Network Services Agreement

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL

PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND HAVE BEEN SEPARATELY FILED WITH

THE COMMISSION. THE CONFIDENTIAL PORTIONS

OMITTED ARE INDICATED BY ASTERISKS

AND A STATEMENT TO THE

FOREGOING EFFECT.]









NETWORK SERVICES AGREEMENT







This NETWORK SERVICES AGREEMENT ("Agreement") is dated as of this 25th day of November, 1998, ("Effective Date") by and between:



HIGH SPEED ACCESS CORP.

1000 West Ormsby Ave., Suite 210

Louisville, Kentucky 40210 ("HSAC")



CHARTER COMMUNICATIONS, INC.

12444 Powerscourt Dr., Suite 400

St. Louis, MO 63131 ("Charter")





MARCUS CABLE, INC.

2911 Turtle Creek Blvd., Suite 1300

Dallas, TX 75219 ("Marcus")





A. Marcus and Charter (referred to individually and together

herein as the "Operator") own and operate Cable Systems and

wish to offer some of their Cable Subscribers in the Cable

Systems listed on EXHIBIT A to this Agreement the opportunity

to utilize the applicable Cable Systems for Internet access

and related services.



B. HSAC provides Internet access and related services through

various sources including Cable Systems.



C. HSAC, Charter, Marcus, and Vulcan Ventures, Incorporated

("Vulcan") are entering into that certain Systems Access and

Investment Agreement of even date herewith ("Systems Access

Agreement"), and HSAC and Vulcan are entering into that

certain Programming Content Agreement of even date herewith

("Content Agreement"). The Access Agreement and Content

Agreement are incorporated herein by this reference.



D. Operator wishes to retain HSAC to provide Internet access and

related services to certain of its Cable Subscribers, and HSAC

wishes to access the Cable Subscribers in the Cable Systems

listed on EXHIBIT A and use certain other Cable Systems of

Operator to provide Internet access and related services to

such Cable Subscribers.



NOW, THEREFORE, in consi deration of the premises and mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follo ws:



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1. DEFINITIONS. In addition to the other capitalized terms defined elsewhere in this Agreement, the following terms will have the meanings set forth below:



1.1. "Activation Schedule" means the schedule(s) for the Full HSAC Services Roll-Out of Committed Systems to be agreed upon by Operator and HSAC pursuant to Section 2.4 hereof.



1.2. "Cable Subscriber" means a cable TV subscriber or potential subscriber residing in a Home Passed in a Committed System regardless of whether such cable TV subscriber or potential subscriber subscribes to HSAC Services.



1.3. "Cable System(s)" means any radio frequency ("RF") cable television franchise or hybrid fiber-coaxial RF Plant distribution syst em ("RF Plant") serving a geographically proximate group of residences, businesses, or other locations. Cable Systems include both One-Way Systems and Two-Way Systems.



1.4. "Committed System(s)" means the Cable Systems that Operator or any Potent ial Operator has specifically designated in such Operator's or Potential Operator's sole and absolute discretion as Committed Systems pursuant to Section 2.1 and 2.2, that such Operator or Potential Operator reasonably believes will conform to Section 4 o f the Systems Access Agreement, and that are either listed in EXHIBIT A attached hereto as of the Effective Date or are added to EXHIBIT A by amendment during the Term pursuant to Section 2.2. A Cable System shall be deemed to no longer be a Committed Syst e m if (i) it has been withdrawn by an Operator or Potential Operator pursuant to Section 2.3 or 18 hereof, (ii) this Agreement has expired or been terminated for any reason pursuant to Section 18 hereof, or (iii) such Committed System is no longer controll ed by the applicable Operator or Potential Operator for any reason.



1.5. "Confidential Information" means any and all information related to either HSAC's business or Operator's business in any form, including, without limitation, (i) customer inf ormation, (ii) the terms and conditions of this Agreement, (iii) all dates, summaries, reports or information of all kinds, whether oral or written, acquired, devised or developed in any manner by or from the disclosing party's files, and (iv) financial, statistical, personnel, or technical information, software or documentation, which the disclosing party deems proprietary or confidential.



1.6. "Conversion Requirements" means such requirements as are set out in EXHIBIT H.



1.7. "Customer List(s)" means the Operator's list of Cable Subscribers in each Committed System and related subscriber information.



1.8. "Data Subscriber" means a Cable Subscriber residing in a Home Passed in a Committed System who subscribes to HSAC Services regardless of whether such subscriber



- 2 - subscribes to Operator's cable TV service. Each Multiple Dwelling Unit ("MDU") constitutes not more than a single Data Subscriber for purpose of this Agreement.



1.9. "Full HSAC Services Roll-Out" means the creation, staffing and operation of every business, technical and service aspect necessary to fully implement the HSAC Services.





1.10. "Gross Revenues" means all gross revenues col lected from Data Subscribers for the HSAC Services, including, without limitation, monthly subscription fees regardless of which party handles the billing and collection, and as used herein, does not include (i) applicable sales or use taxes, (ii) federal , state or local franchise fees, (iii) Installation Fees or any other set-up charges assessed by HSAC, Operators or any authorized third-party reseller or installer (subject to the limitations set forth in Section 6.2 below), (iv) rentals paid by Data Subs c ribers on Home Equipment Packages (subject to the limitations set forth in Section 6.2 below) (v) charges for security encryption software sold or sublicensed to Data Subscribers under Section 9 of this Agreement, and (vi) add-on ISP fees charged by HSAC to Data Subscribers for commercial web-hosting activities (i.e., local caching on HSA's servers of commercial websites, not "complimentary" personal home page hosting of 5MB or less webpages).





1.11. "Home Equipment Package" means the cable modem and related power converter/supply, network interface card (NIC), patch cable, and related software for each Data Subscriber.



1.12. "Homes Passed" means residences that are connected (i.e., a residence with an installed cable "drop" from a Commit ted System or which is eligible for such cable "drop" by virtue of a Committed System passing such residence) to the cable RF Plant/head-ends of a Committed System, regardless of whether the persons residing in such residences subscribe to cable TV servic es. Each MDU constitutes a single Home Passed for purposes of this Agreement.



1.13. "HSAC Network Equipment" means the equipment that HSAC employs for operation of the HSAC Services by connecting such equipment to the head-end of Operator's Cable Systems. HSAC Network Equipment includes, without limitation, all monitoring devices, telecommunications equipment, storage devices, computing and data processing equipment, and software.



1.14. "HSAC Services" means the design, engineering, const ruction (excluding the RF Plant portion of the Cable System), installation, activation, beta testing, ISP and data network operation and management, sales and marketing, customer service and "call center" support, billing (as agreed to the parties on a ca s e-by-case basis), pre- and post-Launch Date deployment and operation, and maintenance of Internet access and related services from the Data Subscriber's computer and cable modem through any Committed System to HSAC's Internet Portal including, without lim itation, interfacing HSAC Network Equipment with Committed Systems to allow Data Subscribers, for a monthly fee or other charges, to browse



- 3 - the World Wide Web, read news groups, and receive and send electronic mail ("E-mail") and perform related activities.



1.15. "Installation Fee" means the gross revenues collected directly or indirectly from a Data Subscriber by HSAC, Operator, or any authorized third-party reseller or installer for the installation and connection of a Home Equipment Package for such Data Subscriber to receive HSAC Services but does not include (i) applicable sales or use taxes, (ii) federal, state or local franchise fees.



1.16. "Internet Portal" means a physical site sometimes referred to as a "point of presence" where there is a collection of equipment including routers, data storage devices, and modems that are used to connect to customers and leased telecommunication lines that connect such site directly to a part of the In ternet backbone.



1.17. "ISP" or "Internet Service Provider" means an entity that provides Internet access to its customers.



1.18. "Launch Date" means, with respect to a particular Committed System, the date on which HSAC or Operator, as the case may be, is required to commence revenue billing for Data Subscribers in such Committed System pursuant to the Activation Sch edule.





1.19. "Minimum Penetration Rate" means (1) with respect to a Committed System where the Operator is the sole provider of RF cable/coaxial landline connectivity to Homes Passed, that *CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION* of the Homes Passed in each Committed System shall have subscribed as Data Subscribers within eighteen (18) months of the Launch Date, and (ii) with respect to an overbuilt Committed System where another MSO or utility competes in the sam e geographic area with the Operator for RF cable/landline connectivity to Homes Passed, that a customer base equivalent in number to *CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION* of the Operator's actual paying cable customers i n each such Committed System shall have subscribed as Data Subscribers within eighteen (18) months of the Launch Date (e.g., Newman, Georgia would qualify as an overbuilt Committed System).





1.20. "MSO" means an entity that owns, controls, or operates multiple Cable Systems that is generally referred to as a Multiple System Operator in the cable television industry.



1.21. "One-Way" means a Cable System that can only deliver television signals, data, or other digital or analog information downstream from the cable head end to the Cable Subscriber, and must use another means, including without limitation a telephone line and modem, to send any information from the Cable Subscriber to an Internet Portal.



1.22. "Other Agreements" means the Systems Access Agreement and the other agreements set forth in subsections (i), (iii), (iv), (v), (vi), (vii), (viii) and (ix) of Section 1.24 of the Systems Access Agreement.



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1.23. "Potential Op erators" means, as the case may be or the context requires, any MSO or operator of packet-switched data systems now or hereafter owned or controlled by, directly or indirectly, or affiliated with Paul G. Allen, Operators or their respective affiliates or subsidiaries.



1.24. "System Data Requirements" means the minimum technical requirements set forth on EXHIBIT B hereto to which the RF Plants in Operators' Committed Systems must conform.



1.25. "System Service Requirements" means the minimum technical and service requirements set forth on EXHIBIT G hereto to which the HSAC Services must conform.



1.26. "Termination Fee" means an amount equal to one-half of the net present value of the Gross Revenues which would otherwise have been generated for the HSAC Services from the base of Data Subscribers existing as of the date of termination in a Committed System through the remainder of the Term. If the parties cannot agree upon the amount of any Termination Fee, they shall jointly engag e and split the cost of a neutral appraiser or valuation specialist to place a value on such Termination Fee.



1.27. "Two-Way" means a Cable System that can both send and deliver television signals, data, or other digital or analog information upst ream and downstream to and from the cable head-end to and from the Cable Subscriber, without using another means to send or receive any information from the Cable Subscriber to an Internet Portal.



1.28. Other Definitions. The following additional defined terms shall have the meanings ascribed to them in the Sections indicated below:



"24x7" 7.2.5

"Additional System Notice" 2.2

"Attainment Measures" 2.3

"Call Center" 7.2.5

"Force Majeure" 21

"HSAC's Share" Exhibit D

"Initial Term" 16

"Intellectual Property Laws" 13.1.5

"MDU" 1.8

"NOC" 7.2.5

"Notice" 7.3.4

"Operator's Share" Exhibit D

"Out-of-Compliance Event" Exhibit D

"RF" 1.3

"RF Plant" 1.3

"RBOC" 2.4.2

"Renewal Term" 16

"Service Failure" 7.3.4



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"Statement" Exhibit D

"Systems Access Agreement"Recital C

"Term" 16

"Termination Events" 18.3



2. EXCLUSIVE RIGHT TO PROVIDE HSAC SERVICES TO COMMITTED SYSTEMS; ADDITIONAL COMMITTED SYSTEMS; INSPECTION AND ACCEPTANCE CRITERIA.



2.1. Exclusive Access. During the Term, HSAC shall have the sole and exclusive right to access the Committed Systems listed on EXHIBIT A to this Agreement for purposes of performing the HSAC Services and to perform the HSAC Services for the Committed Systems, subject to and in accordance with the terms herein and the Systems Access Agreement. Subject to the procedures set forth in this Section 2, HSAC shall perform a Full HSAC Services Roll-Out on every such Committed System within the time frames specified for a particular Com mitted System in the Activation Schedule.



2.2. Designation of Additional Systems. During the Term (and subject to the procedures set forth in this Section 2), Operator and Potential Operators shall have the unilateral right , but not the obligation, to designate an unlimited number of additional Cable Systems as Committed Systems under this Agreement, and such right shall extend to any and all Cable Systems now owned or managed or hereafter acquired or managed by Operator or Potential Operator. Operator and Potential Operators shall exercise their right to designate additional Cable Systems as Committed Systems hereunder by delivering written notice of such designation to HSAC (an "Additional System Notice"). Upon HSAC's rece i pt of such Additional System Notice, HSAC and the applicable Operator shall amend this Agreement to add such Cable System(s) to EXHIBIT A, and the Cable System(s) designated in such Additional System Notice shall automatically become Committed Systems her eunder. If a Potential Operator designates Committed Systems hereunder, the parties and such Potential Operators shall amend this Agreement to include such Potential Operator as an Operator for all purposes hereunder.



2.3. Commissioning of RF Plan t; System Data Requirements. Within sixty (60) days of (i) the Effective Date (as to the Committed Systems referenced in Section 2.1 above), and (ii) HSAC's receipt of an Additional System Notice (as to the Committed Systems referenced in Section 2.2 abov e ), HSAC shall perform an engineering inspection of Operator's RF Plant in the applicable Committed Systems and deliver to Operator, HSAC's recommendations for any upgrades or repairs (if HSAC fails to deliver such recommendations for any Committed System w ithin such 60 day period, then such Committed Systems will be deemed to satisfy the System Data Requirements) which may be necessary for the Committed System to conform to System Data Requirements ("Attainment Measures"). Operator acknowledges and agrees t hat (i) in order for HSAC to deliver HSAC Services to Data Subscribers, each Committed System must satisfy the System Data Requirements, (ii) HSAC is not responsible for whether the Committed Systems satisfy the System Data Requirements, and (iii) Operato r shall undertake (or refuse to take, as the case may be) those Attainment



- 6 - Measures necessary to cause the Committed System's RF Plant to attain, and thereafter maintain in conformity with, the System Data Require ments during the Term of this Agreement. If the Operator declines to effect appropriate Attainment Measures for any particular Committed System, this Agreement shall terminate as to such Committed System without liability of any kind to either Operator or HSAC, and such Committed System shall be removed from EXHIBIT A of this Agreement. If the Operator agrees to effect the Attainment Measures, the Activation Schedule shall be amended to establish the milestones for Operator to bring the Committed Systems i nto conformity with the System Data Requirements including a reasonable amount of additional time for HSAC to complete its Full HSAC Services Roll-Out for such Committed Systems.



2.4. Activation Schedule.



2.4.1. The Activati on Schedule for the initial Committed Systems as of the Effective Date hereunder shall be as set forth in EXHIBIT A. Within forty-five (45) days of HSAC's receipt of an Additional System Notice, Operator and HSAC shall negotiate and agree in good faith up o n a feasible, reasonable "critical path" timelines for each Committed System's Full HSAC Services Roll-Out, and memorialize such timeline in an Activation Schedule (as same may be amended from time to time as contemplated in Section 2.3 above to account f o r the Operator's taking of Attainment Measures and as the parties may otherwise agree in writing). The Activation Schedule shall set out implementation milestones, including, without limitation: (i) that Operator shall notify HSAC when a particular Commit t ed System conforms (or when the Operator expects such Committed System to conform if the taking of Attainment Measures is required) with the System Data Requirements, (ii) the Launch Date, and (iii) the date when the Full HSAC Services Roll-Out in each Co m mitted System shall be completed. In the event that the parties cannot agree upon a reasonable Activation Schedule for any additional Committed Systems designated under Section 2.2 within forty-five (45) days of HSAC's receipt the applicable Additional Sy s tems Notice, then the provisions of Section 6.4 of the Systems Access Agreement shall apply, and HSAC will implement the HSAC Services for such additional Committed Systems at a rate of eight (8) head-ends per month (such head-ends to be designated by Ope rator), with Operators' head-ends receiving priority for activation over head-ends owned and/or operated by other customers of HSAC.



2.4.2. HSAC will not be deemed in default of a scheduled Launch Date if (i) a Regional Bell Operating Com pany ("RBOC") or other telephone network provider (a "telco") is late in installing a T-1 line or backbone connection necessary for the HSAC Services following the submission of a complete order by HSAC to such party before the lead times required by such party in order to install such T-1 line or backbone connection in sufficient time to meet the applicable Launch Date, (ii) an equipment vendor (e.g., COM21) fails to meet its delivery deadlines with respect to the HSAC Network Equipment or Home Equipment Packages following the submission of a complete order by HSAC to such party before the lead times required by such party in order to deliver such equipment in sufficient



- 7 - time to meet the applicable Launch Date, or (iii) HSAC does not receive any specialized equipment required to carry the Vulcan Content (as defined in the Content Agreement), which equipment is otherwise not required in order to perform the HSAC Services, on a timely basis following the submission of a complete order by HSAC to the vendor of such equipment before the lead times required by such vendor in order to deliver such equipment in sufficient time for HSAC to meet the applicable Launch Date.



3. HSAC OBLIGATIONS AFTER COMMISSIONING. As soon as Operator notifies HSAC that any head-end in a Committed System conforms to the System Data Requirements, HSAC agrees that it shall in conformity with the Activation Schedule:



3.1. install and connect the HSAC Network Equipment (subject to Section 6.2);



3.2. arrange at its expense for data transport (via telco, wireless, etc.) from the Internet backbone to the head-ends of Operator's RF Plant for a Committed System;



3.3. arrange telco return path circuits in One-Way Committed Systems;



3.4. commission the HSAC Network Equipment interface;



3.5. activate the data through-put portion of the HSAC Services;



3.6. begin marketing HSAC Services in the relevant areas and begin offering subscriptions to potential Data Subscribers; and



3.7. complete the Full HSAC Services Roll-Out for such Committed System and provide the HSAC Services for such Committed Systems.



4. UPGRADES. After initial activation of HSAC Services in a Committed System, the Operator may reasonably request upgrades to the HSAC Network Equipment, and HSAC shall make such upgrades at its expense within a reasonable time period, provided that such u pgrades are commercially reasonable. HSAC shall also make substantially the same upgrades to the HSAC Network Equipment that HSAC makes to substantially similar equipment that HSAC uses to provide HSAC or third party customers access to the Internet. HSAC will provide Operator with all updates and upgrades that HSAC develops or uses on any Cable System at the same prices as such updates and upgrades are provided by HSAC to other customers of HSAC. Neither party shall unilaterally change HSAC Network Equipm ent or Operator's RF Plant in any way that renders a Committed System or the HSAC Services inoperable without consulting with the other party regarding the allocation of costs relating to such changes or upgrades.



5. ALLOCATION OF MAINTENANCE OBLIGATIONS.



5.1. Allocation. Following the commissioning of each Committed System, HSAC shall maintain all HSAC Network Equipment. Operator shall maintain the integrity of its RF



- 8 - Plant for each Committed Syst em (including, without limitation, all coaxial cable, head-end equipment, connectors, amplifiers and passive devices and splitters). HSAC shall not be required to repair or maintain any portion of the RF Plant of any Committed System. Operator shall also provide technical personnel to eliminate signal leakage and maintain a proper connection interface of the HSAC Network Equipment to the RF Plant for each Committed System.



5.2. Damage to Operator's Facilities. HSAC shall use its best efforts to av oid damaging the Operator's RF Plant for each Committed System, and shall not move, relocate, alter, sell, lease, license, assign, encumber or otherwise tamper with the RF Plant of any Committed Systems. Without limiting Operator's rights and remedies, HS A C shall pay to repair or replace any of Operator's equipment that HSAC or its employees damage and shall pay Operator for any damages resulting therefrom. Such repairs shall return such Operator equipment to at least the same condition it was before the d amage, and any replacement equipment will be at least the same quality as the Operator equipment that is replaced.



5.3. Damage to HSAC Network Equipment. The HSAC Network Equipment shall be the property of HSAC. Operator shall use its best efforts to avoid damaging the HSAC Network Equipment, and shall not move, relocate, alter, sell, lease, license, assign, encumber or otherwise tamper with the HSAC Network Equipment. Without limiting HSAC's rights and remedies, Operator shall pay to repair or re p lace any of HSAC's equipment that Operator or its employees damage and shall pay HSAC for any damages resulting therefrom. Such repairs shall return the HSAC Network Equipment to at least the same condition it was before the damage, and any replacement eq uipment will be at least the same quality as the HSAC Network Equipment that is replaced.



6. HOME EQUIPMENT PACKAGE.



6.1. Equipment Choice. Operator and HSAC shall mutually choose the vendor/brand* of HSAC Network Equipment and cable modems for each Committed System, and HSAC shall procure the Home Equipment Packages for Data Subscribers (except for Data Subscribers who purchase their own). Such Home Equipment Packages shall be installed in accordance with Section 6.2 below. Upon installati o n of such Home Equipment Packages, HSAC shall monitor and maintain electronically the Home Equipment Package for each Data Subscriber. Unless purchased directly by a Data Subscriber from Operator or a third party reseller/retailer, HSAC shall retain owner s hip of the Home Equipment Packages. Each Data Subscriber shall be required to sign a statement acknowledging HSAC's ownership of the Home Equipment Package. (*For purposes of this Agreement, Com2l, Terayon and any other brands the parties may from time to time agree upon shall be deemed acceptable brands.)



6.2. Installation And Modem Revenue Sharing. Either party may install Home Equipment Pack ...