Time Warner Cable 2007 Annual Report Download - page 28

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.
Wireless Spectrum Joint Venture
TWC is a participant in a joint venture with several other cable companies that holds 137 advanced wireless
spectrum (“AWS”) licenses. These licenses cover 20 MHz of AWS in about 90% of the continental United States
and Hawaii. The FCC awarded these licenses to the venture on November 20, 2006. There can be no assurance that
the venture will successfully develop mobile and related services. Under certain circumstances, the members of the
venture have the ability to exit the venture and receive from the venture, subject to certain limitations and
adjustments, AWS licenses covering the areas in which they provide cable services.
TWC’s Governing Documents
Management and Operations
The following description summarizes certain provisions of TWC’s constituent documents and certain
agreements that affect and govern TWC’s ongoing operations. 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.
TWC Stockholders. A subsidiary of Time Warner owns 746,000,000 shares of the TWC Class A common
stock, which has one vote per share, and 75,000,000 shares of TWC’s Class B common stock, which has ten votes
per share, which together represent 90.6% of the voting power of TWC’s common stock and approximately 84% of
the common stock. TWC’s Certificate of Incorporation does not include a mechanism to convert Class B common
stock into Class A common stock. The TWC Class A common stock and 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. The TWC Class A common stock votes as a separate class with respect to the election of
the Class A directors (the “Class A Directors”), and the Class B common stock votes as a separate class with respect
to the election of the Class B directors (the “Class B Directors”). Pursuant to TWC’s 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 TWC’s directors, and the Class B Directors must represent not less than
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