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2. Operating Fee Rates for Adult -Use Cannabis Retail Business• Payment <br />For each month OPERATOR of the permitted "adult -use cannabis retail business" (as <br />said term is defined in Chapter 40 of the Santa Ana Municipal Code) transacts and carries <br />on adult -use cannabis retail business operations at the above-described property location <br />permitted by CITY, OPERATOR shall pay an operating agreement fee monthly to CITY. <br />The term "month" or "monthly" as used in this AGREEMENT shall refer to a calendar month <br />and shall include any fraction of a calendar month as a whole month. Terms of payment of <br />the operating agreement fee are as follows: <br />A. OPERATOR's operating agreement fee shall begin to accrue on the date that CITY first <br />issues OPERATOR an Adult -Use Cannabis Retail Regulatory Safety Permit and shall be <br />paid to CITY by the last day of the month following the month for which it is due. <br />B. OPERATOR shall pay CITY a monthly operating agreement fee which is the higher of <br />the following two calculations: <br />i. calculated at a rate of Eight Percent (8%) of the gross receipts generated or <br />otherwise received; or, <br />ii. calculated at an annual rate of Twenty -Five Dollars ($25.00) per square foot <br />based on the gross square footage of OPERATOR's permitted property location <br />(as confirmed by the corresponding "Approved Building Set" on file with City of <br />Santa Ana Planning and Building Agency) prorated monthly to one -twelfth <br />(1/12th) of the annual rate amount. <br />C. OPERATOR shall calculate and report its monthly operating agreement fee based on <br />both of the above calculations each month; remitting the higher amount to CITY. <br />D. OPERATOR shall report its operating agreement fee calculations to CITY using the <br />"Monthly Operating Agreement Reporting Form" set out in "Exhibit B" of this <br />AGREEMENT which is hereby incorporated into this AGREEMENT by reference. <br />3. Operating Fees Not a Pass -Through Fee; Gross Receipts Defined <br />A. OPERATOR, as an adult -use cannabis retail business, shall not pass the operating <br />agreement fees or any or any portion thereof through to the adult -use cannabis retail <br />business' customer in any fashion except as part of the basic product sales and/or <br />service price. <br />B. For the purposes of this AGREEMENT, "gross receipts" shall mean any and all of the <br />following: <br />• Transfer of title or possession, exchange or barter, conditional or otherwise, in any <br />manner or by any means whatsoever, of tangible personal property for a <br />consideration including any monetary consideration for adult -use (non -medicinal) <br />cannabis, including, but not limited to, membership dues, reimbursements provided <br />by members, regardless of form, or the total amount of cash or in-kind contributions, <br />including all operating costs related to the growth, cultivation, manufacture, <br />2 <br />