1. (a)

   1. (1) The Arkansas Department of Commerce Broadband Office will fund up to seventy-five percent (75%) percent of the total cost of the project.
   2. (2) The applicant shall fund a minimum of twenty-five percent (25%) of the project costs.

   3. (3)

      1. (A) Internet service providers shall maintain an irrevocable standby letter of credit equal to one hundred percent (100%) of the grant award amounts disbursed to the internet service provider.
      2. (B) The irrevocable standby letter of credit:

2. (i) Shall follow the same standards found in 47 C.F.R. § 54.804(c)(2); and

   1. (ii) Will be accompanied by an opinion letter from applicant’s legal counsel stating that the irrevocable standby letter of credit and its proceeds will not be subject to a Chapter 11 bankruptcy proceeding.
   2. (4) The broadband office may allow the letter of credit amount to be reduced to no less than twenty-five percent (25%) of the grant award as the project progresses and defined milestones in the project deployment plan are met.
   3. (5) The letter of credit must remain in place until the project is completed and acceptance testing by the broadband office is satisfactorily concluded.

3. (b)

   1. (1) In lieu of a letter of credit the internet service provider will be required to furnish a performance bond in an amount equal to the grant award.
   2. (2) The performance bond will be in the form of a surety bond issued by a surety company as a guarantee of delivery of goods/services in accordance with the specifications and within the time period established in the grant agreement.

   3. (3) Surety bonds must be:

      1. (A) Issued by a surety company authorized to do business in Arkansas; and
      2. (B) Signed by a resident local agent licensed by the Insurance Commissioner to represent the surety company.
   4. (4) The resident agent’s power-of-attorney must accompany the surety bond.

   5. (5) The company issuing the surety bond must:

      1. (A) Comply with all stipulations herein; and
      2. (B) Be named in the United States Department of the Treasury listing of companies holding certificates of authority as acceptable sureties on federal bonds and as acceptable reinsuring companies.

   6. (6) Any excess between the face amount of the bond and the underwriting limitation of the bonding company shall be protected by reinsurance provided by an acceptable reinsuring company.

      1. (c)
   7. (1) Please note, the broadband office or its designee reserves the right to stop funding should it learn that grantee’s vendors or subcontractors are not getting paid for work performed on ARC projects.
   8. (2) Funding will resume when the broadband office or its designee is satisfied the matter has been resolved.

Codification Notes: "ARC" means Arkansas Rural Connect Broadband Grant Program.