EXHIBIT 99.12
EXECUTION COPY
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SHAREHOLDER AGREEMENT
BETWEEN
TIME WARNER CABLE INC.,
AND
TIME WARNER INC.
DATED AS OF: APRIL 20, 2005
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TABLE OF CONTENTS
Page
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1. Definitions........................................................... 1
2. Actions Requiring Consent of TWX...................................... 4
3. TWX Covenants......................................................... 5
3.1 Tender Offers and Exchange Offers................................ 5
3.2 Mergers.......................................................... 5
3.3 TWE Public Debt.................................................. 5
4. Miscellaneous......................................................... 6
4.1 Notices......................................................... 6
4.2 Successors and Assigns.......................................... 7
4.3 Amendment and Waiver............................................ 7
4.4 Counterparts; Effectiveness..................................... 7
4.5 Specific Performance............................................ 7
4.6 Headings........................................................ 8
4.7 Governing Law................................................... 8
4.8 Jurisdiction.................................................... 8
4.9 WAIVER OF JURY TRIAL............................................ 8
4.10 Severability.................................................... 8
4.11 Rules of Construction........................................... 8
4.12 Entire Agreement; No Third Party Beneficiaries.................. 8
4.13 Effectiveness of Agreement; Termination......................... 9
4.14 Further Assurances.............................................. 9
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of April 20, 2005, among Time Warner
Inc., a Delaware corporation ("TWX") and Time Warner Cable Inc., a Delaware
corporation (the "Company").
WHEREAS, TWX and the Company, along with TWE Holdings II Trust
("Trust II"), are parties to a Parent Agreement, dated as of March 31, 2003 (the
"Parent Agreement");
WHEREAS, the Company, Comcast Corporation ("Comcast") and certain
other parties are parties to a Redemption Agreement, dated as of the date hereof
pursuant to which and subject to the terms and conditions thereof, the shares of
Class A Common Stock owned by Trust II will be redeemed, and upon such
redemption, the Parent Agreement will be terminated; and
WHEREAS, TWX and the Company wish to enter into this Agreement which
shall take effect upon the termination of the Parent Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Adelphia APA" means the Asset Purchase Agreement, dated as of the
date hereof, between Time Warner Cable NY LLC and Adelphia Communications
Corporation.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person; provided, that, for purposes of this definition, "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other equity securities, by contract or
otherwise.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Attribution Entity" means (i) any Managed Entity other than a
Managed 50% Entity or (ii) any other Person (other than a Subsidiary of the
Company or a Managed Entity) of which the Company owns, directly or indirectly,
at least 20% of the outstanding equity.
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"Board of Directors" means the Board of Directors of the Company.
"Business Combination" means a merger, consolidation, share
exchange, business combination, reorganization, recapitalization or similar
corporate transaction. Notwithstanding the foregoing, a Business Combination
shall include any transaction effected pursuant to Section 253 of the General
Corporation Law of the State of Delaware.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Charter Documents" means the Restated Certificate of Incorporation
and the By-laws of the Company as in effect from time to time.
"Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value
$0.01 per share, of the Company.
"Comcast" has the meaning set forth in the preamble to this
Agreement.
"Common Stock" means the Class A Common Stock and Class B Common
Stock.
"Company" has the meaning set forth in the preamble to this
Agreement.
"EBITDA" means, at any time of measurement, with respect to any
Person, for the twelve months ending on the last day of the most recent fiscal
quarter for which such information is available, operating income plus
depreciation and amortization of such Person, in each case determined in
accordance with GAAP as applied as of the date hereof and consistent with the
presentation and manner of calculation in the consolidated statement of
operations contained in the consolidated financial statements included in the
Form 10-Q filed by TWE for the period ended June 30, 2002.
"EBITDAR" means, EBITDA plus Rental Expense.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time.
"Governmental Authority" means any supranational, national, state,
municipal or local government, political subdivision or other governmental
department, court, commission, board, bureau, agency, instrumentality, or other
authority thereof, or
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any quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority, whether
domestic or foreign.
"Incurrence" has the meaning set forth in Section 2 of this
Agreement.
"Indebtedness" means, with respect to any Person, (a) any obligation
of such Person (i) for borrowed money, (ii) evidenced by a note, debenture or
similar instrument (including a purchase money obligation) given in connection
with the acquisition of any property or assets, including securities, (iii) for
the deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business or (iv) under any lease or
similar arrangement that would be required to be accounted for by the lessee as
a capital lease in accordance with GAAP; (b) any guarantee (or keepwell
agreement) by such Person of any indebtedness of others described in the
preceding clause (a); (c) any obligation to reimburse any bank or other Person
for amounts paid under a letter of credit or similar instrument (other than
those issued in respect of the performance obligations in the ordinary course);
and (d) any preferred stock or similar security or equity interest having a
preference over the common equity of such Person in a liquidation, dissolution,
or winding-up of such Person; provided, however, that any such preferred stock
or similar security or equity interest held by TWX or its Subsidiaries shall not
be deemed Indebtedness of the Company, any Subsidiary of the Company or any
Managed Entity for so long as it is held by any such Person.
"Independent Director" has the meaning set forth in Section 303.01
or any successor provision of the Listed Company Manual of the New York Stock
Exchange, as such rules may be amended from time to time.
"Initial Offering Date" means the earlier of (i) the date upon which
shares of the Common Stock shall have been sold in an initial public offering
(whether a primary or secondary offering) of the Company pursuant to an
effective registration statement filed by the Company and (ii) the Closing under
the Adelphia APA.
"Managed Entity" means any Person in which the Company or any of its
Subsidiaries owns any equity and the cable operations of which are managed by
the Company or any of its Subsidiaries pursuant to a management or similar
agreement or arrangement. Each of the Persons included in the Selected Business
shall be deemed not to be a Managed Entity.
"Managed 50% Entity" means any Managed Entity in which the Company
or any of its Subsidiaries owns 50% or more of the outstanding equity. Without
limitation of the foregoing, Texas and Kansas City Cable Partners, L.P. shall be
deemed to be a Managed 50% Entity.
"Operating Lease Obligations" means, with respect to any Person, an
amount equal to six (6) times such Person's Rental Expense.
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"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity or any "group" (as defined under Rule 13-d of the Exchange Act).
"Rental Expense" means, with respect to any Person, the aggregate
amount of rent payable under all leases, the obligation with respect to which is
not included under the definition of Indebtedness, of such Person for the twelve
(12) months ending on the last day of the calendar month immediately prior to
the date of determination.
"Selected Business" has the meaning set forth in the TWE/AN
Partnership Agreement.
"Specified Period" has the meaning set forth in Section 4.3 of this
Agreement.
"Subsidiary" means, with respect to any Person, any other Person of
which securities or other ownership interests having voting power to elect a
majority of the board of directors or other body performing similar functions
are at any time directly or indirectly owned by such Person.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware
limited partnership.
"TWE Indenture" means that certain Indenture, dated as of April 30,
1992, by and among Time Warner Inc., a Delaware corporation, TWE and The Bank of
New York, a New York banking corporation, as trustee, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time.
"TWE/AN Partnership Agreement" has the meaning ascribed to such term
in the Buyer Disclosure Schedules that are referred to in the Adelphia APA.
"TWX" has the meaning set forth in the preamble to this Agreement.
2. Actions Requiring Consent of TWX. In addition to any approval
required under applicable law or the Charter Documents, the Company will not
(and will cause its Subsidiaries and Managed Entities not to) take, approve or
otherwise ratify any of the following actions (whether or not such actions have
been otherwise approved by the Board of Directors or any committee thereof)
without the prior written approval of TWX:
(a) create, incur, assume (including, without
limitation, by acquiring any entity that has outstanding Indebtedness or Rental
Expense), enter into or guarantee (each such action, an "Incurrence") any
Indebtedness or Rental Expense if the Company's ratio of Indebtedness plus
Operating Lease Obligations to EBITDAR then
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exceeds, or would exceed as a result of such Incurrence, 3:1. For purposes of
determining the Company's Indebtedness, Operating Lease Obligations and EBITDAR,
there shall be deemed to be included the following: (A) 100% of the
Indebtedness, Operating Lease Obligations and EBITDAR of all Subsidiaries of the
Company and all Managed 50% Entities and (B) a percentage of Indebtedness,
Operating Lease Obligations and EBITDAR of each Attribution Entity equal to the
percentage of the equity of such Attribution Entity owned, directly or
indirectly, by the Company; provided that (i) in calculating the Company's
Indebtedness, no portion of Indebtedness of any Person shall be included in the
calculation to the extent the Indebtedness has already been included (whether by
guarantee or otherwise) as Indebtedness of the Company in such calculation, (ii)
none of the Indebtedness, Operating Lease Obligations, or EBITDAR attributable
to the Selected Business shall be included in the Indebtedness, Operating Lease
Obligations or EBITDAR of the Company, and (iii) no Indebtedness owed by the
Company or any of its Subsidiaries or any Managed Entity shall be included if it
is owed to TWX or any of its Subsidiaries (except to the extent such Subsidiary
to which such Indebtedness is owed is not directly or indirectly wholly-owned by
TWX) or the Company or any of its Subsidiaries or Managed Entities (except to
the extent such Subsidiary or Managed Entity to which such Indebtedness is owed
is not directly or indirectly wholly-owned by the Company or TWE).
(b) enter into any agreement or arrangement that (i)
binds or purports to bind TWX or any of its Affiliates (other than the Company
and its Subsidiaries) in any manner, or (ii) would impose significant penalties
or restrictions on the Company or its Subsidiaries as a result of any action or
omission of TWX or its Affiliates (other than the Company or its Subsidiaries).
(c) adopt a shareholder rights plan, cause the Company
to be subject to Section 203 of the General Corporation Law of the State of
Delaware, amend its certificate of incorporation to impose a "fair price
provision", or take any similar action.
3. TWX Covenants. TWX hereby agrees as follows:
3.1 Tender Offers and Exchange Offers. For a period of three
(3) years following the Initial Offering Date, TWX shall not (and shall cause
its controlled Affiliates not to) make any tender offer or exchange offer for
any shares of Class A Common Stock (or announce any intention to do so) without
the approval of a majority of the Independent Directors then serving on the
Board of Directors.
3.2 Mergers. For a period of ten (10) years following the
Initial Offering Date, TWX shall not (and shall cause its controlled Affiliates
not to) enter into or effect a Business Combination with the Company without the
approval of a majority of the Independent Directors then serving on the Board of
Directors.
3.3 TWE Public Debt. In the event that TWX or its Subsidiaries
(other than the Company and its Subsidiaries) wishes to purchase any debt
securities issued by TWE under the TWE Indenture, TWX shall first give written
notice
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to the Company of the approximate amount of debt securities it intends to
purchase and the general time period within which it intends to purchase such
debt securities, which time period shall not be greater than ninety (90) days
(the "Specified Period"). The Company shall have five (5) Business Days
following receipt of such notice to indicate its good faith intention to
purchase such amount of debt securities within the Specified Period. If the
Company so indicates, TWX shall not, and shall cause its Subsidiaries (other
than the Company and its Subsidiaries) not to, purchase any such debt securities
within the Specified Period and shall thereafter comply with the provisions of
this Section 3.3 prior to any subsequent purchase of any debt securities issued
under the TWE Indenture. If the Company does not indicate its good faith
intention to purchase such debt securities, TWX shall be entitled to proceed
with its purchase of debt securities for the duration of the Specified Period.
4. Miscellaneous.
4.1 Notices. All notices, demands or other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first class mail, return receipt requested, telecopier,
courier service or personal delivery:
(a) if to the Company:
Time Warner Cable Inc.
75 Rockefeller Plaza
New York, New York 10019-6908
Telecopy: (212) 258-3172
Attention: Executive Vice President,
General Counsel and Secretary
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Attention: Kelley D. Parker
Robert B. Schumer
Fax: (212) 757-3990
(b) if to TWX:
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Telecopy: (212) 258-3172
Attention: Executive Vice President,
General Counsel and Secretary
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With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Attention: Kelley D. Parker
Robert B. Schumer
Fax: (212) 757-3990
or such other address or facsimile number as such party hereto may hereafter
specify for such purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5 p.m. on a Business
Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
4.2 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party hereto may assign,
delegate or transfer any of its rights or obligations hereunder without the
consent of the other parties hereto.
4.3 Amendment and Waiver.
Any amendment, supplement or modification of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure by any party from the terms of any provision of this Agreement,
shall be effective only if it is made or given in writing and signed by (i) the
Company (upon a vote of a majority of the Independent Directors then serving on
the Board of Directors), and (ii) TWX.
No failure or delay on the part of any party hereto in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The rights
and remedies provided for herein are cumulative and are not exclusive of any
rights and remedies that may be available to the parties hereto at law, in
equity or otherwise.
4.4 Counterparts; Effectiveness. This Agreement may be signed
in counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto.
4.5 Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to enforce specifically the performance
of the terms and provisions hereof
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in any federal court located in the State of New York or any New York state
court, in addition to any other remedy to which they are entitled at law or in
equity.
4.6 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
4.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflicts of law rules of the State of New York.
4.8 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought in
any federal court located in the State of New York or any New York state court,
and each of the parties hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on either party hereto anywhere in the world, whether within or without the
jurisdiction of any such court.
4.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
4.10 Severability. If any term, provision, covenant or
restriction of this Agreement is determined by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party hereto. Upon such a
determination, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
may be consummated as originally contemplated to the fullest extent possible.
4.11 Rules of Construction. Unless the context otherwise
requires, references to sections or subsections refer to sections or subsections
of this Agreement.
4.12 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior
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agreements and understandings, both oral and written, between the parties with
respect to such subject matter.
(b) This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
4.13 Effectiveness of Agreement; Termination. This Agreement
shall become effective only upon termination of the Parent Agreement. Section
2(a) of this Agreement shall terminate at such time as the Indebtedness of the
Company is no longer attributable to TWX (such determination to be made in TWX's
reasonable judgment). Sections 2(b), 2(c), 4.1, 4.2 and 4.3 of this Agreement
shall terminate at such time as the Company is no longer a Subsidiary of TWX.
4.14 Further Assurances. Each of the parties shall, and shall
cause their respective Affiliates to, execute such documents and perform such
further acts as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Parent Agreement on the date first written above.
TIME WARNER CABLE INC.
By: /s/ David E. O'Hayre
-------------------------------------
Name: David E. O'Hayre
Title: Executive Vice President,
Investments
TIME WARNER INC.
By: /s/ Robert Marcus
-------------------------------------
Name:Robert D. Marcus
Title: Senior Vice President
Shareholder Agreement