Article 10. GENERAL FINANCIAL AND INSURANCE PROVISIONS  

1.

Franchise Fee.

A.

As compensation for this Franchise and in consideration of permission to use the Streets and Public Property of the Cities for the construction, operation, maintenance and reconstruction of a System within the Cities, and to defray the costs of Franchise regulation, and to support community programming through the CAC, Grantee shall pay to Grantor an annual amount equal to five percent (5%) of Grantee's Gross Revenues.

B.

Payments due Grantor under this section shall be computed quarterly, for the preceding quarter, as of March 31, June 30, September 30 and December 31. Each quarterly payment shall be due and payable no later than thirty (30) days after the dates listed in the previous sentence. Each payment shall be accompanied by a brief report in at least as much detail as that used by Grantee on the most recent report provided to the Grantor prior to the Effective Date showing the basis for the computation and such other relevant facts.

C.

No acceptance of any payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall such acceptance of payment be construed as a release of any claim Grantor may have for further sums payable under the provisions of this Franchise. All amounts paid shall be subject to audit and recomputation by Grantor.

D.

Grantor shall collect all fees paid by Grantee, provided that if a Member withdraws from the Commission pursuant to the Agreement and this Franchise, the City shall collect directly from the Grantee.

2.

Security Fund.

A.

Grantee shall deposit into a bank account established by Grantor and maintain on deposit through the term of this Franchise, the sum of $50,000.00 as security for the faithful performance by it of all the provisions of this Franchise, and compliance with all orders, permits and directions of Grantor or any Cities having jurisdiction over its acts or defaults under this Franchise, and the payment by Grantee of any claim, liens and taxes due Grantor or any Cities which arise by reason of the construction, operation or maintenance of the System. Interest accrued on this deposit shall remain with the deposit as additional security unless, after periodic review, Grantor determines, in its sole discretion, to rebate all or part of the accrued interest or to reduce the required amount of the security fund. Provision shall be made to permit the Commission to withdraw funds from the security fund. Grantee shall not use the security fund for other purposes and shall not assign, pledge or otherwise use this security fund as security for any purpose. The amount of the Security Fund shall be reduced to $25,000 upon completion of the System Upgrade set forth in Article 5 of this Franchise.

B.

Within thirty (30) days after notice to it that any amount has been withdrawn by Grantor from the security fund pursuant to subdivision (A) of this section, Grantee shall deposit a sum of money sufficient to restore such security fund to the original amount.

3.

Penalties Procedure.

A.

Whenever Grantor is notified of an allegation that Grantee has violated any provision of this Franchise, Grantor shall first notify Grantee of the violation in accordance with section 4.8 of this Franchise, and demand correction within a reasonable time, which shall not be less than twenty (20) days in the case of the failure of the Grantee to pay any sum or other amount due the Grantor under this Franchise, and thirty (30) days in all other cases. If Grantee fails to correct the violation within the time prescribed, or if Grantee is unable to correct the violation and fails to commence corrective action within the time prescribed and to diligently remedy such violation thereafter, Grantee shall then be given written notice of not less than twenty (20) days of a public hearing to be held before the Commission. Said notice shall indicate with reasonable specificity the violation alleged to have occurred.

B.

At the public hearing, the Commission shall hear and consider all relevant evidence, and thereafter render findings and its decision based upon the evidence.

C.

In the event the Commission finds that Grantee has corrected the violation or has diligently commenced correction of such violation after notice thereof from Grantor and is diligently proceeding to fully remedy such violation, or that no Franchise violation has occurred, the proceedings shall terminate and no penalty or other sanction shall be imposed.

D.

In the event the Commission finds that a Franchise violation exists and that Grantee has not corrected the same in a satisfactory manner or has not diligently commenced correction of such violation, the Commission may impose liquidated damages, assessable from the security fund, as follows:

(1)

For violations of Article 5 of this Franchise, including, but not limited to provisions relating to the System Upgrade and the System Upgrade construction schedule, $1,500 per day of non-compliance with this Franchise;

(2)

For all other violations, $100 per day per violation.

E.

If Grantor elects to assess liquidated damages pursuant to the provisions of this Franchise, then such election shall constitute Grantor's exclusive remedy for a period of sixty (60) days. Thereafter, if the Grantee remains in non-compliance with the requirements of this Franchise, the Grantor may pursue any available remedy.

F.

The security fund deposited pursuant to section 10.2 of this Franchise shall become the property of Grantor in the event that the Franchise is cancelled by reason of the default of Grantee or revoked for cause. Grantee, however, shall be entitled to the return of such security fund, or portion thereof, as remains on deposit at the expiration of the term of this Franchise, or upon termination of this Franchise at an earlier date, provided there is then no outstanding default on the part of Grantee.

G.

The rights reserved to Grantor with respect to the security fund are in addition to all other rights of Grantor and Cities, whether reserved by this Franchise or authorized by law, and no action, proceeding or exercise of a right with respect to such security fund shall affect any other right Grantor or Cities may have.

4.

Bonds.

A.

Until completion of the System Upgrade described in Article 5 of this Franchise, Grantee shall maintain with Grantor a bond in the sum of Five Hundred Thousand Dollars ($500,000) in such form and with such sureties as shall be acceptable to Grantor. Thereafter, the Grantee shall reduce the amount of the bond to Twenty-five Thousand Dollars ($25,000). All performance bonds shall be conditioned upon the faithful performance by Grantee of this Franchise and upon the further condition that in the event Grantee shall fail to comply with any applicable law, ordinance or regulation, there shall be recoverable, jointly and severally, from the principal and surety of the bond, any damages or losses suffered by Grantor or the Cities as a result, including the full amount of any compensation, indemnification or cost of removal of any property of Grantee, including a reasonable allowance for attorneys' fees and costs (with interest at two percent (2%) in excess of the then prime rate), up to the full amount of the bond. The bond shall further guarantee payment by Grantee of all claims and liens against Grantor or Cities or any Streets and Public Property which arise by reason of the construction, operation, maintenance or use of the System.

B.

The rights reserved by Grantor or Cities with respect to the bond are in addition to all other rights the Grantor or Cities may have under this Franchise or any other law.

5.

Indemnification Damages and Defense.

A.

Grantee shall indemnify and hold harmless Grantor and Cities, and their officers, boards, commissions, elected officials, agents and employees at all times during the term of this Franchise against any costs, damages, penalties, expenses, claims, suits, actions, liability and legal or equitable judgments or other relief, as a result of Grantee's exercise of this Franchise. Damages and penalties shall include, but shall not be limited to, damages arising out of copyright infringement, defamation and all other damages arising out of the construction, operation, maintenance or reconstruction of the System authorized herein, whether any act or omission complained of is authorized, allowed or prohibited by this Franchise.

B.

Grantee shall pay all expenses incurred by Grantor and Cities in defending itself with regard to all damages and penalties mentioned in section (A) above. These expenses shall include all out-of-pocket expenses, such as attorney fees, and shall also include the reasonable value of any services rendered by any employees of Grantor or Cities.

6.

Liability Insurance.

A.

Grantee shall maintain liability insurance covering both the Grantor and Grantee (and shall maintain said insurance during the entire term of the Franchise) in the minimum amounts of:

(1)

$500,000 for property damage to any one person;

(2)

$2,000,000 for property damage in any one act or occurrence;

(3)

$1,000,000 for personal injury to any one person; and

(4)

$2,000,000 for personal injury in any one act or occurrence.

B.

During the term of this Franchise, the Grantee shall maintain insurance, as required by paragraph (A) above, issued by a carrier or carriers with an A.M. Best rating of "A-" or better. The Grantee shall maintain on file with the Grantor certificates of insurance together with written evidence of payment of required premiums throughout the term of this Franchise. The above minimum amounts may be changed from time to time by Grantee as requested by the Grantor; provided, however, the Grantee shall not be required to provide insurance in excess of what is customarily provided by other cable television operators in the Twin Cities metropolitan area.

C.

A Grantee shall immediately give notice to Grantor of any threatened or pending litigation likely to affect this insurance.

D.

Neither the provisions of this section nor any damages recovered by Grantor shall be construed to, or shall excuse the unfaithful performance by a Grantee or limit the liability of a Grantee.

E.

No recovery by Grantor of any sum by reason of the Security Fund or Bond required in this Franchise shall be any limitation upon the liability of Grantee to Grantor under the terms of this section, except that the sum so received by Grantor from such Security Fund or Bond shall be deducted from a recovery under this section, if for the same act or occurrence.

F.

All insurance policies maintained pursuant to this Franchise shall contain the following endorsement:

It is hereby understood and agreed that this insurance policy may not be cancelled nor the intention not to renew be stated until 30 days after receipt by the Grantor, by registered mail, of written notice of such intention to cancel or not to renew.

G.

Grantee shall provide worker's compensation insurance as required by state law.

H.

All such insurance policies shall provide a thirty (30) day notice to the Grantor in the event of material alteration or cancellation of any coverage afforded in said policies prior to the date said material alteration or cancellation shall become effective.