(a) Performance bond. The town may require the grantee, as part of a franchise agreement, to obtain and maintain during the entire term of the franchise and any extensions and renewals thereof, at its cost and expense, and file with the town, a corporate surety bond in an amount specified in this chapter or the franchise to guarantee the faithful performance of the grantee of all its obligations provided under this chapter and the franchise. Failure to timely obtain, file and maintain said bond shall constitute a substantial violation within the meaning of this section.
(b) Conditions. The performance and/or payment bond shall provide the following conditions:
(1) There shall be recoverable by the town jointly and severally from the principal and surety, any and all fines and liquidated damages to the town and any and all damages, losses, costs, and expenses' suffered or incurred by the town resulting from the failure of the grantee to: faithfully comply with the provisions of this chapter and the franchise; franchise fee not in dispute; pay any claims, liens or generally applicable, nondiscriminatory taxes due the town which arise by reason of the construction, operation, maintenance or repair of the Cable System. Such losses, costs and expenses shall include but not be limited to attorney's fees and other associated expenses.
(2) The total amount of the bond shall be forfeited in favor of the town in the event:
a. The grantee abandons the cable system at any time during the term of the franchise or any extension thereto; or
b. The grantee assigns the franchise without appropriate, lawful consent of the town, when such consent is required.
(c) Reduction of bond. Upon written application by the grantee, the town may, at its sole option, permit the amount of the bond to be reduced or waive the requirements for a performance bond subject to the conditions set forth below. Reductions granted or denied upon application by the grantee shall be without prejudice to the grantee's subsequent applications or to the town's right to require the full bond at any time thereafter. However, no application shall be made by the grantee within one year of any prior application.
(d) Letter of credit. The town may require the grantee, as part of a franchise agreement, to obtain, maintain and file with the town an irrevocable letter of credit from a financial institution licensed to do business in the state in an amount specified in the franchise, naming the town as beneficiary. The form and contents of such letter of credit shall be approved by the town and shall be released only upon expiration of the franchise or upon the replacement of the letter of credit by a successor grantee. Failure to obtain the letter of credit within the time specified within the franchise shall constitute a substantial violation within the meaning of this section.
(e) Conditions. The town may draw upon the letter of credit if the grantee fails to: faithfully comply with the material provisions of this chapter and the franchise; comply with all lawful orders, permits and directives of any town agency or body having jurisdiction over its acts or defaults pursuant to the franchise; pay fees due to the town; or pay any lawful claims, liens or generally applicable, nondiscriminatory taxes due the town which arise by reason of the construction, operation, maintenance or repair of the cable system.
(f) Use of performance bond and letter of credit. Prior to drawing upon the letter of credit and/or the performance bond for the purposes described in this section, the town shall notify the grantee in writing that payment is due and the grantee shall have ten days from the receipt of such written notice to make a full and complete payment or request a hearing before council. If the grantee does not make the payment within ten days or request a hearing before council, the town may withdraw the amount thereof, with interest and penalties, from the letter of credit and the performance bond.
(g) Notification. Within three days of a withdrawal from the letter of credit and/or performance bond, the town shall send to the grantee, by certified mail, return receipt requested, written notification of the amount, date and purpose of such withdrawal.
(h) Replenishment of letter of credit and performance bond. No later than 30 days after mailing to the grantee by certified mail notification of a withdrawal pursuant to subsection (f) above, the grantee shall replenish the letter of credit and/or performance bond in an amount equal to the amount so withdrawn. Failure to make timely replenishment of such amount to the letter of credit and/or performance bond shall constitute a substantial violation of this chapter.
(i) Nonrenewal, alteration, or cancellation of letter of credit or performance bond. The performance bond and/or letter of credit required in the franchise shall be in a form satisfactory to the town and shall require 30 days written notice of any nonrenewal, alteration or cancellation to both the town and the grantee. The grantee shall, in the event of any such cancellation notice, obtain, pay all premiums for, and file with the town, written evidence of the issuance of replacement bond or policies within 30 days following receipt by the town or the grantee of any notice of cancellation.
(j) CPI increase. To offset the effects of inflation, the amounts of the bond and letter of credit provided for herein are subject to reasonable CPI increases at the end of every three-year period of the franchise, applicable to the next three-year period, upon the determination of the town.
(Ord. No. 04-009, § 6-30, 8-26-2004)