Blue Ridge shall pay to the municipality an amount equal to 3.5% of the gross revenues derived from the operation of its cable system in the Borough. The term "gross revenues" is defined in Article VIII, Definitions, below. Blue Ridge shall not deduct or otherwise credit against the franchise fee any tax, fee or assessment of general applicability. The municipality may amend the franchise fee upon 60 days' written notice to Blue Ridge, provided that the franchise fee may not exceed the maximum percentage permitted by law.
Franchise fee payments to the municipality under this provision shall be computed at the end of each calendar quarter and shall be due and payable within 30 days after the end of each calendar quarter. Specifically, payments shall be due and payable on or before April 30 (for the first quarter), July 31 (for the second quarter), October 31 (for the third quarter), and January 31 (for the fourth quarter) of each year. In the event that any franchise fee payment is not made on or before the applicable dates, then interest shall be added at the then-current prime rate of the largest commercial bank in Carbon County, plus three percentage points. The interest rate shall be applied as described from the date such franchise fee payment was originally due. No acceptance of any payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall acceptance of any payment be construed as a release of any claim the municipality may have for additional sums payable under this agreement.
Each franchise fee payment shall be accompanied by a written report containing an accurate statement of Blue Ridge's gross revenues received for cable services for the quarter in connection with the operation of Blue Ridge's cable system and a brief report showing the basis for computation of fees. The report shall contain a line item for every source of revenue received and the amount of revenue received from each source. The report shall be verified by a financial representative of Blue Ridge.
On an annual basis, upon 30 days' prior written notice, the municipality shall have the right to conduct an independent audit of Blue Ridge's records reasonably related to the sources, amounts and computation of gross revenues in accordance with generally accepted accounting principles. Such records shall be kept or made available to the municipality at the notice location for Blue Ridge specified in Article VII below. Any reproduction of such records for purposes of inspection shall be performed at Blue Ridge's expense. If the audit shows that franchise fees have been underpaid, then Blue Ridge shall pay the underpaid amount plus interest in the amount of the then-current prime rate of the largest bank in Carbon County plus two percentage points. If franchise fees have been underpaid by 5% or more, then Blue Ridge shall also pay the total cost of the audit.