Big Bear Lake Municipal Code Art. XXIV Security—letter of Credit

A. Within thirty days after the effective date of the franchise agreement, franchisee shall deposit with the city an irrevocable letter of credit in the amount set forth in the franchise agreement and issued by a federally insured commercial lending institution with a net worth in excess of one hundred million dollars and an office in the state of California (although the letter of credit may be issued elsewhere).

B. The form and substance of such letter of credit shall be subject to the approval of the city; such approval shall be given where the letter of credit complies with the requirements of this chapter and the franchise agreement. If all such conditions are not satisfied, the franchisee shall take all such necessary or appropriate actions as to achieve such compliance within ten days following receipt of notice from the city.

C. Failure to obtain or maintain a letter of credit required by this section until properly relieved of such requirement by the city constitutes a material breach of this chapter, the franchise agreement, and is grounds for termination of the franchise agreement.

D. The letter of credit shall be used to assure: the faithful performance by the franchisee of all its obligations under the franchise agreement and this chapter; compliance with all orders, permits and directions of the city having jurisdiction over the franchisee's acts or defaults under its franchise agreement or ordinance; and the payment by the franchisee of any penalties, liquidated damages, claims, liens, franchise fees, taxes or other fees due to the city which arise by reason of the construction, operation or maintenance of the cable system, including cost of removal or abandonment of any property of the franchisee.

E. The letter of credit shall be irrevocable within its term and shall be maintained from the date of its initial deposit with the city to and including the end of a period of two years following the termination, cancellation, revocation or denial of the renewal of the franchise agreement and the exhaustion of any subsequent legal appeals there from.

(Ord. 98-287 § 2, 1998)

When approved by the city council, the letter of credit may be drawn upon by the cable administrator by presentation of a draft on sight at the lending institution accompanied by a written certificate signed by the cable administrator certifying:

A. That the franchisee has failed to comply with its obligations under the franchise agreement and/or this chapter and identifying the nature of the noncompliance;

B. That the franchisee was given written notice of and an opportunity to cure such noncompliance in accordance with this chapter and the franchise agreement and that the franchisee failed to cure such noncompliance within the period allowed therefore, together with a copy of such notice;

C. That the cable administrator issued a notice of intention to assess liquidated damages pursuant to this chapter, required only where liquidated damages are to be assessed, together with a copy of such notice;

D. That franchisee was given a minimum of ten days written notice that the letter of credit would be assessed by the cable administrator for such finding of noncompliance if franchisee failed to satisfy such monetary damages, together with a copy of such notice; and

E. That franchisee failed to pay such monetary damages within the period allowed under such notice, specifying the amount by which the letter of credit is to be charged.

(Ord. 98-287 § 2, 1998)

A. Examples of the nature of the noncompliance for drawing upon the letter of credit include, but are not limited to, the following:

1. Failure of the franchisee to pay to the city any franchise fees, taxes, liens or other fees due and owing pursuant to a franchise agreement or this chapter;

2. Failure of the franchisee to pay to the city any amounts due and owing the city by reason of the indemnity provisions of this chapter;

3. Failure of the franchise to pay to the city any liquidated damages due and owing to the city pursuant to a franchise agreement or this chapter;

4. Failure to make any payment required by franchise agreement or this chapter within the time fixed therein; and

5. Failure to pay to the city any damages, claims costs or expenses which the city has been compelled to pay or incur by the reason of any default by the franchisee in the performance of its obligations under this chapter or a franchise agreement.

B. In the event of such noncompliance, the city may order the withdrawal of the amount thereof from the letter of credit or other instrument for payment to the city.

(Ord. 98-287 § 2, 1998)

Franchisee agrees to structure the letter of credit in such a manner so that if the cable administrator at any time draws upon the letter of credit, the amount of available credit shall automatically increase to the extent necessary to replenish that portion of the available credit exhausted by the honoring of the city's draft. The intent of this section is to make available to the city at all times a letter of credit in the amount specified in the franchise agreement.

(Ord. 98-287 § 2, 1998)

The rights reserved to the city with respect to the letter of credit are in addition to all other rights of the city whether reserved by the franchise agreement, this chapter or authorized by law, and no action or proceeding against a letter of credit shall affect any other rights the city may have, provided that if the city elects to assess liquidated damages against the franchisee, such liquidated damages shall constitute the exclusive monetary remedy available to the city; and the city shall be entitled to no other monetary damages with the exception of claims sounding in fraud or tort.

(Ord. 98-287 § 2, 1998)