Time Warner Cable 2011 Annual Report Download - page 26

TWE-A/N Partnership Agreement
Time Warner Entertainment-Advance/Newhouse Partnership (“TWE-A/N”) is a partnership that was formed in 1994
between TWE and Advance/Newhouse Partnership. The general partnership interests in TWE-A/N are held by Time Warner
NY Cable LLC (“TW NY Cable”) and TWE (collectively, the “TW Partners”) and Advance/Newhouse Partnership (“A/N”), a
partnership owned by wholly owned subsidiaries of Advance Publications Inc. and Newhouse Broadcasting Corporation. The
TW Partners also hold preferred partnership interests. TWE acquired its interest in TWE-A/N as the result of a merger of its
wholly owned subsidiary, TWE-A/N Holdco, L.P. (which previously held the interest), into TWE on December 31, 2008.
2002 restructuring of TWE-A/N. The TWE-A/N cable television joint venture was formed by TWE and A/N in
December 1995. A restructuring of the partnership was completed during 2002. As a result of this restructuring, cable
systems and their related assets and liabilities serving approximately 2.1 million video subscribers as of December 31, 2002
(which amount is not included in TWE-A/N’s 4.4 million consolidated video subscribers as of December 31, 2011) located
primarily in Florida (the “A/N Systems”), were transferred to a wholly owned subsidiary of TWE-A/N (the “A/N
Subsidiary”). As part of the restructuring, effective August 1, 2002, A/N’s interest in TWE-A/N was converted into an
interest that tracks the economic performance of the A/N Systems, while the TW Partners retain the economic interests and
associated liabilities in the remaining TWE-A/N cable systems. TWE-A/N’s financial results, other than the results of the A/
N Systems, are consolidated with TWC’s.
Management and operations of TWE-A/N. Subject to certain limited exceptions, 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.
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 (whose 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
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