§ 12. Compensation.

12.1

Franchise Fee. In consideration of the rights, privileges, and franchise hereby granted, Monmouth Power and Light shall pay to the City from and after the effective date of the acceptance of this franchise, an amount equal to seven percent (7%) of its gross revenues derived from services provided within the corporate limits of City. Franchise fee payments shall be paid quarterly on October 1st, January 1st, April 1st, and July 1st. Payment of the franchise fee for each calendar quarter shall be made within sixty (60) days following the end of the quarter. The term "gross revenue" as used herein shall be construed to mean any revenue of Monmouth Power and Light derived from the sale and use of electric power and energy within the municipal boundaries of the City or any revenues from the rental or lease of Monmouth Power and Light's operating facilities (excluding residential-type space and water heating equipment). after adjustment for the net write-off of uncollectible accounts (accounts which, despite Monmouth Power and Light's best efforts, have been uncollectible for 12 months or more) and corrections of bills theretofore rendered. Gross revenues shall not include any other revenue sources. All amounts paid under this Section 12 shall be subject to review by the City; provided that only payments which occurred during a period of thirty-six (36) months prior to the date the City notifies Monmouth Power and Light of its intent to conduct a review shall be subject to such review. Notwithstanding any provision to the contrary, at any time during the term of this Franchise, the City may elect to increase the franchise fee amount as may then be allowed by state law. The City shall provide Monmouth Power and Light with prior written notice of such increase following adoption of the change in percentage by the City. The increase shall be effective for the first calendar quarter that begins after three (3) months following the date the City has provided such written notice to Monmouth Power and Light.

12.2   

No Credit against Other City Charges, Billing Statements. Payment of the compensation owed under this Franchise shall not exempt Monmouth Power and Light from the payment of any other license fee, or charge on the business occupation property or income of Monmouth Power and Light that may be now or in the future lawfully imposed by the City, except as may be otherwise provided in the ordinance or ordinances imposing such other license fees, or charges. Percentage amounts charged to Monmouth Power and Light may be noted or itemized separately on any bill to any customer or user of services furnished by Monmouth Power and Light under this Franchise, subject to the City's prior review of the initial bill statement noting the charges and itemization.

12.3   

Interest. Franchise fee payments not received by the City by the due date shall be assessed interest equal to the rate of one percent (1%) over the existing prime rate as published in The Wall Street Journal, compounded daily. Interest shall be due on the entire late payment from the date on which the payment was due until the date on which the City receives the payment.

12.4

Report. Accompanying each payment to the City, Monmouth Power and Light shall file with the City a written report containing an accurate statement in summarized form of its calculation of the amount of the payment. Such statement shall be verified by an officer or other authorized representative of Monmouth Power and Light and shall set forth its gross revenues according to their accounting subdivision and any deductions claimed for the period. Such reports shall be in a form satisfactory to the City.

12.5

Alternative Compensation. If, for any reason, the Franchise fee or compensation is invalidated or amended by the final decision or act of a court or governmental authority of competent jurisdiction, then the highest reasonable Franchise fee or compensation allowed by such court or governmental authority shall be the Franchise fee or compensation charged under this ordinance.

12.6

Acceptance of Payment and Recomputation of Amount Owed. No acceptance of any payment pursuant to this Section 12 shall be construed as an accord that the amount paid is, in fact, the correct amount, nor shall any acceptance of payments be construed as a release of any claim the City may have for further or additional sums payable. All amounts paid under this Section 12 shall be subject to audit by the City, provided that only payments which occurred during a period of thirty-six (36) months prior to the date the City notifies Monmouth Power and Light of its intent to perform an audit shall be subject to such audit. If City's audit discloses that Monmouth Power and Light has paid ninety-five percent (95%) or less of the principal amount owing for the period under audit, Monmouth Power and Light agrees to pay the City to proper amount due and owing plus a penalty payment equal to five percent (5%) of any underpayment within thirty (30) days of written notice from the City. If such payment is not received within thirty (30) days of written notice from the City, then interest shall be compounded daily from the date on which the payment was due until the date on which the City receives the payment, such interest to be calculated at one percent (1%) over the existing prime rate as published in the Wall Street Journal.

12.7

Escrow. If Monmouth Power and Light disputes the City's determination of underpayment under this Section 12, Monmouth Power and Light shall place the amount the City asserts is owed, plus any underpayment penalties, in an escrow account at a financial institution with instructions agreed to by the City until final resolution.

12.8   

Right to Audit. The City and its agents and representatives shall have authority to arrange for and conduct audits within a reasonable day's commute to Independence, upon no less than thirty (30) days prior written notice. The City may determine the scope of audit in each instance, subject to the provisions of Section 12.6 of this Franchise.