§ 93.12. SECURITY FUND.

(a)

The franchisee at its sole expense shall post and keep posted with the City a cash security deposit or nonrevocable letter of credit or a surety bond in a form and in an amount approved by the City to be used as a security fund to ensure the franchisee's faithful performance of and compliance with all terms and provisions of this Chapter, the franchise agreement and other applicable law, compliance with all orders, permits and directions of the City, the payment by the franchisee of any claims, liens, fees, or taxes due the City which arise by reason of the construction, operation or maintenance of the system, and to indemnify the City against all losses that it may suffer in the event the franchisee fails to comply with any term or provision of this Chapter, the franchise agreement or other applicable law. The security fund shall remain in effect for the full term of the franchise plus, at minimum, an additional six (6) months thereafter. The exact form and amount of the security fund as set forth in a franchise agreement shall be an amount necessary to protect the public, to provide adequate incentive to the franchisee to comply with this Chapter and the franchise agreement, and to enable the City to effectively enforce compliance therewith. The franchise agreement shall provide for the procedures to be followed with respect to the security fund.

(b)

The franchisee and its surety shall be jointly and severally liable.

(c)

The form and conditions of the bonds and the surety shall be acceptable and satisfactory to the City and surety shall be a nationally recognized surety company acceptable to the City, listed on the current list of "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and Acceptable Reinsuring Companies" as published in circular 570 (amended) by the Audit Staff, Bureau of Government Financial Operations, U.S. Treasury Department, all bonds shall be placed with sureties with a Best rating of no less than A-VII. Bonds shall be executed and issued by a resident agent, licensed and having an office in Palm Beach, Dade, Broward or Martin Counties, Florida, representing such corporate sureties. If the franchisee is a partnership, the bond should be signed by each of the individuals who are partners; if a corporation, the bond should be signed in the correct corporate name by duly authorized officer, agent or attorney-in-fact. There should be executed an appropriate number of counterparts of the bond corresponding to the number of counterparts in the franchise.

(d)

If the surety on any bond furnished by franchisee is declared bankrupt or becomes insolvent or its right to do business is terminated in the State of Florida or it ceases to meet the requirements of paragraph B, franchisee shall within ten (10) days thereafter substitute another bond, surety or cash deposit which must be in conformance with paragraph (c).

(e)

The security fund shall be maintained at the amount specified in a franchise agreement, even if amounts have to be withdrawn and replenished pursuant to Subsection (g).

(f)

Following a determination by the City, pursuant to Section 93.25 that the franchisee has failed to comply with any provision of the franchise agreement which the City reasonably determines can be remedied by demand on the security fund, the City may immediately withdraw the amount thereof, with interest and any penalties, from the security fund. Upon such withdrawal, the City shall notify the franchisee of the amount and the date thereof.

(g)

Within thirty (30) days after notice to it that any amount has been withdrawn from the security fund deposited pursuant to Subsection A above, the franchisee shall pay to, or deposit with, the City a sum sufficient to restore such security fund to the amounts specified in Subsection A, whatever the case may be. Failure to replenish the security fund shall subject the franchisee to penalties. However, replenishment is without prejudice to the franchisee's right under Section 93.25 to contest the validity of the City's withdrawal of money from the security fund.

(h)

The rights reserved to the City with respect to the security fund posted pursuant to this Section are in addition to all other rights and remedies the City may have under this Chapter, the franchise agreement, or at law or equity, and no action, proceeding or exercise of a right with respect to such security fund shall affect any other right or remedy of the City.

(i)

The portion of the security fund deposited pursuant to this Section necessary to compensate the City for damages and costs sustained shall become the property of the City in the event that the franchise is canceled or terminated by reason of the default of the franchisee. The franchisee, however, shall be entitled to the return of such security fund, or portion thereof less any amount in dispute, without interest, as remains on deposit with the City six (6) months after the expiration of the term of the franchise, provided that there is then no outstanding default on the part of the franchisee.

(Ord. No. 10-05, § 1, passed 3/1/05)