Time Warner Cable 2006 Annual Report Download - page 35

interests and associated liabilities in the remaining TWE-A/N cable systems. Also, in connection with the
restructuring, TWC effectively acquired A/N’s interest in Road Runner. TWE-A/N’s financial results, other than
the results of the A/N Systems, are consolidated with TWC. Road Runner continues to provide high-speed data
services to the A/N Subsidiary.
Management and Operations of TWE-A/N. Subject to certain limited exceptions, a subsidiary of TWE is the
managing partner, with exclusive management rights of TWE-A/N, other than with respect to the A/N Systems.
Also, subject to certain limited exceptions, A/N has authority for the supervision of the day-to-day operations of the
A/N Subsidiary and the A/N Systems. In connection with the 2002 restructuring, TWE entered into a services
agreement with A/N and the A/N Subsidiary under which TWE agreed to exercise various management functions,
including oversight of programming and various engineering-related matters. TWE and A/N also agreed to
periodically discuss cooperation with respect to new product development.
Restrictions on Transfer — TW Partners. Each TW Partner is generally permitted to directly or indirectly
dispose of its entire partnership interest at any time to a wholly owned affiliate of TWE (in the case of transfers by
TWE-A/N Holdco, L.P. (“TWE-A/N Holdco”)) or to TWE, Time Warner or a wholly owned affiliate of TWE or
Time Warner (in the case of transfers by TWC). In addition, the TW Partners are also permitted to transfer their
partnership interests through a pledge to secure a loan, or a liquidation of TWE in which Time Warner, or its
affiliates, receives a majority of the interests of TWE-A/N held by the TW Partners. TWE-A/N Holdco is allowed to
issue additional partnership interests in TWE-A/N Holdco so long as Time Warner continues to own, directly or
indirectly, either 35% or 43.75% of the residual equity capital of TWE-A/N Holdco, depending on when the
issuance occurs.
Restrictions on Transfer — A/N Partner. A/N is generally permitted to directly or indirectly transfer its entire
partnership interest at any time to certain members of the Newhouse family or specified affiliates of A/N. A/N is
also permitted to dispose of its partnership interest through a pledge to secure a loan and in connection with
specified restructurings of A/N.
Restructuring Rights of the Partners. TWE-A/N Holdco and A/N each has the right to cause TWE-A/N to be
restructured at any time. Upon a restructuring, TWE-A/N is required to distribute the A/N Subsidiary with all of the
A/N Systems to A/N in complete redemption of A/N’s interests in TWE-A/N, and A/N is required to assume all
liabilities of the A/N Subsidiary and the A/N Systems. To date, neither TWE-A/N Holdco nor A/N has delivered
notice of the intent to cause a restructuring of TWE-A/N.
TWE’s Regular Right of First Offer. Subject to exceptions, A/N and its affiliates are obligated to grant TWE-
A/N Holdco a right of first offer prior to any sale of assets of the A/N Systems to a third party.
TWE’s Special Right of First Offer. Within a specified time period following the first, seventh, thirteenth and
nineteenth anniversaries of the deaths of two specified members of the Newhouse family (those deaths have not yet
occurred), A/N has the right to deliver notice to TWE-A/N Holdco stating that it wishes to transfer some or all of the
assets of the A/N Systems, thereby granting TWE-A/N Holdco the right of first offer to purchase the specified
assets. Following delivery of this notice, an appraiser will determine the value of the assets proposed to be
transferred. Once the value of the assets has been determined, A/N has the right to terminate its offer to sell the
specified assets. If A/N does not terminate its offer, TWE-A/N Holdco will have the right to purchase the specified
assets at a price equal to the value of the specified assets determined by the appraiser. If TWE-A/N Holdco does not
exercise its right to purchase the specified assets, A/N has the right to sell the specified assets to an unrelated third
party within 180 days on substantially the same terms as were available to TWE.
TWC’s Governing Documents
Management and Operation of TWC
The following description summarizes certain provisions of agreements related to, and constituent documents
of, TWC that affect and govern the ongoing operations of TWC. Such description does not purport to be complete
and is qualified in its entirety by reference to the provisions of such agreements and constituent documents.
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