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<br />'.;' <br /> <br />, <br /> <br />'J <br /> <br />3.2 Franchise Fee. Following the issuance and acceptance <br />of the franchise, Grantee shall pay to Grantor a franchise <br />fee of five percent (5%) of annual gross revenues. Said <br />franchise fee shall be computed and paid on a quarterly <br />basis, and due no later than thirty (30) days following the <br />end of each calendar quarter. <br /> <br />3.3 Advance of Franchise Fees. At the time of acceptance <br />of this franchise pursuant to Section 2.6 of this agreement, <br />Grantee shall deposit with Grantor the sum of Five Hundred <br />Thousand Dollars ($500,000.00) as an advance payment of <br />franchise fees to be credited as hereinafter provided. At <br />the beginning of each year thereafter Grantee shall deposit <br />with Grantor the sum of Fifty Thousand Dollars ($50,000.00) <br />as an advance payment of franchise fees to be credited as <br />hereinafter provided. Said payment of franchise fees may be <br />used by Grantor for any lawful purpose and shall not be <br />recoverable from Grantor except as hereinafter credited. <br /> <br />3.4 Credit of Advance Franchise Fees. In any single <br />year wherein the franchise fee required by Section 3.2 of <br />this agreement exceeds the amount of Fifty Thousand Dollars <br />($50,000.00), a sum equal to the difference between Fifty <br />Thousand Dollars ($50,000.00) and the actual franchise fee <br />shall be credited to the initial advance of Five Hundred <br />Thousand Dollars ($500,000.00) advanced pursuant to Section <br />3.3 of this agreement. Any amount remaining from advance <br />payment of franchise fees at the end of the term hereof <br />shall be and remain the sole property of Grantor. <br /> <br />3.5 Security Fund. At the time of acceptance of this <br />agreement pursuant to Section 2.6 of this agreement, Grantee <br />shall deposit with Grantor the sum of One Hundred Thousand <br />Dollars ($100,000.00) as a security deposit for the performance <br />by Grantee of the provisions of this agreement. Ninety <br />percent (90%) of the security deposit may be in the form of <br />an irrevocable letter of credit on a form as approved by <br />Grantor's City Attorney. If Grantee is in default as here- <br />inafter specified in Section 4.3 or 10.4, Grantor may use <br />the security fund, or any portion thereof, to cure the de- <br />fault or to compensate Grantor as penalty for nonperformance. <br />Grantee shall immediately on demand pay to Grantor a sum <br />equal to the portion of the security deposit expended or <br />applied by Grantor as provided in this agreement so as to <br />maintain the security deposit in the sum of One Hundred <br />Thousand ($100,000.00). If Grantee is not in default at the <br />completion of construction as herein provided, the principal <br />amount of the required security deposit shall be reduced to <br />Fifty Thousand Dollars ($50,000.00), ninety percent (90%) of <br /> <br />-8- <br />