Tangible Personal Property, Century


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Owned Real Property, Century Leased Property, Century Other Real Property Interests, Century System Franchises, Century System Licenses, Century System Contracts, Century Books and Records and Century Other Intangibles, but excluding any Century Excluded Assets.


1.12 Century Books and Records. All engineering records, files, data, drawings, blueprints, schematics, reports, lists, plans and processes and all other files of correspondence, lists, records and reports concerning Century's Cable Business, including subscribers and prospective subscribers of the Century Systems, signal and program carriage and dealings with Governmental Authorities, including all reports filed by or on behalf of Century with the FCC and statements of account filed by or on behalf of Century with the U.S. Copyright Office.


1.13 Century Leased Property. All leasehold interests in real property that are held for use or used in connection with Century's Cable Business and that are to be contributed to the Partnership pursuant to the Contribution Agreement, including those described as Century Leased Property on SCHEDULE 1.12.


1.14 Century Other Intangibles. All intangible assets other than Century System Franchises, Century System Licenses and Century System Contracts, including subscriber lists, accounts receivable, claims (excluding any claims relating to Century Excluded Assets), patents, copyrights and going concern value, if any, that are owned, held for use or used in connection with Century's Cable Business and that are to be contributed to the Partnership pursuant to the Contribution Agreement.


1.15 Century Other Real Property Interests. All easements and rights of access (other than those relating to multiple dwelling units) and other interests in real property that are held for use or used in connection with Century's Cable Business and that are to be contributed to the Partnership pursuant to the Contribution Agreement, including those interests described as Century Other Real Property Interests on SCHEDULE 1.14, but not including Century Leased Property or Century Owned Property.


1.16 Century Owned Property. All fee interests in real property that are held for use or used in connection with Century's Cable Business and that are to be contributed to the Partnership pursuant to the Contribution Agreement, including those described as Century Owned Property on SCHEDULE 1.15 and all improvements thereon.


1.17 Century Required Consents. Any and all consents, authorizations and approvals required for (a) the Partnership to transfer the Century Assets to TCI; (b) TCI to operate the Century Systems and to own, lease, use and operate the Century Assets and the Century Systems at the places and in the manner in which the Century Assets are used and the Century Systems are operated as of the date of this Agreement and as of the Closing; and (c) TCI to assume and perform the Century System Franchises, the Century System Licenses, the leases and other documents evidencing Century Leased Property and Century Other Real Property Interests and the Century System Contracts, including those consents, authorizations and approvals required under the Century System


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Franchises, the Century System Licenses, the leases and other documents evidencing Century Leased Property and Century Other Real Property Interests and the Century System Contracts.


1.18 Century System Contracts. All pole line agreements, underground conduit agreements, crossing agreements, multiple dwelling, bulk billing or commercial service agreements, leased channel access agreements and other Contracts (other than Century System Franchises and Century System Licenses) held for use or used in connection with Century's Cable Business and that are to be contributed to the Partnership pursuant to the Contribution Agreement, including those described on SCHEDULE 1.17.


1.19 Century System Franchises. All franchise agreements, operating permits or similar governing agreements, instruments, resolutions, statutes, ordinances, approvals, authorizations and permits obtained from any franchising authority in connection with Century's Cable Business, including those listed on SCHEDULE 1.18, including all amendments and modifications thereto and all renewals thereof.


1.20 Century System Licenses. The intangible cable television channel distribution rights, cable television relay service (CARS), business radio and other licenses, copyright notices and other licenses, authorizations, consents or permits issued by the FCC or any other Governmental Authority in connection with Century's Cable Business (other than Century System Franchises, Century System Contracts and Century Other Real Property Interests), including those described on SCHEDULE 1.19.


1.21 Century Tangible Personal Property. All tangible personal property that is owned, leased, held for use or used in connection with Century's Cable Business and that are to be contributed to the Partnership pursuant to the Contribution Agreement, including towers, tower equipment, aboveground and underground cable, distribution systems, headend amplifiers, line amplifiers, microwave equipment, converters, testing equipment, motor vehicles, office equipment, computers and billing equipment, furniture, fixtures, supplies, inventory and other physical assets, the principal items of which, including all motor vehicles, are described on SCHEDULE 1.20.


1.22 Century's Cable Business. The cable television business and other income-generating businesses related to the Century Systems conducted by Century through the Century Systems.


1.23 Closing Time. 12:01 A.M., Pacific Time, on the Closing Date.


1.24 Communications Act. The Communications Act of 1934, as amended, and the FCC rules and regulations promulgated thereunder.


1.25 Contract. Any contract, mortgage, deed of trust, bond, indenture, lease, license, note, franchise, certificate, option, warrant, right or other instrument, document, obligation or agreement, whether written or oral.


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1.26 Contribution. The transactions contemplated by the Contribution Agreement to be consummated at the closing thereunder.


1.27 Equivalent Basic Subscribers (or "EBSs"). As of any date of determination and for each franchise area served by a System, the sum of (a) the total number of private residential customer accounts that are billed by individual unit for at least Basic Services (regardless of whether such accounts are in single-family homes or in individually billed units in apartment buildings and other multi-unit buildings) (exclusive of (i) "second connects" and "additional outlets" as such terms are commonly understood in the cable television industry, and (ii) accounts that are not charged or are charged less than the standard monthly service fees and charges then in effect for such System for Basic Services) and (b) the quotient of (i) the total monthly billings for sales of Basic Services and Expanded Basic Services by such System for such franchise area during the most recent billing period ended prior to the date of calculation to commercial, bulk-billed and other accounts not billed by individual unit (whether on a discounted or non-discounted basis) and to private residential customer accounts that are billed by individual unit but pay less than the standard monthly service fees charged for Basic Services, but excluding billings in excess of a single month's charges for any account, divided by (ii) the standard monthly combined rate (without discount of any kind) charged by such System for such franchise area to individually billed subscribers for the highest level of Basic Services and Expanded Basic Services offered by such system in effect during such billing period, which monthly rate will not be less than the applicable rates specified in SCHEDULE 5.14 (in the case of the Partnership) or SCHEDULE 6.14 (in the case of TCI). For purposes of calculating the number of EBSs, there will be excluded (i) all accounts billed by individual unit that are, and all billings to any commercial, bulk-billed and other accounts not billed by individual unit that are, more than 60 days past due in the payment of any amount in excess of the lesser of $5.00 or the standard rate charged for Basic Services at the time of determination, (ii) any accounts billed by individual unit and all commercial, bulk-billed and other accounts not billed by individual units that, as of the date of calculation, have not paid in full the charges for at least one full month of the subscribed service, (iii) that portion of the billings to all accounts billed by individual unit included in clause (b) above and any commercial, bulk-billed and other accounts not billed by individual unit representing an installation or other non-recurring charge, a charge for equipment or for any outlet or connection other than the first outlet or first connection in any individually billed unit or, with respect to a bulk account, in any residential unit (e.g., an individual apartment or rental unit), a charge for any tiered service other than Expanded Basic Services (whether or not included within Pay TV), any charge for Pay TV or a pass-through charge for sales taxes, line-itemized franchise fees, fees charged by the FCC and the like, and (iv) any individually billed unit and all billings to any commercial, bulk-billed or other accounts not billed by individual unit that was solicited within the 60 day period preceding the Closing Date to purchase such services by promotions or offers of discounts other than those ordinarily made by the party for which the determination of EBSs is being made or its predecessor. For purposes of this definition, payments on account of monthly billings will be deemed due on the first day of the period for which the service to which such billings relate is provided.


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1.28 Environmental Law. Any Legal Requirement concerning the protection of public or employee health, safety, welfare or the environment, including Legal Requirements relating to emissions, discharges, releases or threatened releases of Hazardous Substances into the environment, air (including both ambient and within buildings and other structures), surface water, ground water or land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances.


1.29 ERISA. The Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder and published interpretations with respect thereto.


1.30 ERISA Affiliate. As to any Person, any trade or business, whether or not incorporated, which together with such Person would be deemed a single employer as determined under Section 4001(a)(14) of ERISA.


1.31 Expanded Basic Services. Any level of video programming service greater than Basic Services provided over a cable television System, regardless of service tier, other than Basic Services, any new product tier and Pay TV.


1.32 FCC. The Federal Communications Commission.


1.33 Financial Statements. Century's Financial Statements or TCI's Financial Statements, as the context requires.


1.34 GAAP. Generally accepted accounting principles as in effect from time to time.


1.35 Governmental Authority. The United States of America, any state, commonwealth, territory or possession of the United States of America and any political subdivision or quasi-governmental authority of any of the same, including any court, tribunal, department, commission, board, bureau, agency, county, municipality, province, parish or other instrumentality of any of the foregoing.


1.36 Hazardous Substances. (a) Any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 'SS''SS'6901 et seq.), as amended, and the rules and regulations promulgated thereunder; (b) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (15 U.S.C. 'SS''SS'9601 et seq.) (CERCLA), as amended, and the rules and regulations promulgated thereunder; (c) any substance regulated by the Toxic Substances Control Act (TSCA) (15 U.S.C. 'SS''SS'2601 et seq.), or the Insecticide, Fungicide and Rodenticide Act (IFRA) (7 U.S.C. 'SS''SS'136 et seq.), each as amended, and the rules and regulations promulgated thereunder; (d) asbestos or asbestos- containing material of any kind or character; (e) polychlorinated biphenyls; (f) any substances regulated under the provisions of Subtitle I of RCRA relating to underground storage tanks; (g) any substance the presence, use, handling, treatment, storage or disposal of which on real property is prohibited by any Environmental Law; and (h) any other substance which by any Environmental Law requires special


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handling, reporting or notification of any Governmental Authority in its collection, storage, use, treatment or disposal.


1.37 HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.


1.38 Judgment. Any judgment, writ, order, injunction, award or decree of any court, judge, justice or magistrate, including any bankruptcy court or judge or the arbitrator in any binding arbitration, and any order of or by any Governmental Authority.


1.39 Knowledge. The actual knowledge of a particular matter of one or more of the principal corporate personnel of such party involved in the transactions contemplated by this Agreement, or the general manager or one or more of the managers of such party's Systems.


1.40 Leased Property. The Century Leased Property or TCI Leased Property, as the context requires.


1.41 Legal Requirement. Applicable common law and any statute, ordinance, code or other law, rule, regulation, order, technical or other written standard, requirement, policy or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority, including any Judgment and all judicial decisions applying common law or interpreting any other Legal Requirement, in each case, as amended.


1.42 Lien. Any security interest, security agreement, financing statement filed with any Governmental Authority, conditional sale or other title retention agreement, any lease, consignment or bailment given for purposes of security, any mortgage, lien, indenture, pledge, option, encumbrance, adverse interest, constructive trust or other trust, claim, attachment, exception to, defect in or other condition affecting title or other ownership interest (including but not limited to reservations, rights of entry, possibilities of reverter, encroachments, protrusions, easements, rights-of-way, rights of first refusal, restrictive covenants, leases and licenses) of any kind, which constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, System License, System Franchise, System Contract or otherwise.


1.43 Litigation. Any written claim, action, suit, proceeding, arbitration or hearing.


1.44 Losses. Any claims, losses, liabilities, damages, penalties, costs and expenses, including interest that may be imposed in connection therewith, expenses of investigation, reasonable fees and disbursements of counsel and other experts, and the cost to any Person making a claim or seeking indemnification under this Agreement with respect to funds expended by such Person by reason of the occurrence of any event or the existence or assertion of any Liens (other than Permitted Liens) with respect to which indemnification is sought, except Losses incurred by a Person or on behalf of a Person in asserting any claim for indemnification against a party where it is ultimately determined (including by agreement of the parties) that such Person is not entitled to


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indemnification from such party (before giving effect to the limitations on such indemnification obligations set forth in Sections 11.5 and 11.6).


1.45 Non-TV Products and Services. (A) local or long distance wireline telephony services, (B) data (other than data provided incidental to, or integrated with, television programming (such as interactive services) and high speed broadband internet access and other services now or hereafter provided by At Home Corporation), (C) internet access services (other than high speed broadband internet access and other services now or hereafter offered by At Home Corporation and other than internet access services that are provided incidental to, or integrated with, television programming), (D) video (other than cable, broadcast or any other television programming, including any substantially similar successor services that may replace these types of services), e.g., video telecommunications services, and (E) wireless telecommunications products and services (other than cable, broadcast or any other television programming, including any substantially similar successor services that may replace these types of services). Notwithstanding anything to the contrary in this definition, "Non-TV Products and Services" does not include (x) cable, broadcast or other television programming, or (y) high speed broadband communication internet access or services now or hereafter provided by At Home Corporation.


1.46 Other Real Property Interests. The Century Other Real Property Interests or the TCI Other Real Property Interests, as the context requires.


1.47 Owned Property. Century Owned Property or TCI Owned Property, as the context requires.


1.48 Pay TV. A la carte tiers or premium programming services selected by and sold to subscribers on a per channel or per program basis.


1.49 Permitted Lien. Any (a) Lien securing Taxes, assessments and governmental charges not yet due and payable, (b) zoning law or ordinance or any similar Legal Requirement, (c) right reserved to any Governmental Authority to regulate the affected property or to acquire the affected property for fair value, whether upon condemnation or pursuant to any Franchise or ordinance, (d) as to Owned Property and Other Real Property Interests, any Lien not securing indebtedness or arising out of the obligation to pay money that does not individually or in the aggregate interfere with the right or ability to own, use or operate the Owned Property or Other Real Property Interests as they are being used or operated or materially diminish the value of such Owned Property or Other Real Property Interests, (e) in the case of Owned Property and Leased Property, any lease or sublease by TCI or Century in favor of a third party that is disclosed in the Schedules to this Agreement, and (f) in the case of Leased Property, (i) the rights of any lessor and (ii) any Lien granted by any lessor of Leased Property; provided that "Permitted Lien" will not include any Lien securing a debt or claim (other than inchoate materialmen's, mechanics', workmen's, repairmen's or other like Liens arising in the ordinary course of business or any Lien described in clause (f) above) or any Lien which could prevent or impair in any way the conduct of the business of the affected System as it is currently being conducted, and provided further that the classification of any Lien as a "Permitted


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Lien" will not affect any liability which TCI may have under this Agreement for any such Lien with respect to the exchange of the TCI Systems or which the Partnership may have under this Agreement for any such Lien with respect to the exchange of the Century Systems, including pursuant to any indemnity obligation under this Agreement.


1.50 Person. Any natural person, Governmental Authority, corporation, general or limited partnership, limited liability company, joint venture, trust, association or unincorporated entity of any kind.


1.51 Required Consents. The Century Required Consents or the TCI Required Consents, as the context requires.


1.52 System. Any of the Century Systems or the TCI Systems, as the context requires.


1.53 System Contracts. The Century System Contracts or the TCI System Contracts, as the context requires.


1.54 System Franchises. The Century System Franchises or the TCI System Franchises, as the context requires.


1.55 System Licenses. The Century System Licenses or the TCI System Licenses, as the context requires.


1.56 Tangible Personal Property. The Century Tangible Personal Property or the TCI Tangible Personal Property, as the context requires.


1.57 Taxes. All levies and assessments of any kind or nature imposed by any Governmental Authority, including all income, sales, use, ad valorem, value added, franchise, severance, net or gross proceeds, withholding, payroll, employment, excise or property taxes and levies or assessments related to unclaimed property, together with any interest thereon and any penalties, additions to tax or additional amounts applicable thereto.


1.58 TCI Assets. All assets, properties, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description that are owned, leased, held for use or used in connection with TCI's Cable Business and in which TCI or any Affiliate of TCI has any right, title or interest or acquires any right, title or interest on or before the Closing, including TCI Tangible Personal Property, TCI Owned Real Property, TCI Leased Property, TCI Other Real Property Interests, TCI System Franchises, TCI System Licenses, TCI System Contracts, TCI Books and Records and TCI Other Intangibles, but excluding any TCI Excluded Assets.


1.59 TCI Books and Records. All engineering records, files, data, drawings, blueprints, schematics, reports, lists, plans and processes and all other files of correspondence, lists, records and reports concerning TCI's Cable Business, including subscribers and prospective subscribers of the


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TCI Systems, signal and program carriage and dealings with Governmental Authorities, including all reports filed by or on behalf of TCI with the FCC and statements of account filed by or on behalf of TCI with the U.S. Copyright Office.


1.60 TCI Leased Property. All leasehold interests in real property that are held for use or used in connection with TCI's Cable Business which TCI or any Affiliate of TCI has, or acquires prior to Closing, including those described as TCI Lease ...