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currently$1.00 per month, per Subscriber. The Annual PEG Grant payment, along with a brief <br /> summary of the Subscriber information upon which it is based, shall be delivered to the City <br /> concurrent with the Franchise fee payment. Franchisee's obligation to pay the Annual PEG <br /> Grant is contingent upon the City imposing a comparable economic burden on a per Subscriber <br /> basis in writing on all new or existing providers of cable service(as such term may be defined by <br /> other providers)within the Franchise Area and that such providers pay such financial support <br /> throughout the term of this Agreement. The LFA shall give Franchisee sixty(60) days prior <br /> written notice before changing the amount of the Annual PEG Grant under this Section. <br /> Calculation of the Annual PEG Grant will commence with the first calendar month during which <br /> Franchisee obtains its first Subscriber in the Service Area. <br /> 6.2.3 The City shall provide Franchisee with a complete accounting annually of <br /> the distribution of funds granted pursuant to this Section 6.2. <br /> 6.3 City shall require all local producers and users of any of the PEG facilities or <br /> Channels to agree in writing to authorize Franchisee to transmit programming consistent with <br /> this Agreement and to defend and hold harmless Franchisee and the City, from and against any <br /> and all liability or other injury, including the reasonable cost of defending claims or litigation, <br /> arising from or in connection with claims for failure to comply with applicable federal laws, <br /> rules, regulations or other requirements of local, state or federal authorities; for claims of libel, <br /> slander, invasion of privacy, or the infringement of common law or statutory copyright; for <br /> unauthorized use of any trademark, trade name or service mark; for breach of contractual or <br /> other obligations owing to third parties by the producer or user; and for any other injury or <br /> damage in law or equity, which result from the use of a PEG facility or Channel. City shall <br /> establish rules and regulations for use of PEG facilities, consistent with, and as required by, 47 <br /> U.S.C. §531. <br /> 6.4 To the extent permitted by federal law, the Franchisee shall be allowed to recover <br /> the costs of an Annual PEG Grant, the Franchise Grant, and any other costs arising from the <br /> provision of PEG services from Subscribers and to include such costs as a separately billed line <br /> item on each Subscriber's bill. Without limiting the forgoing, if allowed under state and federal <br /> laws, Franchisee may externalize, line-item, or otherwise pass-through interconnection costs to <br /> Subscribers. <br /> 7. FRANCHISE FEES <br /> 7.1 Payment to City: Franchisee shall pay to the City a Franchise fee of five percent <br /> (5%) of annual Gross Revenue. In accordance with Title VI of the Communications Act, the <br /> twelve (12) month period applicable under the Franchise for the computation of the Franchise fee <br /> shall be a calendar year. Such payments shall be made no later than forty-five (45) days <br /> following the end of each calendar quarter. Franchisee shall be allowed to submit or correct any <br /> payments that were incorrectly omitted, and shall be refunded any payments that were <br /> incorrectly submitted, in connection with the quarterly Franchise fee remittances within 90 days <br /> following the close of the calendar year for which such payments were applicable. <br /> 7.2 Supporting Information: Each Franchise fee payment shall be accompanied by a <br /> brief report prepared by a representative of Franchisee showing the basis for the computation. <br /> EVERETT 13 <br /> Seattle-3388207.8 0010932-00119 <br />