Franchisee shall pay to LFA a franchise fee
of 5% of annual gross revenue. In accordance with Title VI of the
Communications Act, the twelve-month period applicable under the franchise
for the computation of the franchise fee shall be a calendar year.
Such payments shall be made no later than 45 days following the end
of each calendar quarter. Specifically, payments shall be due and
payable on or before May 15 (for the first quarter), August 15 (for
the second quarter), November 15 (for the third quarter), and February
15 (for the fourth quarter). In the event that any franchise fee payment
is not made on or before the applicable dates, then interest shall
be added at the rate of 6% of the amount of franchise fee revenue
due to LFA. No acceptance of any payment shall be construed as an
accord that the amount paid is the correct amount. Franchisee shall
be allowed to submit or correct any payments that were incorrectly
omitted, and shall be refunded any payments that were incorrectly
submitted, in connection with the quarterly franchise fee remittances
within 90 days following the close of the calendar year for which
such payments were applicable.
Each franchise fee payment shall be accompanied
by a brief report that provides line items of revenue sources and
is verified by a financial manager of franchisee showing the basis
for the computation. A sample report is attached as Exhibit C.[1]
[1]
Editor's Note: Exhibit C is included at the end of this chapter.
The parties agree that the period of limitation
for recovery of any franchise fee payable hereunder shall be four
years from the date on which payment by franchisee is due.
A.
LFA may audit or conduct a franchise fee review of
franchisee's books and records no more than once every three years
during the term. All records reasonably necessary for any such audit
shall be made available by franchisee to LFA. Franchisee shall provide
copies of such records to LFA upon written request.
B.
Each party shall bear its own costs of an audit; provided,
however, that if the results of any audit indicate that franchisee
underpaid the franchise fees by 5% or more, then franchisee shall
pay the reasonable, documented, out-of-pocket costs of the audit up
to $3,000.
C.
If the results of an audit indicate an overpayment
or underpayment of franchise fees, the parties agree that such overpayment
or underpayment shall be returned to the proper party within 45 days;
provided, however, that franchisee shall be required to remit underpayments
to LFA together with interest at 5% of the amount correctly due from
the date such underpayment would have been due.
D.
Any entity employed by LFA that performs the audit
or franchise fee review shall be a professional firm with recognized
expertise in auditing franchise fees and shall not be permitted to
be compensated on a success based formula e.g., payment based on an
underpayment of fees, if any.
In the event that franchisee pays to any other municipality located in Montgomery County, Pennsylvania, a higher franchise fee percentage than that contained in this agreement, or pays a franchise fee on any revenue sources not included in the definition of "gross revenue" in § A301-41 of this agreement within three years of the effective date of this agreement, then such more favorable terms shall automatically be applicable to LFA and this agreement shall be amended to reflect such more favorable terms.
If cable services subject to the franchise fee required under this Article XII are provided to subscribers in conjunction with noncable services, the franchise fee shall be applied only to the value of the cable services, as reflected on the books and records of franchisee in accordance with FCC or Pennsylvania Public Utility Commission regulatory rules, regulations, standards, or orders, and generally accepted accounting principles and applicable laws and regulations.
