Time Warner Cable 2010 Annual Report Download - page 30

new product development. TWC receives a fee for providing the A/N Subsidiary with high-speed data services and the
management functions noted above.
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) or to TWE,
TWC or a wholly owned affiliate of TWE or TWC (in the case of transfers by TW NY Cable). 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
TWC, or its affiliates, receives a majority of the interests of TWE-A/N held by the TW Partners. TWE is allowed to issue
additional partnership interests in TWE so long as TWC continues to own, directly or indirectly, either 35% or 43.75% of
the residual equity capital of TWE, 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 and A/N each has the right to cause TWE-A/N to be restructured at any
time upon 12 months notice. 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 Communications
TWC holds a 4.7% equity interest in Clearwire Communications LLC (“Clearwire Communications”), the operating
subsidiary of Clearwire, a publicly traded company that was formed by the combination of the respective wireless
broadband businesses of Sprint and Clearwire Communications. During 2010, Clearwire deployed its 4G wireless
network in several cities, providing mobile broadband services to wholesale and retail customers. Clearwire’s Class A
Common Stock is listed for trading on the NASDAQ Global Select Market.
In connection with TWC’s initial investment in Clearwire Communications, TWC entered into wholesale
agreements with Clearwire and Sprint that allow TWC to offer wireless services utilizing Clearwire’s 4G WiMax
network and Sprint’s 3G CDMA network. See “—Services—Residential Services—High-speed Data Services” above. At
the same time, affiliates of TWC and the other Clearwire investors, including Intel Corporation (“Intel”), Google Inc.,
Comcast and Bright House Networks, LLC, 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,
including director nominations, transfer and purchase restrictions on Clearwire’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 registration statement on Form S-3) as long as the securities to be
registered have an aggregate price to the public of not less than $50 million. On December 21, 2009, Clearwire filed a
shelf registration statement providing for the registration and sale of all Clearwire securities held by TWC as of such date.
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