Time Warner Cable 2008 Annual Report Download - page 34

Restructuring rights of the partners. TWE 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 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
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 stating that it wishes to transfer some or all of the assets of the
A/N Systems, thereby granting TWE 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 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 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.
Clearwire Investment
In November 2008, TWC, Intel Corporation (“Intel”), Google Inc., Comcast and Bright House Networks, LLC
(together with TWC, Intel Corporation, Google Inc. and Comcast, the “Clearwire Investors”) collectively invested
$3.2 billion in Clearwire Corp and one of its operating subsidiaries, Clearwire LLC. TWC’s final ownership interest
in Clearwire will be determined based on the trading price of Clearwire Corp’s Class A common stock during a post-
closing measuring period ending on February 26, 2009. If the volume weighted average trading price is $17 or
below, TWC’s ownership interest will be approximately 4.4%. The closing price of Clearwire Corp’s Class A
common stock on February 13, 2009 was $3.60.
In connection with the transaction, affiliates of TWC and the other Clearwire Investors entered into an
operating agreement, an equity holders’ agreement and a registration rights agreement (the “Registration Rights
Agreement”) with Clearwire, and, other than Intel, a strategic investor agreement governing certain rights and
obligations of the parties with respect to the governance of Clearwire Corp, including director nominations, transfer
and purchase restrictions on Clearwire Corp’s common stock, rights of first refusal, pre-emptive rights and tag-
along rights. Under the Registration Rights Agreement, TWC is entitled to two demand registration rights (other
than demands to file a Form S-3) as long as the securities to be registered have an aggregate price to the public of not
less than $50 million. After Clearwire becomes eligible to use Form S-3, Clearwire is required to file a shelf
registration statement providing for the registration and sale of securities on a delayed or continuous basis and TWC
also has the right to demand that Clearwire file a Form S-3. The Registration Rights Agreement also provides TWC
with customary “piggyback” registration rights.
Wireless Spectrum Joint Venture
TWC is a participant in a joint venture with certain other cable companies (“SpectrumCo”) that holds
advanced wireless spectrum (“AWS”) licenses. Under certain circumstances, the members of SpectrumCo 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. In January 2009, SpectrumCo redeemed the 10.9% interest
held by an affiliate of Cox Communications, Inc. (“Cox”), and Cox received AWS licenses, principally covering
areas in which Cox has cable services, and approximately $70 million in cash (of which TWC’s share was
$22 million). Following the closing of the Cox transaction, SpectrumCo’s AWS licenses cover 20 MHz over 80% of
the continental United States and Hawaii.
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