(A) Performance bond. Upon the effective date of the franchise, the grantee shall 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 to be determined by Council and as specified in the franchise agreement 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 the bond shall constitute a substantial violation within the meaning of this section.
(B) Conditions. The performance 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 due 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; comply with all orders, permits and directives of any town agency or body having jurisdiction over its acts or defaults; pay fees due to the town; or pay any claims, liens or taxes due the town which arise by reason of the construction, operation, maintenance or repair of the cable system. The 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 transfers the franchise without the express written consent of the town.
(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 following conditions: 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 without notice at any time thereafter. However, no application for reduction shall be made by the grantee within 1 year of any prior application for reduction of within the first 5 years of the franchise.
(D) Use of performance bond. Prior to drawing upon the performance bond for the purposes described in this section, the town shall notify the grantee in writing by certified or registered mail, return receipt requested, that payment is due and the grantee shall make a full and complete payment. If the grantee does not make the payment within 10 days from the mailing of the notice, the town may withdraw the amount thereof, with interest and penalties, from the performance bond.
(E) Notification. Within 3 days of a withdrawal from the performance bond, the town shall send to the grantee, by certified mail, return receipt requested, written notification of the amount, date and purpose of the withdrawal.
(F) Replenishment of performance bond. No later than 30 days after mailing to the grantee by certified mail notification as described in division (E) above of a withdrawal pursuant to division (D) above, the grantee shall replenish the performance bond in an amount equal to the amount so withdrawn. Failure to make timely replenishment of the amount to the performance bond may constitute a substantial violation of this chapter.
(G) Nonrenewal, alteration or cancellation of performance bond. The performance bond required herein 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 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, and failure to do so constitutes a substantial violation of this chapter.
(H) Inflation. To offset the effects of inflation the amounts of the bond provided for herein, shall be increased by the annual rate of inflation at the end of every 3-year period of the franchise, applicable to the next 3-year period, upon the request of the town.