HIGH-SPEED SERVICE AGREEMENT

 

 

doubt, by way of co-location) any equipment, technology, hardware or software at TWC’s premises or within the System Facilities. As between EarthLink and TWC, TWC shall retain full ownership and operating control of, and will be fully responsible for operating and maintaining, the System Facilities. TWC shall have no responsibility for provision of facilities to EarthLink other than as expressly set forth herein.

 

(b)        EarthLink’s Obligations .

 

(i)         Subject to and in accordance with the terms and conditions of this Agreement, EarthLink shall, at its own expense and in its sole discretion, promote, advertise, offer, market, and sell the EarthLink High-Speed Service in the Operating Areas.

 

(ii)        As between EarthLink and TWC, EarthLink shall, at its own expense, create or otherwise aggregate and obtain any content, applications, features, functionality, products and services that may be included in the EarthLink High-Speed Service and are not included in the TWC HSS as provided by TWC under this Agreement. Subject to Section 1.4(b), EarthLink shall provide Service Subscribers with access to the full offering of all features and functionality made available to residential subscribers through any other EarthLink-branded high-speed Internet access service, including but, not limited to, all such associated links, content, services, features, functionality, issuance and use of EarthLink email addresses and features related thereto available to residential customers in any other EarthLink branded high-speed Internet access service (other than any EarthLink-branded service offered as a municipal “wi-fi” service offering ( i.e ., a local wireless service offered in a specific municipality)). EarthLink also shall, at its own expense, be responsible for providing, managing and operating all narrowband dial-up access services that EarthLink may desire, in its discretion, to offer in connection with the EarthLink High-Speed Service. If, at any time during the Term, EarthLink makes any material upgrades, modifications or enhancements to the EarthLink High-Speed Service, the EarthLink Software or the Documentation, EarthLink shall provide any software upgrades by electronic download or compact disc, and continue to reasonably support the immediately preceding version of the EarthLink High-Speed Service for a period of at least twelve (12) months from the general commercial release of the new version thereof.

 

(iii)       Subject to and in accordance with the terms and conditions of this Agreement, EarthLink hereby grants to TWC during the Term the right and license to the extent necessary to promote, advertise, offer, market, distribute, transmit, deliver, reproduce, perform, display and otherwise use the EarthLink High-Speed Service in order to provide the same to Service Subscribers in the Operating Areas. Such license shall include: (A) all rights necessary for TWC to exercise its rights and perform its obligations hereunder in connection with the EarthLink High-Speed Service, including with respect to interfaces, tools, content and software therein, and (B) the right to reproduce and distribute, directly and through third parties, the EarthLink Software and Documentation in connection with the offering of the EarthLink High-Speed Service. Without limitation of the foregoing, but subject to Section 2.1 (Retail Price), TWC shall have the right to

 

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market the Premium EarthLink High-Speed Service to EarthLink customers at pricing to be established by TWC.

 

(iv)       Subject to and in accordance with the terms and conditions of this Agreement, EarthLink shall not: (A) conduct or knowingly permit any illegal activity using the EarthLink High-Speed Services or the System Facilities; (B) except as required by TWC or Bright House Networks LLC pursuant to Section 5.3 of this Agreement or otherwise solely in connection with account administration communications ( e.g. , messages without promotional content), engage in or knowingly permit use of the System Facilities to engage in mass distribution of unsolicited messages, use of e-mail to initiate an attempt to gain unauthorized access to the computer system of any person or entity, or unauthorized entry into computer or other systems; (C) interfere with the operation of the System Facilities or a third party’s use of any services (not including actions taken in connection with the administration of any Service Subscriber accounts) provided through the System Facilities; or (D) subject TWC’s or its subcontractors’ personnel to hazardous conditions. In any instance in which TWC believes in good faith that any of the provisions in this Section 1.1(b)(iv) have been breached, subject to the following sentence and without limitation of any other rights or remedies, TWC may immediately restrict, suspend or discontinue providing the EarthLink High-Speed Service. In the event of EarthLink’s breach of this Section 1.1(b)(iv), and except in a circumstance where immediate action is necessary to prevent or minimize resulting damage, actual or reasonably anticipated liability to TWC, or material interference with the TWC HSS or the System Facilities, prior to any such restriction, suspension or discontinuance, TWC shall provide prior notice to EarthLink, and, if curable, EarthLink will have ten (10) business days to cure such breach. TWC will not be liable to EarthLink or any third party for such restriction, suspension or discontinuance. In addition, EarthLink’s breach of any of the provisions of this Section 1.1(b)(iv) (except for breaches of this Section 1.1(b)(iv) due to the illegal activities of users of the Internet or EarthLink’s services, without specific misconduct by or on behalf of EarthLink) and failure to cure any such breach within the time period specified above, will constitute a material breach of this Agreement. For the avoidance of doubt, each Party shall be responsible for processing and taking all actions required by law in response to any notifications it receives pursuant to the Digital Millennium Copyright Act, 17 U.S.C. § 512.

 

1.2                  Network Architecture.

 

(a)        TWC shall have the right to determine, in its sole discretion, all aspects of network architecture with respect to the System Facilities that deliver the EarthLink High-Speed Service. To the extent TWC elects to make available any modifications or enhancements to network quality of service, or network operations or architecture for any Online Provider with or without an additional charge, then the Parties will reasonably discuss in good faith the possibility of amending this Agreement to include such modifications or enhancements. TWC shall support Service Subscribers in a reasonable manner (including time to repair, installations and responding to customer service calls) determined in TWC’s reasonable business judgment. TWC’s customer support shall not be determined based upon whether a particular high-speed service customer is a Service Subscriber or a customer of another Online Provider or Road Runner.

 

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(b)        TWC will provide all the necessary network functions to support DOCSIS cable modem systems.

 

1.3                  EarthLink High-Speed Service Speed Tiers.

 

TWC currently provides three (3) service tiers for the TWC HSS: Service Level 1 (Standard); Service Level 2 (Premium); and Service Level 3 (Lite). EarthLink shall offer the EarthLink High-Speed Service utilizing TWC’s Service Level 1 and may, but shall not be required to, offer the EarthLink High-Speed Service utilizing Service Level 2 and/or Service Level 3. Each tier is keyed to a maximum throughput between each Device and the Internet, and will provide a (1) maximum throughput capacity for a Service Subscriber ( e.g. , the maximum instantaneous IP data throughput available to a Service Subscriber), and (2) maximum byte consumption by such Service Subscriber per month.

 

(a)        “Service Level 1” currently provides (i) maximum throughput capacity for a Service Subscriber of 5 Mbps downstream (i.e., Internet to Device) and 384Kbps or 512Kbps upstream (i.e., Device to Internet), and (ii) maximum byte consumption by such Service Subscriber per month of no more than ____ Gb downstream and ____ Gb upstream.

 

(b)        “Service Level 2” currently provides (i) maximum throughput capacity for a Service Subscriber of 8 Mbps downstream and 1 Mbps upstream, and (ii) maximum byte consumption by such Service Subscriber per month of no more than _____ Gb downstream and _____ Gb upstream.

 

(c)        “Service Level 3” currently provides (i) maximum throughput capacity for a Service Subscriber of 768Kbps downstream and 128Kbps upstream, and (ii) maximum byte consumption by such Service Subscriber per month of no more  than _____ Gb downstream and _____ Gb upstream.

 

(d)        TWC shall have the right, at any time and in its sole discretion, with respect to any or all TWC Cable Systems, to:

 

(i)         establish additional tiers other than Service Level 1, Service Level 2 or Service Level 3 or upgrades, premiums, or upsells to existing tiers utilizing any features or conditions, including but not limited to throughput capacity or consumption, it deems appropriate (such Service Levels and any additional tiers upgrades, premiums, or upsells established by TWC collectively referred to as the “Service Levels” );

 

(ii)        modify the features and conditions, including but not limited to throughput capacity or consumption, of any then-existing Service Level(s);

 

(iii)       cancel any Service Level(s); and

 

(iv)       establish, in a manner consistent with applicable law, requirements regarding the terms on which any Online Provider, including EarthLink, may offer any Service Level(s) (e.g., limiting access to a given Service Level to promotional uses for a limited duration).

 

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TWC shall take commercially reasonable steps to provide EarthLink with at least 60 days’ written notice prior to instituting or terminating any Service Level(s) in any TWC Division(s); provided that (x) EarthLink acknowledges that, from time to time, competitive pressures may require that TWC promptly institute or terminate Service Level(s) and that, under such circumstances, TWC will satisfy its notice obligations by providing EarthLink with the best notice practicable under the circumstances; and (y) TWC acknowledges that any changes negatively impacting customers (e.g., decreased speed or lower consumption caps) may require EarthLink to provide its customers with at least 30 days’ written notice. In the event TWC terminates any Service Level, TWC and EarthLink agree to work in good faith to create and implement a transition plan for those Service Subscribers impacted by such termination.

 

(e)        TWC shall make available to EarthLink all Service Level(s) that TWC makes available for its Road Runner residential service. TWC and EarthLink shall negotiate in good faith the economic terms for any Service Level(s) established by TWC after the Effective Date, including, without limitation, monthly fees and surcharges.

 

(f)         TWC reserves the right, in its sole discretion to meter or otherwise technologically monitor Service Subscriber consumption levels and usage volume and patterns and to utilize any means at its disposal to ensure that Service Subscribers do not violate the terms of their Service Level, TWC’s acceptable use policy (AUP) or subscriber agreement, including any limits on bandwidth consumption or usage. Such means may include the imposition of rate shaping or other technological means of ensuring compliance with Service Level terms, additional fees for excess bandwidth usage to Service Subscribers or requiring subscription to a higher Service Level as a condition of continuing to provide service to a Service Subscriber who violates TWC’s terms. TWC shall exercise its reasonable business judgment in enforcing its rights using these means, and will not make decisions based upon whether a particular high speed service customer is a Service Subscriber or a customer of another Online Provider or Road Runner.

 

1.4                  General.

 

(a)        The EarthLink High-Speed Service will be optimized for the desktop or laptop personal computer (as such concepts are generally understood as of the Effective Date) (a “Personal Computer”). EarthLink and TWC understand that the EarthLink High-Speed Service may operate (i) with another device connected through a cable modem or (ii) through a device including an integrated cable modem, in either case if so connected by a Service Subscriber (each such Personal Computer or other device, a “Device” ). Without limiting the foregoing, the technical specifications of the version of any content, applications, features, functionality, products or services included in the EarthLink High-Speed Service will be specifically formatted and designed for an Internet Protocol ( “IP” ) Device conforming to then-current DOCSIS specifications. TWC’s obligations under this Agreement shall not include installation to any Device other than a Personal Computer and a cable modem connected directly to the Personal Computer. Notwithstanding the foregoing, EarthLink shall not be in breach of this Section 1.4 if the EarthLink High-Speed Service is not optimized for Personal Computers as a result of the actions or inactions of TWC in violation of TWC’s obligations under this Agreement.

 

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(b)        Subject to any other express limitations herein, EarthLink may offer any IP data-based services on or through the EarthLink High-Speed Service as EarthLink determines from time to time in its sole discretion, including those that utilize a television Device; and may provide any equipment used to deliver such services, and any IP value added services (including streaming audio and video applications and video programming that is commonly available for purchase or free viewing on the Internet and any content, applications, features, products and services offered through the EarthLink narrowband services to Personal Computers), and may enter into relationships to bundle and package specialty viewing content over high-speed Internet service offered by EarthLink (i.e., such as EarthLink’s current partnership with Synacor for sports viewing or a future partnership with a provider such as Akimbo). Any permitted services will be compatible with the network architecture determined pursuant to Section 1.2. Any such content, applications, features, functionality, products and services included in the EarthLink High-Speed Service when sold by EarthLink will also be included in such EarthLink High-Speed Service when sold by TWC.

 

(i)         Notwithstanding the foregoing, nothing herein shall be construed to allow EarthLink to bundle as all or any part of or with any EarthLink High-Speed Service: (i) any audiovisual programming services similar to television programming “channels” or television services (including, without limitation, any “IPTV” service); or (ii) any services similar to those services commonly referred to as “video on demand” or “VOD,” whether free or on a subscription basis, including any mode of exhibition of single or multi-channel, full motion video with accompanying principal audio programming (collectively, “TV Services” ). For example, EarthLink may not bundle as all or part of or with any EarthLink High-Speed Service an IPTV service offered by a third-party provider. The Parties further agree that EarthLink will in no event target market to Service Subscribers or existing subscribers of TWC’s Road Runner service any TV Services of any provider; provided that TWC shall provide to a third-party service provider agreed by the Parties (each Party’s agreement not to be unreasonably withheld) a list of such Road Runner subscribers and provide timely updates as requested.

 

(c)        For purposes of clarification, TWC shall have no quality of service obligations with respect to video, audio or other streamed media of any kind provided by EarthLink in connection with the EarthLink High-Speed Service.

 

(d)        Unless the Parties shall otherwise agree in writing, the EarthLink High-Speed Service shall be designed, intended and marketed solely as a consumer service offering to residential locations, which may include marketing the consumer use of the EarthLink High-Speed Service for telecommuting and “work at home” purposes.

 

1.5                  IP Addresses.

 

Consistent with DOCSIS 1.0, TWC will supply the public IP address or addresses as reasonably necessary for the management of the cable modem device in the Service Subscriber’s home. To the extent any TWC Division provides multiple public IP addresses for residential high-speed service customers, TWC shall consider supplying multiple public IP addresses for residential Service Subscribers and will make such determination in good faith without consideration of whether a particular high-speed service customer is a Service

 

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Subscriber or a customer of another Online Provider or Road Runner. As reasonably required by TWC, EarthLink will supply routable IP address ranges for connecting to the EarthLink High-Speed Service.

 

1.6                  IP Telephony.

 

EarthLink will not provide any IP telephony that could reasonably cause or causes TWC to become subject to regulation as a provider of a telecommunications service by any state public utilities commission or the FCC or other governmental or judicial authority or agency. TWC shall not be required to provide any quality of service commitments for any IP telephony. If TWC incurs a tax or fee as a result of any provision of IP telephony by EarthLink on the EarthLink High-Speed Service, EarthLink, at its sole discretion, will either (a) cease offering IP telephony on the EarthLink High-Speed Service to the extent necessary to avoid such tax or fee, or (b) pay its share (pro-rata with other Online Providers offering IP telephony services) of such tax or fee assessed on TWC or its facilities as a result of such IP telephony services.

 

2.                          PRICING; ECONOMICS AND INVOICING

 

2.1       Retail Price.

 

Each Party will set its own retail price(s) for the Basic EarthLink High-Speed Service (including for Service Level 1, Service Level 2, Service Level 3 and any other Service Levels established by TWC) (the “Retail Price(s)” ) as sold by it, including the right to establish different prices to Service Subscribers in different TWC Cable Systems. EarthLink shall have the right to set the retail price for any Premium EarthLink High-Speed Service in connection with its sales thereof and in connection with TWC’s sales thereof, which shall be as agent for EarthLink. For purposes of clarity, the Retail Price shall not be deemed to include taxes, franchise fees or installation or set-up (or similar) fees, regardless of whether the same are charged to Service Subscribers.

 

2.2                  Monthly Fees.

 

(a)        Service Level 1 .

 

For Service Level 1 Service Subscriptions (other than for Additional EarthLink Revenues):

 

(i)         Where the Retail Price is set by EarthLink, TWC shall be entitled to ______________ dollars ($_____), plus ____________ percent of the Excess Amount, if any, per Service Level 1 Service Subscription (the “SL1 TWC Monthly Fee” ). Such amount will be paid to TWC by EarthLink for Service Subscribers billed by EarthLink (or Service Subscribers billed by TWC to the extent the Retail Price set by EarthLink is less than the SL1 TWC Monthly Fee) or retained by TWC for Service Subscribers billed by TWC, if any.

 

(ii)        Where the Retail Price is set by TWC, EarthLink shall be entitled to ___________ dollars ($_____), plus _____________ percent of the Excess Amount, if any, per Service Level 1 Service Subscription (the “SL1 EarthLink Monthly Fee” ). Such

 

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amount will be paid to EarthLink by TWC as such Service Subscribers will be billed by TWC.

 

The “Excess Amount” shall be the amount by which the Retail Price for the EarthLink High-Speed Service exceeds _____________ dollars ($___).

 

In the event either Party offers a promotion in which the Retail Price is less than $___ for a defined promotional period and the full Retail Price is charged after the promotional period, the Retail Price for each period shall be the net amount billed the customer. As a result, there will be no Excess Amounts due by either Party during the promotional period if the net amount billed the customer is less than $___.

 

(b)        Service Level 2 .

 

For Service Level 2 Service Subscriptions (other than for Additional EarthLink Revenues):

 

(i)         Where the Retail Price is set by EarthLink, TWC shall be entitled to __________ dollars ($_____), plus ______________ percent of the SL2 Excess Amount (as defined below), if any, per Service Level 2 Service Subscription (the “SL2 TWC Monthly Fee” ). Such amount will be paid to TWC by EarthLink for Service Subscribers billed by EarthLink (or Service Subscribers billed by TWC to the extent the Retail Price set by EarthLink is less than the SL2 TWC Monthly Fee) or retained by TWC for Service Subscribers billed by TWC, if any.

 

(ii)       Where the Retail Price is set by TWC, EarthLink shall be entitled to ___________ dollars ($_____), plus ______________ percent of the SL2 Excess Amount, if any, per Service Level 2 Service Subscription (the “SL2 EarthLink Monthly Fee” ). Such amount will be paid to EarthLink by TWC as such Service Subscribers will be billed by TWC.

 

The “SL2 Excess Amount” shall be the amount by which the Retail Price for the EarthLink High-Speed Service exceeds [_______________ dollars and _____________ cents] ($_______).

 

(c)        Service Level 3 .

 

For Service Level 3 Service Subscriptions (other than for Additional EarthLink Revenues):

 

(i)         Where the Retail Price is set by EarthLink, TWC shall be entitled to the appropriate Service Level 3 Payment (as determined in accordance with Section 2.2(c)(i)(A) — (C) below), plus _____________ percent of the SL3 Excess Amount (as defined below), if any, per Service Level 3 Service Subscription (the “SL3 TWC Monthly Fee” ). Such amount will be paid to TWC by EarthLink for Service Subscribers billed by EarthLink (or Service Subscribers billed by TWC to the extent the Retail Price set by EarthLink is less than the SL3 TWC Monthly Fee) or retained by TWC for Service Subscribers billed by TWC, if any.

 

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(A)       TWC wishes to create an incentive for EarthLink to encourage existing EarthLink narrowband subscribers to become Service Subscribers. Accordingly, for so long as the Incentive Benchmark (as defined below), as measured on the then-most recent Incentive Benchmark Date (as defined below), is equal to or greater than the Incentive Benchmark as measured on the Effective Date, the “Service Level 3 Payment” for incremental Service Level 3 Subscribers will be $______. If, as of any Incentive Benchmark Date after the Effective Date, the Incentive Benchmark is not higher than the Incentive Benchmark as of the Effective Date, then thereafter (until the next Incentive Benchmark Date if any on which the Incentive Benchmark is equal to or greater than the Incentive Benchmark as measured on the Effective Date) the “Service Level 3 Payment” for incremental Service Level 3 Subscribers will be $______. Actual payments will be based on gross subscriber numbers using a LIFO (i.e., “last in first out”) method, as described in Section 2.2(c)(i)(C) below, rather than based on the date on which a particular subscriber became an EarthLink Subscriber.

 

(B)        The “Incentive Benchmark” shall be calculated on the Effective Date and on each anniversary of the Effective Date (each, an “Incentive Benchmark Date” ) by:

 

(1)         calculating the average monthly level of then-current Service Level 1 Service Subscribers originally sold by EarthLink and the average monthly level of then-current Service Level 2 Service Subscribers originally sold by EarthLink for each of the 12 calendar months immediately prior to the month in which the relevant Incentive Benchmark Date occurs (the average level for each such month to be determined by adding the number of respective then-current Service Level 1 Service Subscribers sold by EarthLink and then-current Service Level 2 Service Subscribers sold by EarthLink on the first day of each month to the number of such Service Subscribers on the last day of such month and dividing by two (2)) and

 

(2)         adding the 12 monthly averages and dividing by 12.

 

Notwithstanding anything to the contrary contained herein, each Incentive Benchmark, and EarthLink’s compliance with such benchmark, shall be calculated separately for all TWC Cable Systems other than the Bright House Cable Systems, as one group, and all Bright House Cable Systems as another. As a result, depending on its success in complying with the Incentive Benchmarks, EarthLink may be eligible during a given period for the incentive program described herein in either group of systems, both groups of systems or neither groups of systems.

 

(C)        If a Service Level 3 Service Subscription is terminated during the Term, the terminated subscription shall be treated for purposes

 

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(iv)       For purposes of this Section 2.2(d), the average number of Service Subscribers in a month shall be determined by adding the number of Service Subscribers on the first day of the month to the number of Service Subscribers on the last day of the month and dividing by two (2).

 

(v)        Notwithstanding the foregoing, to the extent an Annual Benchmark Date Average exceeds 54 kbps, EarthLink shall have the right to notify TWC in writing within fifteen (15) days after the Annual Benchmark Date to request that TWC waive any incremental monthly Transit Surcharge due hereunder for that portion of the Benchmark Date Average in excess of 54 kbps. To the extent TWC does not notify EarthLink in writing of its agreement to such a waiver within thirty (30) days of EarthLink’s request, EarthLink shall have fifteen (15) days thereafter to terminate this Agreement pursuant to Section 8.5 herein upon written notice to TWC.

 

(e)                       Calculation of Fees: Prorated Fees .

 

(i)         Determination of amounts to be paid shall be on a per Service Subscriber, per Service Level basis.

 

(ii)        During the month of commencement or termination of a Service Subscription, if the Service Subscriber pays a pro-rated fee (or receives a pro-rated credit or refund) for such Service Subscription, the monthly payments will be pro-rated on the same basis.

 

(f)                         Subscription Termination Notice .

 

Each of the Parties will promptly notify the other in the event of a termination of a Service Subscriber’s Service Subscription to the EarthLink High-Speed Service (which notification shall in no event be later than 24 hours after such termination), regardless of whether such termination is generated by the Service Subscriber, by EarthLink or by TWC. The Party that bills a Service Subscriber for the EarthLink High-Speed Service shall have the sole right to terminate, in accordance with its own applicable policies and procedures, the EarthLink High-Speed Service Service Subscription of a Service Subscriber for nonpayment by such Service Subscriber of subscription fees for such EarthLink High-Speed Service. Consistent with past practices, the parties shall use commercially reasonable efforts to develop and implement a “saves” program to retain Service Subscribers who indicate they wish to terminate the EarthLink High-Speed Service. In the case of TWC, any such program must be approved by a senior vice president (or above) based in TWC’s corporate headquarters in Stamford, Connecticut. Any such program shall contemplate that, if TWC “saves” a Service Subscriber using an EarthLink-approved saves offer, such Service Subscriber shall, throughout the relevant save promotional period, be treated for billing and payment purposes as if EarthLink set the Retail Price for such Service Subscriber. For avoidance of doubt, nothing contained herein shall require TWC to attempt to “save” any Service Subscriber or transfer calls from terminating Service Subscribers to EarthLink; provided that TWC shall in good faith attempt through its normal customer service operations to “save” Service Subscribers to the EarthLink High-Speed Service who indicate they wish to terminate through appropriate incentives agreed upon between EarthLink and TWC.

 

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2.3                  Sharing of Additional Revenues.

 

In addition to all other amounts payable under this Agreement, EarthLink shall pay TWC, monthly, an amount equal to ________ percent (___%) of Additional EarthLink Revenues in excess of _______ dollars ($__) per Service Subscriber per month (with Service Subscribers determined by averaging Service Subscribers at the beginning and the end of the relevant month) (the “Revenue Share”) .

 

2.4                  Outage Credit; Service Subscriber Default.

 

(a)                       To the extent a billing Party issues a credit or refund to Service Subscriber(s) in respect of any period(s) of any unscheduled outage of the EarthLink High-Speed Service, the adjustment (if any) to the amount payable by such Party to the other shall be as follows:

 

(i)         To the extent (A) such outage is solely the result of the billing Party’s failure to perform its responsibilities hereunder, or (B) the aggregate period of any such outages occurring in any calendar month, is less than four (4) hours, the amount payable to the other Party shall be determined as though no such credits shall have been issued.

 

(ii)        To the extent such outage is solely the result of the other Party’s failure to perform its responsibilities hereunder, subject to Section 2.4(a)(v), the fees payable to the other Party shall be reduced by the lower of (x) the amount of such credit actually issued or (y) the amount required by law, regulation, any LFA franchise agreement, any subscriber agreement or other agreement of the Parties.

 

(iii)       To the extent that the corresponding service outage resulted from neither or both Parties’ failure to perform its respective responsibilities hereunder, subject to Section 2.4(a)(v), the billing Party may reduce the fees payable to the other Party by fifty percent (50%) of the lower of (x) the amount of such credit actually issued or (y) the amount required by law, regulation, any LFA franchise agreement, any subscriber agreement or other agreement of the Parties.

 

(iv)       If the amount of the reduction in fees under Section 2.4(a)(ii) or 2.4(a)(iii) exceeds the amount of the fees payable in any month, the billing Party may, at its option, apply such reduction against future fees or invoice the other Party, whereupon such other Party will promptly pay the invoiced amount.

 

(v)        Outage credits shall not apply in any month unless the aggregate period of service outages in the System Facilities occurring in any calendar month exceeds four (4) hours.

 

Neither Party shall be precluded from offering or providing any service outage credits to Service Subscribers to the extent that such Party remains fully responsible, both administratively and financially, for such credits.

 

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If a Service Subscriber fails to pay any invoiced amount, the billing Party shall be solely responsible for collection thereof, and shall be obligated to pay the other Party the fees with respect to such Service Subscriber without regard to such default; provided, however , if such other Party was the selling Party, and such sale was in violation of Service Subscriber qualification procedures or criteria of the billing Party (as each Party shall provide to the other from time to time), the other Party shall bear sole responsibility for the default, and the billing Party may deduct the applicable amount thereof from amounts otherwise payable to such other Party.

 

2.5                   Payment Procedures.

 

Subject to any additional procedures mutually agreed by the Parties, the Parties shall pay and report to one another as follows:

 

(a)                       TWC shall pay EarthLink no later than 30 days following the end of any month, an amount equal to the monthly fees to which EarthLink is entitled pursuant to Section 2.2 (adjusted for any applicable credits), for each Service Subscriber billed by TWC during such preceding month.

 

(b)                      EarthLink shall pay TWC no later than 30 days following the end of any month an amount equal to: (i) the monthly fees to which TWC is entitled pursuant to Section 2.2 (adjusted for any applicable credits), for each Service Subscriber billed by EarthLink during such preceding month; plus (ii) the Revenue Share payable to TWC in respect of such preceding month pursuant to Section 2.3; plus (iii) other amounts payable to TWC under this Agreement in respect of expense reimbursement, franchise fees or otherwise.

 

2.6                  Taxes; Fees.

 

Subject to Section 2.7, the Party actually billing the Service Subscriber in accordance with Section 7.3 shall be responsible for billing and collecting from the Service Subscriber and remitting to the appropriate taxing authorities all applicable sales, use, excise, import or export, value added or similar taxes and fees arising by law from the purchase by such Service Subscriber of the EarthLink High-Speed Service.

 

2.7                   Franchise Fees and Other Obligations to Local Franchising Authorities

 

(a)                       EarthLink will agree to abide by the terms of any LFA obligation regarding the provision of the EarthLink High-Speed Service that are, in TWC’s reasonable judgment, applicable to EarthLink, including, without limitation (i) charging Service Subscribers for, and remitting to TWC for payment to LFAs, the applicable franchise fee on the service when sold by EarthLink; and (ii) complying with any customer service, disclosure or quality of service requirements; provided, however, if in any TWC Division: (x) the franchise fee exceeds five percent (5%) of subscriber fees or (y) any LFA imposes obligations (other than disclosure requirements) that exceed those typical in other jurisdictions and that either have a material adverse impact on EarthLink’s financial returns from such TWC Division, taken as a whole, or impose materially adverse restrictions or obligations on EarthLink’s business, or require EarthLink to maintain acceptable use or privacy policies that are materially more onerous than EarthLink’s generally applicable policies, then EarthLink may, within sixty (60) days of

 

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EarthLink’s receipt of notice regarding such requirement, elect by written notice to TWC to terminate this Agreement with respect to such TWC Division.

 

(b)                      In the event that EarthLink elects to provide notice of termination pursuant to Section 2.7(a), then during the Transition Period for such TWC Division, EarthLink shall pay to TWC and/or charge applicable Service Subscribers for, such fees, and comply with such LFA obligations, each as they arise.

 

(c)                       EarthLink will remit all franchise fees for which EarthLink is responsible in accordance with Section 2.7(a) to TWC for payment to the applicable LFAs within thirty (30) days after the end of the calendar month for which they are applicable.

 

(d)                      Without limiting the generality of the foregoing provisions of this Section 2.7, (i) TWC will provide EarthLink with reasonable advance notice of all obligations with which EarthLink is required to comply, and of changes in such obligations from time to time; and (ii) TWC and EarthLink will cooperate with each other on procedures regarding matters of compliance with LFA-imposed fees or other obligations.

 

3.                          ADDITION OR REMOVAL OF TWC CABLE SYSTEMS

 

(a)                      Transfer of TWC Systems.

 

(i)         In connection with a transfer, whether by sale, exchange or otherwise, of a TWC Cable System, TWC shall have the right: (A) subject to Section 13.8 of Exhibit C, to assign its rights and delegate its obligations hereunder with respect to such TWC Cable System to the transferee thereof, and thereupon remove such TWC Cable System from the scope of this Agreement; or (B) if the transferee of such TWC Cable System does not expressly assume all of TWC’s obligations hereunder in writing with respect to such TWC Cable System, to remove such TWC Cable System from the scope of this Agreement; provided that, in negotiating such transfer, TWC will use commercially reasonable efforts to cause the transferee of such TWC Cable System to agree to enter into a standalone agreement with EarthLink substantially similar to this Agreement with respect to such TWC Cable System, and, if the foregoing is not agreed, to permit any existing Service Subscribers utilizing such TWC Cable System, if any, to continue to receive the EarthLink High-Speed Service for as long as is reasonably necessary to permit transition of such Service Subscribers off the EarthLink High-Speed Service. In the event that the transferee of such TWC Cable System does not accept TWC’s rights and obligations under this Agreement, nothing herein shall limit EarthLink’s ability to solicit Service Subscribers of such TWC Cable System for transition to other EarthLink services after the transfer of such TWC Cable System to the transferee. TWC will provide EarthLink with as much prior notice as possible of any transfer of a TWC Cable System following execution and delivery of a binding agreement therefor (but, unless legally prohibited, in no event less than four (4) months prior notice to EarthLink).

 

(ii)        With respect to any TWC Cable Systems divested in association with the Pending Transactions (as defined below), EarthLink acknowledges that TWC

 

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has complied with its obligations under Section 3.4(a)(i) of the High-Speed Service Agreement between the parties effective as of November 18, 2000 (the “Current Carriage Agreement” ). EarthLink hereby waives any and all payments or compensation provided for pursuant to Section 3.4(a)(ii) of the Current Carriage Agreement.

 

(iii)       With respect to any TWC Cable Systems divested in association with the TKCCP Divestiture (as defined below), EarthLink acknowledges that TWC has complied with its obligations under Section 3.4(a)(i) of the Current Carriage Agreement and EarthLink hereby waives any and all payments or compensation provided for pursuant to Section 3.4(a)(ii) of the Current Carriage Agreement. As used herein, the term “TKCCP Divestiture” shall mean TWC’s divestiture of certain interests in an entity known as “Texas and Kansas City Cable Partners, L.P.”

 

(iv)       Notwithstanding anything to the contrary contained herein, if all or substantially all of the TWC Divisions are sold, exchanged or otherwise transferred to an entity, then TWC shall cause this Agreement to be assumed by the transferee.

 

(b)                     Acquisition of TWC System.

 

(i)         In connection with an acquisition, whether by purchase, exchange or otherwise, by TWC, of a new cable system that following such acquisition would constitute a TWC Cable System under this Agreement and subject to any pre-existing obligations or contractual restrictions associated with the cable system being acquired and subject also to the provisions of Section 3(c) herein, the Parties (x) shall add such new TWC Cable System to the scope of this Agreement if such TWC Cable System will operate in an operating area Immediately Adjacent to an Operating Area of a then-existing TWC Cable System carrying the EarthLink High-Speed Service; (y) shall add such new TWC Cable System to the scope of this Agreement if such TWC Cable System has more than 300,000 residential homes passed (as that term is commonly used in the television cable industry) in its Operating Area, determined in accordance with TWC’s standard internal policies and (z) may mutually agree, but shall not be required, to add any other such TWC Cable System to the scope of this Agreement.

 

(ii)        TWC will notify EarthLink promptly following execution and delivery of a binding agreement for the acquisition of a TWC Cable System that is to be added to the scope of this Agreement.

 

(iii)       For each TWC Cable System to be added to the scope of this Agreement, TWC shall make the TWC HSS available to EarthLink for branding and resale as promptly as practicable following the date on which such TWC Cable System’s System Facilities, and administrative and billing systems, are, in TWC’s sole discretion, capable of handling without extraordinary effort the provision of multiple Online Providers’ services. If a TWC Cable System is added to the scope of this Agreement, EarthLink will be subject to its obligations under Section 1.3 with regard to the TWC Cable System.

 

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(c)        The cable systems to be acquired by TWC upon the consummation of the transaction(s) pending as of the Execution Date between and among TWC, Comcast Corporation and Adelphia Communications Corporation (the “Pending Transactions”) shall constitute TWC Cable Systems under this Agreement including (i) such cable systems that are located within the Los Angeles, California; Cleveland, Ohio; Buffalo, New York; or Dallas, Texas DMAs (provided that EarthLink shall offer the EarthLink High-Speed Service on all TWC Cable Systems in each such DMA); and (ii) such cable systems on which EarthLink high-speed service is being provided immediately prior to the consummation of the Pending Transactions. In each TWC Cable System to be added to the scope of this Agreement pursuant to the foregoing sentence, TWC shall make the TWC HSS available to EarthLink for branding and resale as promptly as practicable, but in any event within ninety (90) days, following the date on which such TWC Cable System’s System Facilities, and administrative and billing systems, are, in TWC’s sole discretion, capable of handling without extraordinary effort the provision of multiple Online Providers’ services.

 

(d)        TWC may terminate its obligations hereunder with respect to any Operating Area, by notice in writing to EarthLink, if TWC ceases to provide its cable television services in such Operating Area.

 

4.                          PROMOTION FOR TWC SITE

 

4.1                  Link To TWC Site.

 

EarthLink will create, host, operate and maintain a Service Subscriber customizable “Personal Start Page” with TWC co-branding (as mutually agreed upon by the Parties) and a prominent, above-the-fold link to a local TWC Site for each TWC Division offering the EarthLink High-Speed Service (or, subject to mutual agreement, another reference to a TWC Site in a mutually agreeable above-the-fold location). EarthLink shall update TWC branding and linking as reasonably requested by TWC. The Personal Start Page will be the default home page as part of the EarthLink Total Access Software through which a Service Subscriber accesses the EarthLink High-Speed Service.

 

TWC shall not permit nor require the inclusion of any advertising for or link or reference to the Online Provider services of another Online Provider or Road Runner on the Personal Start Page or on the TWC Division landing page accessible by a click-through from the Personal Start Page without EarthLink’s prior written consent, which may be withheld at EarthLink’s sole and absolute discretion.

 

5.                          MARKETING AND BUNDLING.

 

5.1                  Marketing of the EarthLink High-Speed Service .

 

(a)        EarthLink shall advertise, promote and market the EarthLink High-Speed Service in all Operating Areas in which EarthLink High-Speed Service is made available via TWC Cable Systems.

 

(b)        TWC may, but shall not be required to, advertise, promote and market the EarthLink High-Speed Service, if any, offered by TWC.

 

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(c)                       TWC may, but shall not be required to, advertise, promote and market the Premium EarthLink High-Speed Service, if any, offered by TWC.

 

(d)                      EarthLink will have the opportunity to seek TWC’s (and the TWC Divisions’) assistance in promoting and marketing the EarthLink High-Speed Service. TWC shall use reasonable efforts to provide contact information for appropriate TWC Division personnel, and shall send a communication to such personnel to introduce key EarthLink personnel. TWC and the TWC Divisions will reasonably consider EarthLink’s requests for promotion and marketing assistance in its reasonable business judgment.

 

(e)                       Subject to complying with the provisions of this Agreement (including Sections 5.2 and Exhibit C) and any other procedures mutually agreed in writing by the Parties, each Party may perform such advertising, promotion and marketing via whatever means, methods or media, it deems suitable; provided that neither Party shall use the Marks of the other Party without the express prior written consent of such other Party, such approval not to be unreasonably withheld. Each Party shall bear all costs associated with its respective marketing of the EarthLink High-Speed Service.

 

5.2                  Bundling.

 

(a)                       Subject to Section 5.3, TWC may bundle any Premium EarthLink High-Speed Service with the Basic EarthLink High-Speed Service (it being understood that TWC would be acting as EarthLink’s agent for any such offering of any Premium EarthLink High-Speed Service), provided that with respect to any individual Premium EarthLink High-Speed Service, bundling and/or order entry is practical and technically feasible; that EarthLink’s systems support such bundling and order entry and, if billing rights are requested, third-party billing of the bundled offerings; and that EarthLink’s inability to support bundling for TWC shall not restrict EarthLink from offering and selling the bundle itself including under the Agency Agreement between TWC and EarthLink dated as of the Execution Date.

 

(b)                      TWC may, on a TWC Division level in its sole discretion, bundle the EarthLink High-Speed Service with other TWC products or services, including but not limited any or all of TWC’s voice, data and video services (“Bundled Packages”) . If EarthLink and a TWC Division agree that such TWC Division will include any Service Level of the EarthLink High-Speed Service in a Bundled Package (an “EarthLink Bundled Package”), EarthLink and such TWC Division will enter into an agreement (the “Marketing Letter”), in the form set forth as Exhibit E, to memorialize the arrangement and related marketing obligations. Notwithstanding anything contained in any Marketing Letter executed after the date hereof, the following terms and conditions shall apply to each EarthLink Bundled Package offered by a TWC Division:

 

(i)         The retail price for each EarthLink Bundled Package shall be a discounted price compared to the aggregate a la carte price of each service component of such EarthLink Bundled Package (the resulting difference, the “Discount”), based on the TWC Division’s then-current a la carte retail prices; provided, however, that to the extent any such EarthLink Bundled Package includes TWC’s digital phone service, the retail

 

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price for the digital phone component shall be deemed to be the price at which such TWC Division offers digital phone when bundled with at least one other service offering.

 

(ii)                       In respect of each Bundled Package, EarthLink shall be responsible for 25% of the pro rata portion of the Discount attributable to the EarthLink High-Speed Service. Schedule 1 contains an illustrative example of the Discount allocation. For the avoidance of doubt, Schedule 1 shall be utilized for financial settlement between EarthLink and TWC only for Service Subscribers in the EarthLink Bundled Package. Financial settlement of non-EarthLink Bundled Package Service Subscribers shall continue to be handled pursuant to the Agreement. The TWC Division shall be entitled to deduct EarthLink’s share of the Discount from the subscription fee split for the EarthLink High-Speed Service portion of the EarthLink Bundled Package. The parties agree that the EarthLink High-Speed Service component shall not appear as being discounted on the bill to the customer.

 

(iii)                    The TWC Division will have sole discretion to (i) establish and revise the retail price of the EarthLink Bundled Package (but not, for avoidance of doubt, the a la carte retail price of the EarthLink High-Speed Service as offered by EarthLink) and any promotional offering associated with the EarthLink Bundled Package, and (ii) establish and revise the specific TWC Division products, features and services to be included in any EarthLink Bundled Package and any TWC promotional offering associated with the EarthLink Bundled Package. The TWC Division shall retain sole authority to cancel any video or digital phone components of any EarthLink Bundled Package and to make corresponding pricing and discount allocation revisions to such revised Bundled Packages.

 

(iv)                   The TWC Division will offer each EarthLink Bundled Package at _ the same price as it offers each comparable Bundle