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Compromise Agreement between Falcon Cable and Charter Communications COMPROMISE AGREEMENT BETWEEN FALCON CABLE SYSTEMS CHARTER II, L.P. dba CHARTER COMMUNICATIONS AND THE CITY OF GILROY CONCERNING CHARTER COMMUNICATION'S REQUEST FOR MODIFICATION This agreement (hereinafter "Compromise Agreement") is made as of March 4,2002, ("Effective Date") by and between Falcon Cable Systems Charter II, L.P. d/b/a Charter Communications ("Charter"), and the City of Gilroy, California (the "City"), or collectively as the "Parties." RECIT ALS: WHEREAS, on or about January 6, 1997, the City adopted Ordinance No. 97-1, establishing requirements for all cable franchisees, codified at Gilroy City Code Chapter 24, SS 21 et seq. (the "Cable Ordinance"); and WHEREAS, the City and Charter are currently bound by an agreement entitled "Franchise Agreement Between the City of Gilroy, California and Falcon Cable System Company II, L.P., a Wholly Owned Subsidiary of Charter Communications Holdings Company; L.L.c." dated December 6, 1999 (the "Franchise Agreement"); under which Charter is authorized to operate a cable television system in the City (the "System"); and WHEREAS, under the terms of the Franchise Agreement Charter had committed to upgrade or rebuild the System no later than January 5, 2002 (the "Rebuild"); and WHEREAS, a dispute has arisen between Charter and the City regarding the extent to which Charter is required to install its cable system electronic components underground as part of the Rebuild requirements of the Franchise Agreement; and WHEREAS, the City staff and Charter have exchanged information regarding methods by which Charter could place some of the active electronic devices used in the System above ground while preserving, to the maximum extent possible, the aesthetics of the City in areas where utilities are otherwise underground; and WHEREAS the City met with representatives of Charter and requested Charter to provide certain information and to take certain measures to insure that any future work in the City will be performed safely; and WHEREAS, on December 27,2001, Charter filed a petition to modify its Franchise Agreement with the City pursuant to Cable Ordinance S 24.24(g) and 47 V.S.C. S 545 ("Modification Petition") in light of the City's requirement for Charter to place electronic devices associated with the System Rebuild underground; and WHEREAS, on January 14,2002, Charter and the City met in a City Council study session, and favorably discussed a tentative compromise agreement regarding the City's requirement for Charter to place electronic devices associated with the System Rebuild underground; and \JH\543180.1 01-021004706002 -1- WHEREAS, in light of the discussion ofa compromise agreement regarding Charter's placement of electronic devices associated with the System Rebuild underground, the City and Charter entered into a Tolling Agreement dated January 16, 2002, under which Charter temporarily withdrew its Modification Petition without prejudice under mutually acceptable terms and conditions; and WHEREAS, on March 4, 2002, pursuant to Cable Ordinance S 24.24 the City Council held a duly noticed public hearing regarding the Modification Petition; and WHEREAS, the City has found and determined that the public convenience, safety and general welfare are served through a franchising process that specifies certain conditions for review but also allows for future flexibility to meet cable-related needs and interests; and WHEREAS, having reviewed and considered the Modification Petition, the City further finds that Charter's requests to modify: (a) its obligations regarding placement of electronic devices associated with the System Rebuild underground; (b) its obligation to complete the Rebuild; and (c) the imposition of liquidated damages for failure to complete the Rebuild, are financially and technically reasonable, and are consistent with the cable-related needs and interests ofthe community; NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to facilitate the resolution ofthe Parties differences with respect to Charter's obligations pursuant to the Franchise Agreement, the Parties enter into this Compromise Agreement and agree as follows 1. INSTALLATION OF ELECTRONIC DEVICES IN AREAS WITH UNDERGROUND UTILITIES 1.1 Charter agrees that, in areas of the City where all utilities are underground, all passive electronic devices ofthe System (taps, splitters, directional couplers and coax splices) shall be mounted below ground, with the cover ofthe device or box flush with the ground. 1.2 The City and Charter agree that, in areas of the City where all utilities are underground, Charter shall install active electronic devices of the system (node/fiber amplifiers, RF amplifiers, power inserters, power supplies, and fiber splices) above ground, camouflaged or hidden from view pursuant to terms of this Compromise Agreement. 1.3 Charter shall be permitted to follow existing utility rights of way within the public rights of way of the City, including the location of its current facilities in the public rights of way. \JH\543180.1 01-021004706002 -2- 1.4 The City acknowledges that Charter's compliance with this Compromise Agreement and the applicable encroachment permit shall be deemed to satisfy the City's requirements with respect to the underground installation of Charter's System. 1.5 The City and Charter agree that, the construction, operation and repair of the cable system is governed by the Franchise Agreement, the Cable Ordinance and this Compromise Agreement, and will be performed in a manner consistent with high industry standards and all applicable federal, state and local laws. The City and Charter will in good faith, continue an open dialogue concerning the use of state ofthe art equipment in the future expansion ofthe cable system, and to the extent feasible, may adopt additional standards as required to ensure that the future construction, operation and repair of the cable system continues to reflect changes in standards which may occur over the franchise term. 2. COOPERATION WITH RESIDENTS FOR ABOVE-GROUND ELECTRONIC INSTALLATION 2.1 For the duration of the Franchise Agreement, Charter agrees to provide every owner in the City on whose property Charter intends to install an active or passive electronic device in a new location with prior notice of such installation. Notice by registered mail to such owners shall be provided at least 30 days in advance of scheduled installation. As required under the circumstances, Charter shall provide such notice by telephone, by a letter, and by Charter personnel visiting the residence. 2.2 Every owner on whose property Charter intends to install an above ground active electronic device shall be permitted to select among several enclosure options that mask or camouflage the electronic device (such as brick, faux rock, vegetation net, or landscaping). The cost for all such camouflage work and materials shall be paid entirely by Charter. 2.3 Every owner on whose property Charter intends to install an active device or passive device in a new location shall be allowed to suggest alternative locations for the device on the property. Charter shall be flexible in considering alternative locations for the device, and shall cooperate to the extent economically and technically reasonable. 2.4 In the event Charter and any owner are unable to agree on either the camouflaging or the location of the electronic device on that owner's property, Charter agrees to meet with City staff and the owner to attempt to work out a compromise. In the event the owner is unwilling to meet within 30 days with the City staff, or to enter into a reasonable compromise, or Charter is unable to contact any owner ofleased or rented property, then Charter and City staff shall agree upon the appropriate location and camouflage for the device. 2.5 The City shall issue Charter a separate encroachment permit for construction within each area served by a single node. The City shall issue no more than three encroachment permits at anyone time. The City agrees to inspect all work expeditiously, so that no more than 10 days passes between the time Charter notifies the City that construction in a node area is complete, and the City inspects and approves all completed \JH\543180.1 01-021004706002 -3- work. 3. COMPLETION OF REBUILD: MODIFICATION OF THE PARTIES' RIGHTS AND OBLIGATIONS UNDER SECTION 7.2 OF THE FRANCHISE AGREEMENT 3.1 In settlement of the Parties' dispute, Charter and the City agree that Charter's obligation to complete the Rebuild under the Franchise Agreement Section 7.2 shall be no later than December 31, 2002, but Charter agrees to use its best efforts to complete the Rebuild on or before November 30, 2002. 3.2 Liquidated damages for failure to complete the rebuild shall not be imposed pursuant to Section 7.2 of the Franchise Agreement until June 30, 2003. 3.3 This Section 3 operates as a modification to Section 7.2 of the Franchise Agreement to the extent of subsections 3.1 and 3.2 only, and does not otherwise operate to modify or amend any other provision of Section 7.2 of the Franchise Agreement, nor to modify or amend any other provision of the Franchise Agreement. 4. AUTHORIZATION TO EXECUTE AGREEMENT Each of the Parties hereto represents and warrants to the other that it is fully authorized and has the capacity and authority to execute and deliver this Compromise Agreement and to perform the transactions contemplated hereby. Upon execution and delivery, this Compromise Agreement shall be the valid and binding obligation of each ofthe Parties hereto, enforceable against such party in any court of competent jurisdiction. 5. ADDITIONAL ACTIONS AND DOCUMENTS Each of the Parties hereto hereby agrees to take or cause to be taken such further actions, to execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, and to obtain such consents, as may be necessary or as may be reasonably requested in order to fully effectuate the purposes, terms and conditions of this Compromise Agreement. 6. BINDING EFFECT This Compromise Agreement shall be binding upon and inure to the benefit of all Parties herein, and their successors and assigns. All other terms of the Franchise Agreement which are not in conflict with the provisions of this Compromise Agreement shall remain unchanged and in full force and effect. In the case of a conflict in the terms ofthis Compromise Agreement and the Franchise Agreement, the provisions of this \JH\543180.1 01-021004706002 -4- Compromise Agreement shall control. 7. WITHDRAWAL OF MODIFICATION PETITION Pursuant to the mutually acceptable terms and conditions set forth in this Compromise Agreement Charter hereby withdraws its Modification Petition with prejudice. IN WITNESS WHEREOF, each of the Parties has caused this Compromise Agreement to be duly executed on its behalf as of the date first hereinabove set forth. FALCON CABLE SYSTEMS CHARTER II, L.P. D/B/A CHARTER COMMUNICATIONS By: mo..l /.U tUt F4-- uJ It z vf OfJif~, 1Jk) I(Rfji'o^", s Vice-Presidettt , Dated: .3-J2.~02- CITY OF GILROY, CAL A Municipal C lA, Attest: ~.. /2- / . ,/ ' 1.'._'" --1 " 'A1b){dA uc-<---<'-~~ Rhonda Pellin, City Clerk APPROVED AS TO FORM: EFFECTIVE DATE: March 4,2002 ~ ~~lCrrn.~ Lin a A. Callon, CIty Attorney \JH\543180.1 01-021004706002 -5-