Time Warner Cable 2006 Annual Report Download - page 36

Stockholders of TWC. A subsidiary of Time Warner owns 746,000,000 shares of TWC Class A common
stock, which generally has one vote per share, and 75,000,000 shares of TWC Class B common stock, which
generally has ten votes per share, which together represent 90.6% of the voting power of TWC stock and
approximately 84% of the equity of TWC. The TWC Class B common stock is not convertible into TWC Class A
common stock. The TWC Class A common stock and the TWC Class B common stock vote together as a single
class on all matters, except with respect to the election of directors and certain matters described below.
Board of Directors of TWC. The TWC Class A common stock votes as a separate class with respect to the
election of the Class A directors of TWC (the “Class A Directors”), and the TWC Class B common stock votes as a
separate class with respect to the election of the Class B directors of TWC (the “Class B Directors”). Pursuant to the
amended and restated certificate of incorporation of TWC (the “TWC Certificate of Incorporation”), which was
adopted upon the closing of the Adelphia Acquisition, the Class A Directors must represent not less than one-sixth
and not more than one-fifth of the directors of TWC, and the Class B Directors must represent not less than four-
fifths of the directors of TWC. As a result of its holdings, Time Warner has the ability to cause the election of all
Class A Directors and Class B Directors, subject to certain restrictions on the identity of these directors discussed
below.
The TWC Certificate of Incorporation requires that there be at least two independent directors on the board of
directors of TWC. Pursuant to a shareholder agreement between TWC and Time Warner (the “Shareholder
Agreement”), so long as Time Warner has the power to elect a majority of TWC’s board of directors, TWC must
obtain Time Warner’s consent before entering into any agreement that binds or purports to bind Time Warner or its
affiliates or that would subject TWC or its subsidiaries to significant penalties or restrictions as a result of any action
or omission of Time Warner or its affiliates; or adopting a stockholder rights plan, becoming subject to section 203
of the Delaware General Corporation Law, adopting a “fair price” provision in its certificate of incorporation or
taking any similar action.
Furthermore, pursuant to the Shareholder Agreement, Time Warner may purchase debt securities issued by
TWE under the TWE Indenture only after giving notice to TWC of the approximate amount of debt securities it
intends to purchase and the general time period for the purchase, which period may not be greater than 90 days,
subject to TWC’s right to give notice to Time Warner that it intends to purchase such amount of TWE debt securities
itself.
Under the terms of the TWC Certificate of Incorporation, for three years following July 31, 2006, the date upon
which shares of TWC common stock were issued in connection with the Adelphia Acquisition, at least 50% of the
board of directors of TWC must be independent directors.
Protections of Minority Class A Common Stockholders. The approval of the holders of a majority of the
voting power of the outstanding shares of TWC Class A common stock held by persons other than Time Warner is
necessary in connection with:
• any merger, consolidation or business combination of TWC in which the holders of TWC Class A common
stock do not receive per share consideration identical to that received by the holders of the TWC Class B
common stock (other than with respect to voting power) or which would adversely affect the specific rights
and privileges of the TWC Class A common stock relative to the TWC Class B common stock;
• any change to the TWC Certificate of Incorporation that would have a material adverse effect on the rights of
the holders of the TWC Class A common stock in a manner different from the effect on the holders of the
TWC Class B common stock;
• through July 31, 2011,any change to provisions of TWC’s amended and restated by-laws (the “TWC By-
Laws”) concerning restrictions on transactions between TWC and Time Warner and its affiliates and the
adoption of provisions of the TWC Certificate of Incorporation or the TWC By-Laws inconsistent with such
restrictions;
• any change to the TWC Certificate of Incorporation that would alter the number of independent directors
required on the TWC board of directors; and
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