#1 Enter management agreement with Kemper Sports Management (File Res. #2010-739)ADMINISTRATIVE SERVICES MEMORANDUM
October 4, 2010
TO: City Council
FROM: Jacob J. Winzenz, Dir. of Admin. Services/Assistant City Manager
SUBJECT: Action on a Proposed Resolution Authorizing the City Manager to
enter into a Management Agreement with Kemper Sports
Management, Inc. for the Management, Operation, and
Maintenance of Riverside and Blackhawk Golf Courses
(File Res. No. 2010-739)
Summary
The current lease with Crown Golf Properties (Crown) for the Janesville golf
courses expires on December 31, 2010. In the fall of 2009 Crown indicated that
they were not interested in renewing the lease, but would consider a
management contract. In anticipation of the expiration of the current lease the
City prepared a Request for Qualifications/Proposal (RFQP) for golf management
services and mailed it to twenty-seven (27) regional and national companies.
After reviewing the responses, conducting interviews, completing site visits, and
conducting reference checks, the evaluation committee selected Kemper Sports
Management, Inc. (Kemper) as the preferred vendor and staff has negotiated a
management agreement. The proposed agreement was reviewed by the Golf
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Course Advisory on September 29 and they voted unanimously to forward it to
the City Council with a positive recommendation.
Staff Recommendation
Staff recommends that the City Council adopt File Resolution 2010-739 which
authorizes the City Manager to enter into an agreement with Kemper Sports for
the management, operation, and maintenance of Riverside and Blackhawk golf
courses.
City Manager Recommendation
The City Manager recommends approval.
Background
The City owns two (2) golf courses; Riverside which is an eighteen (18) hole
course and Blackhawk which is a nine (9) hole course. The City operated and
maintained both golf courses until 1982 when the golf courses were leased to the
Rajon Corporation. The lease with Rajon Corporation expired in 1990, and in
1991 the golf courses were leased to Greenvisions, Inc. In 1995 Greenvisions’
portfolio was purchased by Crown Golf Properties, L.P. (Crown) as the two
organizations merged and Crown assumed the lease. Crown currently leases
the courses and the lease expires December 31, 2010.
Under the terms of the current lease, Crown pays the City a minimum of
$100,000 per year, or 12% of gross revenue, whichever is greater, as a rent
payment. In addition, Crown contributes a 1.5% of gross revenue into a Capital
Improvement Fund (CIF) for mutually agreed upon improvements to the courses.
In 2009 Crown paid the City $138,090 in rent and contributed $17,261 to the CIF.
While this has been a beneficial arrangement for the City, in recent years it has
not been particularly beneficial for Crown. Since 2002 the Janesville courses
have had an average net operating income of approximately $70,000. However,
after subtracting rent paid to the City of Janesville, the contribution to the CIF,
interest expense, and depreciation Crown has lost an average of approximately
$135,000 over this same period.
What has occurred in Janesville is not unique across the country. In the mid
1990’s and into the early 2000’s new golf courses were constructed at a rapid
pace. In this area we saw the construction of Prairie Woods, Glen Erin, and
Bass Creek. What this did was divide the total pie of golf rounds into smaller
pieces. This situation was further exacerbated by the economic downturn.
Given these changes in the national and local golf economy, finding a company
to lease the Janesville courses was determined to be unlikely. Therefore, the
decision was made to seek a company to manage the golf courses.
Golf management contracts are similar to leases in some respects, but very
different in others. Under both a lease and management contact a third-party is
retained to run the day-to-day operations of the golf course including staffing,
food and beverage, maintenance, club house operations, accounting, etc.
However, a management contract shifts the financial risk from the third-party to
the owner. The following table summarizes the major differences:
Lease Management Contract
Revenue Accrues to Lessee Accrues to owner (City)
Expenses Paid by Lessee Paid by Owner (City)
Profit/losses Lessee Owner (City)
Equipment Owned by Lessee Owned by Owner (City)
Golf Carts Provided by Lessee Provided by Owner
On April 26, 2010, a Request for Qualifications/Proposals (RFQP) was mailed to
twenty-seven (27) regional and national companies that specialize in the
management of golf courses. Responses were due on May 24, 2010, and a total
of six (6) companies responded to our RFQ/P. The responses were reviewed by
a committee comprised of members of the Golf Course Advisory Committee, City
staff, and Councilmember Perrotto. Based upon their responses, three (3)
companies were invited for interviews. Following the interviews the list was
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narrowed to two (2) companies for site visits and reference checks. On August
30, 2010, the review committee met to review the results of the site visits and
reference checks. Following the review the committee unanimously
recommended that the City enter into negotiations for a management agreement
with Kemper.
Analysis
The proposed Management Agreement with Kemper contains a number of
important provisions:
Agreement is for a term of five (5) years with an option to renew for an
additional five (5) years.
The City will have the ability to “opt-out” after three (3) years if Kemper is
not meeting budget.
The City will be responsible for all operating costs associated with the golf
courses.
The City will receive all revenue from the operation of the golf courses.
All staff will be employees of Kemper.
The City will retain the ability to approve budgets, set fees, and determine
hours of operation.
The City will be involved in and offer advice on the selection of the
General Manager and Golf Course Superintendent.
The City will pay Kemper a “Transition Services Fee” of $3,500 per month
to assist the City in the time period between signing this agreement and
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January 1.
The City will pay Kemper a monthly management fee of $6,250.
Kemper will receive an incentive fee of 30% of the first $30,000 of net
operating income plus 40% of any net operating income in excess of
$30,000.
Kemper will be reimbursed for a maximum of $3,500 per year in out-of-
pocket expenses.
Staff believes the proposed agreement represents the best opportunity for
Riverside and Blackhawk golf courses to be successful. It minimizes the fixed
costs to the City and provides incentives for Kemper to return the courses to
profitability. Staff believes Kemper will bring fresh ideas, creativity, and energy to
the courses.
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FILE RESOLUTION No. 2010-739
A Resolution Authorizing the City Manager to enter into a Management Agreement with
Kemper Sports Management, Inc. for the Management, Operation, and Maintenance of
Riverside and Blackhawk Golf Courses
WHEREAS, the City of Janesville is the owner of Riverside Golf Course located at 2100
Golf Course Road and Blackhawk Golf Courses located at 2100 Palmer Drive in the City of
Janesville, County of Rock, State of Wisconsin, collectively the “Courses”; and
WHEREAS, Kemper Sports Management, Inc., an Illinois corporation (“Kemper”), is in
the business of golf course management with a portfolio of 103 18-hole courses in 28 states and
Puerto Rico, thirty-three of which are public agency facilities; and
WHEREAS, Kemper desires to manage, operate, and maintain the Courses as an
independent contractor according to the terms and provisions of a certain negotiated and
proposed Management Agreement (“Agreement”) which is incorporated herein by reference as
if fully set forth verbatim; and
WHEREAS, Kemper and the City Administration have negotiated a proposed five (5)
year Agreement for such purposes for the term commencing January 1, 2011 and ending
December 31, 2015; and
WHEREAS, the City of Janesville Golf Course Advisory Committee review the proposed
Agreement at their meeting on September 29, 2010, and unanimously recommended approval;
and
WHEREAS, the Common Council hereby find that this Agreement is in the best interest
of the City of Janesville, the community, and surrounding area to execute and enter into the
proposed Management Agreement; and
WHEREAS, such management agreement, terms, and conditions are permitted by law
and the Common Council are empowered to enter into such management agreement, pursuant
to Wis. Stats. Sec. 62.11(5), 62.22, 62.23(17), and 66.0101 and other pertinent provisions in
the Wisconsin Statutes.
NOW THEREFORE BE IT RESOLVED by the Common Council of the City of Janesville
that they hereby authorize and approve the Management Agreement by and between the City of
Janesville and Kemper Sports Management upon the terms, conditions, obligations, and
provisions set forth above as proposed by the City Administration; and further authorize the City
Manager and his designee(s), on behalf of the City of Janesville, to execute and enter into the
Management Agreement with Kemper Sports Management; and
BE IT FURTHER RESOLVED by the Common Council that the City Manager and his
designees are hereby authorized to negotiate, renew, amend, and execute such documents,
papers, agreements, and forms, and to take whatever other actions, that the City Manager may,
from time to time, find necessary, desirable, and/or beneficial to effectuate the Agreement
and/or the intent of this Resolution.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
McDonald
Eric J. Levitt, City Manager
Perrotto
Rashkin
ATTEST:
Truman
Steeber
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
Wald Klimczyk, City Attorney
Proposed by: Administrative Services
Prepared by: Administrative Services
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (“Agreement”) is made and entered into as of
_______________________ 2010, by and between the City of Janesville, Wisconsin, a
Municipal corporation (“Owner”) and Kemper Sports Management, Inc., an Illinois corporation
(“KSM”).
W I T N E S S E T H:
WHEREAS, Owner owns the eighteen hole golf course and related facilities known as
"Riverside Golf Course" as well as the nine hole golf course and related facilities known as
“Blackhawk Golf Course” both located in Janesville, Wisconsin (collectively, the “Courses”);
and
WHEREAS, Owner and KSM desire for KSM to operate and manage the Courses subject
to the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants, promises, and
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions. All capitalized terms referenced or used in this Agreement and not
specifically defined herein shall have the meanings set forth on Exhibit A attached hereto.
ARTICLE 2
APPOINTMENT AND TERM
2.1. Appointment. Owner hereby retains, engages, and appoints KSM solely as an
independent contractor to perform the Management Services during the Term, as more fully
described herein, and KSM hereby accepts said appointment upon and subject to the terms hereof.
2.2. Term. The initial term of this Agreement shall begin on October 12, 2010 (the
“Commencement Date”) and shall terminate on the fifth anniversary of the Operations
Commencement Date (December 31, 2015) (the “Termination Date”) unless terminated or
extended according to the provisions hereof (the “Term”). The Term of this Agreement shall
automatically be extended for a term of five (5) years upon the expiration of the Term then in
effect unless at least one hundred eighty (180) days prior to the expiration of the Term then in
effect, either Owner or KSM shall notify the other that it elects not to extend the Term of this
Agreement, whereupon the Term of this Agreement shall terminate as of the expiration of the
Term then in effect.
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2.3. Opt-out. At the end of the 2013 golf season, or December 1, 2013, the Owner shall
review the operations and financial performance of the golf courses. If KSM does not meet or
exceed the EBITDA projections contained in the approved 2013 Annual Operating Budget (unless
such failure to meet the EBITDA projections is caused by the actions of Owner or by unforeseen
events beyond the reasonable control of KSM), Owner shall have the right, but not the obligation,
to terminate this Agreement upon ninety (90) days written notice, provided that such written
notice shall be delivered to KSM prior to January 31, 2014.
ARTICLE 3
MANAGEMENT SERVICES
3.1. Transition Services. Commencing on the Commencement Date until December 31,
2010 (the “Operations Commencement Date”), KSM shall perform the following transition
services (the “Transition Services”) in preparation of its commencement of operations of the
Course on the Operations Commencement Date:
Begin recruiting for the General Manager for the Courses.
o
Prepare the transition budget for presentation to Owner.
o
Review the existing budgets for the Courses and initiate the proposed Operating Budget,
o
Capital Expenditure Budgets for the fiscal year ending December 31, 2011.
Initiate the employee interview and recruiting process.
o
Perform facility audit including equipment and supplies.
o
Begin transition for liquor license and other licenses and permits.
o
Begin transition for local bank accounts and vendor relations.
o
Manage the employee transition and orientation in the days leading up to the Operations
o
Commencement Date. Manage all human resource activities necessary in connection
with the commencement of operations.
Initiate all other operations matters leading up to the official transfer on the Operations
o
Commencement Date.
3.2. Management of the Courses and Property. Commencing on the Operations
Commencement Date, KSM shall perform the management services described in the remainder
of this Article 3 (collectively, the “Management Services”) and shall supervise, manage, direct,
and operate the Courses and the Property, solely as an independent contractor, on behalf of and
for the account of Owner, subject to the terms hereof and at all times consistent with the
Operating Budget approved by Owner. Owner hereby delegates to KSM, subject to the (i)
Budgets, (ii) Owner’s approval rights specifically described in this Agreement (the “Approval
Rights”), (iii) the extent of the powers and authority granted to the Common Council of the City
of Janesville, Wisconsin under and pursuant to its charter and applicable laws, and (iv) other
terms and conditions set forth herein, the discretion and authority to determine operating policies
and procedures, standards of operation, house rules, standards of service and maintenance,
pricing, and other policies, rules, and regulations affecting the Courses or the Property or the
operation thereof, to implement all of same, and to perform any act on behalf of Owner deemed
by KSM to be necessary or desirable for the operation and maintenance of the Courses and the
Property.
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3.3. Use of the Property. Owner hereby grants to KSM the right to use and occupy the
Courses and Property during the Term solely for the purposes set forth herein. KSM shall, upon
the expiration or prior termination of the Term, vacate and surrender the Courses and Property to
Owner in good condition, reasonable wear and tear excepted (subject to Owner providing KSM
sufficient funds to maintain the Courses and Property in such condition).
3.4. Scope of Services. KSM will manage all activities of the Courses that are included
in the annual Operating Budget and approved by Owner. KSM will operate the Courses to high
quality standards (i.e., golf course maintenance, customer service, etc.) as provided for in the
approved Operating Budget. Subject to the terms of this Agreement and the approved Operating
Budget, KSM shall have the authority and responsibility to:
3.4.1. Manage the Courses and use commercially reasonable efforts to achieve
the approved Operating Budget;
3.4.2. Implement the policies and standards of the Courses, as approved by
Owner;
3.4.3. Establish high quality golf course maintenance standards approved by
Owner and funded appropriately in the Operating Budget;
3.4.4. Manage and supervise all day-to-day operations of the Courses, including
tee time reservations, collecting green and cart fees, clubhouse operations, outside
services, course maintenance, managing tournaments and events, payroll and benefits
administration, accounting, and financial reporting, etc;
3.4.5. Hire, employ, train, and supervise all employees required to carry out
KSM’s responsibilities;
3.4.6. Manage payment of the payroll and all operating expenses of the Courses
as identified in the Operating Budget;
3.4.7. Determine hours of operations, dress code requirements, establish starter,
marshal and other outside services, establish handicap services, and golf instruction
programs;
3.4.8. Acquire all goods and services necessary to carry out KSM’s
responsibilities;
3.4.9. Market the Courses to achieve targeted objectives;
3.4.10. Obtain licenses and other operating permits;
3.4.11. Negotiate contracts for maintenance equipment and carts to be executed
by Owner;
3.4.12. Use commercially reasonable efforts to comply with all insurance and
legal requirements of the Courses; and
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3.4.13. Make repairs and other improvements to keep the Courses in good order.
It is understood that some of the Management Services will only need to be provided when the
Courses are open for business (e.g., customer survey and retention programs, certain staff
training, certain marketing services, certain accounting responsibilities).
3.5. Budgets. All budgets, as hereinafter set forth (collectively the “Budgets”), shall be
prepared with the advice and counsel of Owner, based on what KSM believes to be reasonable
assumptions and projections, and delivered to Owner for Owner’s prior review and written
approval. All Budgets shall be presented in reasonable detail. KSM shall not be deemed to have
made any guarantee or warranty in connection with the results of operations or performance set
forth in the Budgets and the parties acknowledge that the Budgets are based solely upon KSM’s
judgment and the facts and circumstances known by KSM at the time of preparation.
3.5.1. Operating Budget. At least one-hundred thirty-five (135) days prior to the
first day of each fiscal year during the Term, KSM shall submit to Owner, for Owner’s
review and written approval, a preliminary operating budget setting forth the forecasted
revenues and expenses associated with the operations of the Courses for the upcoming
fiscal year or part thereof within the Term, which preliminary operating budget may be
subject to adjustment until ninety (90) days prior to the first day of each fiscal year during
the Term in order to reflect changes in forecasted revenues and expenses during such
period (as adjusted, the “Operating Budget”).
3.5.2. Capital Expenditures Budget. At least one-hundred twenty (120) days
prior to the first day of each fiscal year during the Term, KSM shall submit to Owner, for
Owner’s review and written approval, a budget setting forth the proposed capital
improvements (including equipment purchases and leases) within and to the Property for
the upcoming fiscal year or part thereof within the Term (the “Capital Expenditures
Budget”).
3.5.3. Owner’s Review and Approval of Budgets. The Budgets shall be for
Owner’s review and written approval, subject to the terms of this Agreement. Owner
shall give its written comment and approval by the first Monday in December of each
year. In the event of disapproval of any Budgets, KSM shall continue operating the
Courses pursuant to the Budgets then in effect, subject to increases in Operating
Expenses required due to (i) increases in Gross Revenues or (ii) other matters beyond the
control of KSM, until such time as Owner and KSM agree upon the appropriate
replacement Budgets.
3.5.4. Unanticipated Expenditures and Reallocation of Funds. Owner agrees that
the Budgets are intended to be reasonable estimates, and, accordingly, KSM shall be
entitled from time to time to revise the Budgets to cover any expenditures that were
unanticipated at the time of preparation of the Budgets but are reasonable and necessary
to carry out the provisions of this Agreement; provided, however, that except as
otherwise set forth in this Agreement, KSM shall be required to obtain Owner’s prior
written approval of any expenditures which would result in the total budgeted
expenditures being exceeded by more than five percent (5%) of the annual Operating
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Budget. KSM is authorized to take all action reasonably deemed necessary by KSM to
implement, perform, or cause the performance of the items set forth in the Budgets.
Owner acknowledges that KSM has not made any guarantee, warranty, or representation
of any nature whatsoever concerning or relating to (i) the Budgets, or (ii) the amounts of
Gross Revenues or Operating Expenses to be generated or incurred from the operation of
the Courses.
3.6. Course Operations. KSM shall use commercially reasonable efforts to perform all
acts that are necessary in the opinion of KSM to operate and manage the Courses, subject to the
Budgets, the Approval Rights and terms and conditions set forth herein, on behalf of and for the
account, and at the sole cost and expense of, Owner, in accordance with the standards of quality
expected at high quality golf courses in the vicinity of the Courses. KSM shall have the
authority and responsibility for the administration, operation and management of the Courses and
the Property. At a minimum, KSM shall perform the following acts and services:
3.6.1. Financial Management, Accounting Records and Reporting. Unless and
until Owner elects for KSM to employ an on-site accountant or bookkeeper in accordance
with this Section 3.6.1, the day-to-day accounting and financial affairs of the Courses
shall be handled generally by KSM’s home office. KSM’s duties shall include (i)
maintaining all books, records and other data associated with the financial activities of
the Courses, (ii) preparing all operating budgets, cash flow budgets, and other financial
forecasts, and (iii) being responsible for the day-to-day financial affairs of the Courses
(the “Accounting Services”). All accounting records shall be maintained in a format
consistent (in all material respects) with generally accepted accounting principles. In
order to reimburse KSM for the use of its internal resources in connection with the
performance of such Accounting Services by its home office, Owner shall pay to KSM a
monthly accounting reimbursement as described in Section 5.2.2 (the “Accounting
Reimbursement”), which Accounting Reimbursement shall be an Operating Expense.
Owner may request, upon ninety (90) day written notice to KSM, that KSM employ an
on-site accountant or bookkeeper at the Courses to perform the Accounting Services.
The costs and expenses of such on-site accountant or bookkeeper shall be an Operating
Expense.
(A)Financial Reporting. During the Term, KSM shall provide the following
financial statements in a format reasonably specified by Owner:
i.KSM shall submit to Owner, within twenty (20) days after the close of
each calendar month, a financial statement showing in reasonably accurate
detail the financial activities of the Courses for the preceding calendar
month and the fiscal year to date.
ii. KSM shall submit to Owner, within sixty (60) days after the close of
each fiscal year, a financial statement showing in reasonably accurate
detail the financial activities of the Courses for the fiscal year then ended.
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(B)Statistical Reporting and information.
i.KSM shall provide to the Owner appropriate statistical records and reports
regarding activity at and use of the Property by the public as may, from
time to time, reasonably be requested or required by the Owner, City
Manager, Assistant City Manager, and/or Comptroller.
ii.KSM shall submit to the Owner monthly records showing the number and
category of golf rounds played at each golf course, with substantiating
records, within twenty (20) days after the close of each calendar month.
Such records and reports shall, at a minimum, show an itemized statement
of all Gross Revenue categories, a Gross Revenue analysis, and Annual
Passes sold by category.
iii.Any and all statistical records, reports and information KSM provides to
the Owner must be categorized separately for the Riverside Golf Course
and the Blackhawk Golf Course to the extent available under point-of-sale
reporting software and systems.
(C)Internal Control. KSM agrees to develop, install, and maintain reasonably
appropriate accounting, operating, and administrative controls governing the
financial aspects of the Courses, such controls to be consistent (in all material
respects) with generally accepted accounting principles.
(D) Records and Inspection. KSM shall maintain a set of all financial, vendor
and operating records relating to the Courses at the Property. At any time
during the Term, Owner shall have the right, after three (3) days prior written
notice to KSM, to inspect the books, records, invoices, deposits, canceled
checks, or other financial data or transactions of the Courses at reasonable
times and during normal business hours; provided, however, Owner shall use
its best efforts to not cause any disruptions in the operations of the Courses in
connection with such inspections. Notwithstanding the foregoing, such
inspection rights shall not extend to any inspection of KSM corporate records
at its corporate office nor any records relating to any other KSM projects or
locations. Upon expiration or termination of this Agreement, KSM will
promptly turn over all such Course records to Owner. KSM acknowledges
the need to comply with Wisconsin’s Public Records Laws, as from time to
time amended and/or renumbered, with respect to records relating to the
Courses.
3.6.2. Bank Accounts. KSM shall assist Owner in establishing, in Owner’s
name, utilizing the federal tax identification number of Owner, a deposit account (the
“Deposit Account”). KSM shall establish a disbursement account for payroll and
operating expense obligations (the “Disbursement Account”) in KSM’s name. The
records and bank statements shall be subject to inspection by Owner pursuant to the terms
recited herein. All Gross Revenues of the Property shall be collected, received, and
deposited by KSM exclusively through the Deposit Account in accordance with the terms
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of this Agreement. KSM will be provided the bank information of the Deposit Account
on an inquiry only basis in order to perform its duties related to cash management and
reconciliation. All Gross Payroll and Operating Expenses shall be handled and expended
exclusively through the Disbursement Account. The Owner shall electronically transfer
sufficient funds to KSM’s Disbursement Account once a week, if necessary, to pay all
Operating Expenses. On a bi-weekly basis and in accordance with Section 4.2, the City
shall electronically transfer sufficient funds to pay all Gross Payroll obligations and
maintain the Payroll Expense Minimum.
3.6.3. Employees. As part of the Operating Budget, KSM shall (i) determine
personnel requirements, recruitment schedules, and compensation levels, (ii) furnish job
descriptions, performance appraisal procedures, employee benefit programs, and
operational and procedural manuals for all personnel, and (iii) establish forms and
procedures for employee compensation and Course incentive programs. KSM shall hire,
employ, promote, discharge, and supervise all employees performing services in and
about the Courses. All of the employees of the Courses shall be employees of KSM and
not of the Owner.
3.6.4. Marketing. KSM shall make recommendations to Owner as to green fees
and other fees and rates. KSM shall develop the ongoing marketing plan for the Courses
and define a schedule of marketing and advertising activities, which shall be submitted to
Owner as part of the Operating Budget. Upon Owner’s approval, KSM shall indicate on
the premises that the Courses are being operated by KSM.
3.6.5. Fee Schedule.
(A)KSM shall prepare and submit in writing to the City Manager, no later than 1
October of the immediately preceding year, any and all proposed fee changes
for the immediately subsequent year, which fees, if approved by the Owner,
shall become effective the following January 1st. In the event Owner does
not approve the fee schedule prepared by KSM, each Budget prepared with
reference to such fee schedule shall be revised to reflect any changes such
Budget attributable to changes to the fee schedule.
(B)KSM may alter or add new fee categories only following prior review by the
Golf Course Advisory Committee constituted by the Common Council (the
“GCAC”), together with written authorization from the City Manager or
his/her designee.
(C)KSM shall not alter, eliminate nor modify Annual Pass categories or pass
restrictions without prior review by of the GCAC and the prior written
approval of the City Manager.
3.7. Owner Approval Rights. Except as specified elsewhere in this Agreement, Owner
shall retain certain approval and comment rights on matters affecting the operation of the
Courses. Specifically, and not limited to, the Owner shall approve:
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(A)Annual operating budget
(B)Capital budget
(C)Hours of operation, including opening and closing dates
(D)Greens fees, Annual Passes, and cart rental rates
The Owner shall have the right to render advice and make recommendations any
time KSM seeks to hire for the positions of General Manager or Golf Course Superintendent.
The City Manager, or their designee, shall participate in the interview and selection process and
shall offer their input, suggestions, and advice. However, such participation and input is
advisory only and in no manner shall it constitute nor be construed as constituting any offer of
employment to such person by or with the Owner and KSM shall have the ultimate authority to
select and hire candidates for the positions of General Manager and Golf Course Superintendent.
3.8. Golf Course Advisory Committee - Meetings Upon reasonable notice and upon
reasonable intervals (except in emergency situations), KSM shall cause a representative of KSM
familiar with the operation of the Courses to meet with the GCAC, City Manager, Assistant City
Manager, Comptroller, and/or Common Council to discuss the operation, maintenance,
development, and related issues relating to the operation and maintenance of the Courses and the
performance of this Agreement.
3.9. Environmental Remediation. Throughout the Term, if KSM becomes aware of the
presence of any Hazardous Material in a quantity sufficient to require remediation or reporting
under any Environmental Law in, on or under the Property or if KSM, Owner, the Courses, or
the Property becomes subject to any order of any federal, state or local agency to investigate,
remove, remediate, repair, close, detoxify, decontaminate, or otherwise clean up the Property,
KSM shall, at Owner’s request and sole expense, use all commercially reasonable efforts to carry
out and complete any required investigation, removal, remediation, repair, closure,
detoxification, decontamination, or other cleanup of the Property; provided that such remediation
activities shall be at KSM’s expense if such activities are required as a direct consequence of
Hazardous Material being present in, on or under the Property solely as a result of grossly
negligent actions undertaken by KSM. Owner acknowledges and agrees that Owner shall be
solely responsible for any legal or other liability arising out of the presence of any Hazardous
Material in, on, or under the Property, except to the extent such Hazardous Material is present in,
on or under the Property solely as a result of grossly negligent actions undertaken by KSM.
3.10. Contracts. KSM shall negotiate, consummate, enter into, and perform, in the name
of the Courses, such agreements as KSM may deem necessary or advisable for the furnishing of
all food, beverages, utilities, concessions, entertainment, operating supplies, equipment, repairs,
and other materials and services as KSM determines are needed from time to time for the
management and operation of the Courses. Notwithstanding the above, any contract which
exceeds Twenty Five Thousand Dollars ($25,000) in total payments over the term of such
contract or which has a term of over one (1) year shall require the prior written consent of
Owner, which consent shall be deemed to have been given if Owner neither consents nor
disapproves within ten (10) business days after KSM’s written request for approval. Any
contract that cannot be made in the name of the Courses shall be provided to Owner for its
execution in the name of Owner.
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3.11. Licenses, Permits, and Accreditations. KSM shall apply for and use its
commercially reasonable efforts to obtain and maintain, in the name of KSM or a KSM affiliate
(or, if otherwise required by applicable Laws, in Owner’s name), all licenses, permits, and
accreditations required in connection with the management and operation of the Courses, the cost
of which shall be an Operating Expense. Owner will cooperate with KSM in applying for,
obtaining, and maintaining such licenses (including liquor licenses), permits, and accreditations,
the cost of which shall be an Operating Expense. All alcohol licenses shall be solely in the name
of KSM or a KSM affiliate.
3.12. Legal Action. KSM may not institute any legal action by or on behalf of Owner or
the Courses without the prior written consent of Owner and Owner may not institute any legal
action by or on behalf of KSM without the prior written consent of KSM.
3.13. Emergency Expenditures. In the event, at any time during the Term, a condition
should exist in, on, or about the Property of an emergency nature which, in KSM’s sole and
absolute discretion, requires immediate action to preserve and protect the Property, to better
assure the Courses' continued operation, or to protect the Courses' customers, guests, or
employees, KSM is authorized to take all steps and to make all reasonable expenditures
necessary to repair and correct any such condition, whether or not provisions have been made in
the applicable Budgets for any such expenditures. Owner shall be notified of the need for, and
estimated amount of, any such emergency expenditures as soon as reasonably practical.
3.14. Compliance with Laws. KSM shall use all commercially reasonable efforts to (i)
comply with all federal, state and local laws, ordinances, rules, or governmental regulations now
or hereafter in force, or by order of any governmental or municipal power, department, agency,
authority, or officer (collectively “Laws”) applicable to the use, operation, maintenance, repair,
and restoration of the Courses and Property, whether or not compliance therewith shall interfere
with the use and enjoyment of the Courses and Property; and (ii), except for those which are the
obligation of Owner or Owner’s separate contractors, procure, maintain, and comply with all
licenses and other authorizations required for any use of the Courses and Property then being
made, and for the operation and maintenance of the Courses and Property or any part thereof, the
costs of which shall be Operating Expenses. Notwithstanding the foregoing, Owner
acknowledges and agrees that Owner or its construction contractors shall be responsible for
procuring, maintaining, and complying with all licenses and other authorizations relating to
design, construction, zoning, erection, installation, and similar matters relating to any
construction at the Courses. If at any time during the Term KSM is notified or determines that
repairs, additions, changes, or corrections in the Property of any nature shall be required by
reason of any Laws, KSM shall notify Owner and request Owner’s consent to take all reasonable
steps and to make all reasonable expenditures necessary to repair and correct any such repairs,
additions, changes, or corrections whether or not provisions have been made in the applicable
Budgets for any such expenditures, the costs of which shall be Operating Expenses. If Owner
withholds such consent, KSM shall not be liable for any failure of the Property to be in
compliance with such Laws.
3.15. Other Duties and Prerogatives. KSM shall use commercially reasonable efforts to
perform any act that is necessary to operate and manage the Courses and the Property during the
Term, subject to the terms and conditions hereof. In fulfilling its operational and managerial
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responsibilities hereunder, KSM shall have all rights ordinarily accorded to a manager in the
ordinary course of business, including, without limitation, the collection of proceeds from the
operation of the Courses and the Property, the incurring of trade debts in Owner’s name (other
than mortgage indebtedness), the approval and payment of obligations, and the negotiating and
signing of leases and contracts. KSM shall not be obligated to advance any of its own funds to
or for the account of Owner nor to incur any liability, unless Owner shall have furnished KSM
with funds necessary for the full discharge thereof. Further, KSM shall not be obligated to sign
any leases, contracts, or other agreements in KSM’s name. However, if for any reason KSM
shall have advanced funds in payment of any reasonable expense in connection with the
maintenance and operation of the Courses or the Property, Owner shall reimburse KSM within
twenty (20) days after Owner’s receipt of an invoice for the full amount of such KSM advance
payments.
ARTICLE 4
RESPONSIBILITIES OF OWNER
4.1Expenditures. Owner acknowledges that it is solely responsible for all Operating
Expenses, Management Fees, lease obligations and capital expenditures required for or on behalf
of the Courses provided that such Operating Expenses and capital improvements are made in
accordance with the terms of this Agreement. Owner shall be responsible for all other
expenditures and obligations in connection with the Courses and the Property, including without
limitation, all federal, state and local taxes, and all principal and interest payments on
indebtedness.
4.2Owner’s Advances. Owner shall transfer funds to the Disbursement Account
described in Section 3.5.2 to conduct the affairs of the Courses and maintain the Property (the
“Owner’s Advances”). In accordance with Section 3.6.2, Owner’s Advances shall be transferred
weekly to the Disbursement Account, as needed, by electronic or other automatic clearing house
transfer following receipt by Owner of a written request from KSM in the form of a check
register detailing checks to be drawn, together with such supporting invoices or payroll register
information as reasonably requested by Owner. Owner acknowledges and agrees that it has sole
responsibility for providing Owner’s Advances and KSM shall have no responsibility to provide
funds for the payment of any Operating Expenses, Gross Payroll, debts, or other amounts
payable by or on behalf of the Club, the Property, or Owner.
On or before the Operations Commencement Date (and in any event, prior to KSM’s incurrence
of any Gross Payroll obligations), Owner shall remit to KSM for deposit into the Disbursement
Account, Owner’s Advances equal to two (2) weeks’ estimated Gross Payroll (as specified in the
approved Budget) (the “Payroll Expense Minimum”). Owner shall replenish the Disbursement
Account in order to maintain the Payroll Expense Minimum in the Disbursement Account as
described below. On a bi-weekly basis, KSM shall provide Owner with a statement describing
the Gross Payroll use of funds. Within five (5) days after Owner’s receipt of such statement
from KSM, Owner shall remit to the Disbursement Account the amount set forth on such
statement. KSM shall use the funds in the Disbursement Account to pay the Operating
Expenses, including the Gross Payroll, of the Courses. The parties agree to adjust the Payroll
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Expense Minimum seasonally, or as otherwise required from time to time, in order to reflect the
then-current payment obligations of the Courses.
ARTICLE 5
FEES, EXPENSES AND RECEIPTS.
5.1Transition Services Fee. Commencing on the Commencement Date until the
Operations Commencement Date, in addition to reimbursement of its out of pocket expenses as
described in Section 5.3 below, Owner shall pay KSM a monthly transition services fee (the
"Transition Services Fee") of Three Thousand Five Hundred and 00/100 Dollars ($3,500), which
fee shall be paid on the Commencement Date and then monthly, in advance, no later than the
first day of each calendar month until the Operations Commencement Date. The Transition
Services Fee shall be prorated for any partial month occurring during such transition period.
5.2Management Fee. Commencing on the Operations Commencement Date, Owner
shall pay KSM management fees as follows (the “Management Fee”):
5.2.1Base Management Fee. Owner shall pay KSM a monthly fee of Six Thousand
Two Hundred Fifty and 00/100 Dollars ($6,250.00) (the “Base Management
Fee”), which fee shall be paid in advance, no later than the first day of each
calendar month. (Such Base Management Fee shall be prorated for any partial
calendar month occurring during the Term.) The Base Management Fee shall be
increased each year on the anniversary of the Operations Commencement Date by
the All Urban Consumer Price Index (AUCPI) or three percent (3%), whichever is
less. Payment of the Base Management Fee may be made directly from the
Disbursement Account.
5.2.2Accounting Reimbursement. For so long as KSM provides Accounting Services
from its home office, Owner shall pay KSM an annual Accounting
Reimbursement equal to Eighteen Thousand Dollars ($18,000). The Accounting
Reimbursement shall be paid in equal monthly installments, in advance, no later
than the first day of each calendar month and may be paid directly from the
Disbursement Account. The Accounting Reimbursement shall be increased each
year on the anniversary of the Operations Commencement Date by the All Urban
Consumer Price Index (AUCPI) or three percent (3%), whichever is less.
5.2.3Incentive Management Fee. In addition to the fees described above, Owner shall
pay KSM an annual incentive management fee (the “Incentive Management Fee”)
equal to thirty percent (30%) of the first $30,000 of EBITDA and forty percent
(40%) of EBITDA in excess of $ 30,000 for the Courses, on a consolidated bases,
for the applicable fiscal year. [For example: If EBITDA for the Courses, on a
consolidated basis, was $48,000 for a particular fiscal year, the Incentive
Management Fee for such year would be equal to $16,200 (0.30*30,000) +
(0.40*18,000)]
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The Incentive Management Fee shall be paid to KSM within sixty (60) days after
the end of the fiscal year to which the Incentive Management Fee relates.
5.3Out-of-Pocket Expenses. Commencing on the Commencement Date, in addition
to all other fees and expenses recited herein payable to KSM, and subject to Owner’s approval of
same in the Budgets, it is agreed that Owner shall reimburse KSM within twenty (20) days of
Owner’s receipt of KSM’s invoice for all actual out-of-pocket expenses incurred by KSM in the
performance of this Agreement. Out-of-pocket expenses shall include, but shall not be limited
to, reasonable travel, air express, costs of recruitment (including applicable agent’s fees), and
other incidental expenses. Reimbursement for such out-of-pocket expenses will be made at
actual cost and may be made directly from the Disbursement Account. It is understood that the
out-of-pocket expenses will be capped at an aggregate maximum in the amount of Three
Thousand Five Hundred and 00/100 Dollars ($3,500.00) per year (excluding any costs of
recruitment) unless otherwise approved by Owner.
5.4Late Fees. Owner shall pay to KSM all of the fees described above, and any other
sums due KSM, at the times, at the places, and in the manner herein provided. If any payment or
any part thereof to be made by Owner to KSM, pursuant to the terms hereof, shall become
overdue for a period of thirty (30) days, a “late charge” may be charged by KSM for the purpose
of defraying the expense incident to handling such delinquency. The late charge shall be equal
to the lesser of (i) one percent (1%) per month, or (ii) the highest amount allowed to be charged
under applicable law. In the event any portion of this Section violates any state or federal law or
regulation, this Section shall be deemed void and shall have no other effect or make invalid any
other provision of this Agreement. Further, nothing herein shall be construed as waiving any
rights of KSM arising out of any Events of Default of Owner by reason of KSM assessing or
accepting any such late payment or late charge; the right to collect the late charge is separate and
apart from any rights relating to remedies of KSM after default by Owner in the performance or
observance of the terms of this Agreement. Owner shall bear the costs of any reasonable legal or
collection fees and expenses incurred by KSM in attempting to enforce Owner’s payment
obligations hereunder.
5.5 Automatic Withdrawal. In the reasonable discretion of KSM, upon the
occurrence of an Insecurity Event, Owner shall take all necessary steps to initiate and authorize
payment of the Management Fees and the out of pocket expenses of KSM through automatic
withdrawal from an account designated by Owner and wire transfer to an account designated by
KSM. Such automatic withdrawal shall occur on or before the first day of each month for
services to be rendered during the upcoming month.
5.6 Deposit. In the reasonable discretion of KSM, upon the occurrence of an
Insecurity Event, KSM will require the payment of a security deposit which will not be applied
against amounts owing by Owner to KSM and will be retained by KSM as security for the
payment of fees and expenses and returned to Owner at the end of the engagement. The terms
and conditions applicable to the retainer are set forth in this Section 5.6.
5.6.1 Amount and Payment of Deposit. The initial deposit (the “Deposit”) shall be set
at an amount equal to the aggregate of the Management Fees plus the expected out-of-
pocket expenses of KSM, each to be estimated by KSM in its reasonable discretion based
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on expected amounts due and owing from Owner to KSM during a one (1) month period.
KSM shall have the right to request that Owner add to the Deposit in the event that, at
any time, KSM’s monthly Management Fees plus the monthly expected out of pocket
expenses exceeds the amount of the Deposit. Such Deposit shall be submitted by Owner
as directed by KSM within fifteen (15) days after KSM’s request.
5.6.2 Security Interest in Deposit. The Deposit is a separate obligation of Owner and
Owner understands and agrees that failure to submit such Deposit in accordance with the
terms of this Agreement shall constitute an Event of Default hereunder. The Deposit
shall not be applied or credited to amounts due from Owner as they come due, but will be
returned to Owner once all amounts due hereunder are paid in full. Owner hereby grants
a security interest in the Deposit to KSM to secure payment of all amounts due hereunder
and expressly authorizes KSM to pay itself any amounts past due from the Deposit.
Owner acknowledges and agrees that this security interest is perfected by virtue of
KSM’s possession of the Deposit.
5.6.3. Interest on Deposit. Interest earned on the Deposit is the property of Owner and
shall be returned to Owner once all amounts due under the Agreement are paid in full.
KSM shall maintain such Security Deposit in an interest bearing account. The Deposit is
not intended to be an estimate for the total expenses to be incurred by Owner hereunder.
5.7 Payment Prior to Insolvency Proceeding. Prior to the initiation of an Insolvency
Proceeding (as defined in Section 11.3 below) by Owner, if applicable, Owner shall pay all
amounts then outstanding and owing to KSM in immediately available funds by wire transfer.
ARTICLE 6
COVENANTS AND REPRESENTATIONS
6.1Owner’s Covenants and Representations. Owner makes the following covenants
and representations to KSM, which covenants and representations shall, unless otherwise stated
herein, survive the execution and delivery of this Agreement:
6.1.1Corporate Status. Owner is a municipal corporation duly organized, validly
existing, and in good standing under the laws Wisconsin, and authorized to
transact business in Wisconsin, with full corporate power and authority to enter
into this Agreement.
6.1.2Authorization. The making, execution, delivery, and performance of this
Agreement by Owner has been duly authorized and approved by all requisite
action. This Agreement has been duly executed and delivered by Owner and
constitutes a valid and binding obligation of Owner, enforceable in accordance
with its terms.
6.1.3Effect of Agreement. Neither the execution and delivery of this Agreement by
Owner nor Owner’s performance of any obligation hereunder (a) shall constitute a
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violation of any law, ruling, regulation, or order to which Owner is subject, or (b)
shall constitute a default of any term or provision or shall cause an acceleration of
the performance required under any other agreement or document (i) to which
Owner is a party or is otherwise bound, or (ii) to which the Courses, the Property
or any part thereof is subject.
6.1.4Ownership Rights. As of the Commencement Date and throughout the Term of
this Agreement, Owner owns and shall retain all right, title, and interest in the
Courses and the Property peaceably and quietly. Owner represents and warrants
that KSM’s performance of any of the services contemplated by this Agreement
shall not violate the property rights or interests of any other Person.
6.1.5Documentation. If necessary to carry out the intent of this Agreement, Owner
agrees to execute and provide to KSM, on or after the Commencement Date, any
and all other instruments, documents, conveyances, assignments, and agreements
which KSM may reasonably request in connection with the operation of the
Courses.
6.2KSM’s Covenants and Representations. KSM makes the following covenants and
representations to Owner, which covenants and representations shall, unless otherwise stated
herein, survive the execution and delivery of this Agreement:
6.2.1Corporate Status. KSM is a corporation duly organized, validly existing, and in
good standing under the laws of Illinois, and authorized to transact business in
Wisconsin, with full corporate power to enter into this Agreement and execute all
documents required hereunder. KSM shall designate a Wisconsin corporate agent
for all purposes. Every alcohol license agent of KSM for the Courses and
Property in Janesville shall be a resident of Rock County and satisfy all other
qualifications and requirements of applicable Laws, in all material respects.
6.2.2Authorization. The making, execution, delivery, and performance of this
Agreement by KSM has been duly authorized and approved by all requisite action
of the board of directors of KSM. This Agreement has been duly executed and
delivered by KSM and constitutes a valid and binding obligation of KSM,
enforceable in accordance with its terms.
6.2.3Effect of Agreement. Neither the execution and delivery of this Agreement by
KSM nor KSM’s performance of any obligation hereunder (i) will constitute a
violation of any law, ruling, regulation, or order to which KSM is subject, or (ii)
shall constitute a default of any term or provision or shall cause an acceleration of
the performance required under any other agreement or document to which KSM
is a party or is otherwise bound.
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ARTICLE 7
INSURANCE
7.1Course Insurance. During the Term, the following insurance shall be maintained
in connection with the operations at the Courses:
7.1.1 Insurance Maintained by Owner. During the Term, Owner shall secure the
following insurance:
(A) Property Insurance covering loss or damage to the buildings, structures, or other
Improvements, contents, equipment, and supplies. Such Property Insurance shall include
a waiver of all right of recovery by way of subrogation against KSM and Owner in
relation to any damage covered by such policy.
(B) Business Interruption, Loss of Income, and Extra Expense Insurance that will
reimburse Owner and KSM for direct and indirect loss of earnings attributable to six (6)
months of business interruption and for the actual loss sustained until the structures are
substantially rebuilt after an insured property loss.
7.1.2 Insurance Maintained by KSM. KSM shall secure, the cost of which shall be an
Operating Expense, the following insurance covering its on-site activities under this
Agreement:
(A) Commercial General Liability and/or Umbrella/Excess Liability Insurance
providing coverage for bodily injury and property damage arising in connection with the
operation of the Club or on the Property and including coverage for contractual liability
providing limits of not less than:
Bodily Injury and Property Damage Liability - $5,000,000 each occurrence
Personal Injury and Advertising Liability - $5,000,000 per person or per
organization
General Policy Aggregate - $5,000,000
Products Liability/Completed Operations Aggregate - $5,000,000
(B) Commercial Business Automobile Liability Insurance including coverage for all
owned, non-owned, and hired vehicles providing coverage for bodily injury and property
damage liability with combined single limits of not less than $1,000,000.
(C) Commercial Liquor Liability including coverage for damages arising out of the
selling, serving or furnishing of any alcoholic beverage with a limit of $5,000,000 per
occurrence/$5,000,000 aggregate limit or the minimum limits required by statute if
higher.
Special Note: the limits of liability specified in A, B and C above can be satisfied through
a combination of primary, umbrella, or excess liability policies, provided that the
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coverage under such umbrella or excess liability policies is at least as broad as the
primary coverage.
(D) Workers’ Compensation Insurance in such amounts that comply with applicable
statutory requirements, and Employer’s Liability limits, including Umbrella Liability
Insurance, if necessary, of not less than $1,000,000 per accident, $1,000,000 disease-
policy limit, and $1,000,000 disease each employee.
(E) Fidelity Bond or Fidelity Insurance covering all employees who have access to or
responsibility for or who handle Owner funds.
All such insurance coverage maintained by KSM (except as set forth in (D) and (E)) shall name
Owner as additional insured and shall be maintained with insurance companies rated at least A-
by Best Key Rating Guide and shall be licensed to do business in Wisconsin. KSM shall deliver
to Owner certificates of such insurance evidencing the required policies together with original
copies of the policies if requested. Property insurance shall include a waiver of all recovery by
way of subrogation against KSM and Owner in relation to any damage covered by such policy.
The expenses for all the coverages outlined in Section 7.1.2 (A) through (E) above shall be
Operating Expenses.
7.2Owner’s Option to Provide Insurance. Upon Owner’s prior written notification to
KSM, Owner may procure and maintain, at Owner’s sole cost and expense, with insurance
companies rated at least A- by Best’s Key Rating Guide, and licensed to do business in
Wisconsin, sufficient insurance fully covering the Property and operation of the Courses, in at
least the amounts specified in Section 7.1.1 and 7.1.2 (A) through (C) above. All such insurance
shall name KSM and its shareholders, officers, directors, employees, agents, and representatives
as additional insureds. Owner shall deliver to KSM certificates of insurance evidencing the
above-required policies. Property insurance shall include a waiver of all recovery by way of
subrogation against KSM in relation to any damage covered by such policy.
Within fifteen (15) days after receipt of such written notification from Owner, along with
appropriate certificates of insurance, KSM shall no longer secure the coverage specified in
Section 7.1.2 (A) through (C) above; provided, however, that KSM shall continue to secure the
coverage specified in Section 7.1.2 (D) and (E) above. The expenses for the coverages provided
by KSM shall be Operating Expenses.
7.3 Waiver of Subrogation. Notwithstanding anything else contained in this
Agreement, Owner and KSM each hereby waive all rights of recovery against the other and their
Affiliates, and against each of their officers, employees, agents, and representatives, on account
of loss by or damage to the waiving party’s property or the property of others under its control,
to the extent that such loss or damage is (i) insured against under any insurance policy which
either may have in force at the time of the loss or damage; or (ii) is required to be insured against
in accordance with this Agreement; or (iii) given the facts and circumstances surrounding the
Property and the Courses, should reasonably be insured against by the Owner (in any case,
regardless of whether or not such insurance policy is in effect). Owner shall, upon obtaining any
policies of insurance required under this Agreement, give notice to its insurance carrier or
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carriers that the foregoing mutual waiver of subrogation is contained in this Agreement. This
waiver of subrogation shall survive the expiration or termination of this Agreement.
7.4 Notice to Owner of Insurance Lapse, Default, Material Modification. The Owner
shall be provided not less than ten (10) days prior notice of any lapse or material change of any
such policy(ies).
7.5 The insurance provided by KSM shall be occurrence based insurance coverage.
ARTICLE 8
DAMAGE AND CONDEMNATION
8.1Substantial Destruction. In the event the Real Property, Tangible Personal
Property, and/or Improvements are damaged or destroyed by fire or other casualty to the extent
that the damage cannot be materially restored with due diligence within two hundred seventy
(270) days following such event, either party hereto may terminate this Agreement upon written
notice to the other party given within ninety (90) days following the date of such destruction. In
the event of termination of this Agreement pursuant to this Section, the Term shall cease and
come to an end as of the effective date of termination specified in the termination notice (which
shall in no event be prior to the date of receipt of the termination notice) as though such date
were the date originally fixed for the expiration of the Term. Both parties shall pay all amounts
due to the other party up to such effective date of termination (or, with respect to amounts due to
KSM, after such date if it is reasonably necessary to incur additional expenses in the wind-down
of operations of the Courses).
8.2Partial Destruction. In the event the Real Property, Tangible Personal Property,
and/or Improvements, or any portion thereof, is damaged or destroyed by fire or other casualty
and such damage can be materially restored with due diligence within two hundred seventy (270)
days following such event, Owner shall have the obligation to repair the damaged Real Property,
Tangible Personal Property, and/or Improvements as nearly as practicable to the condition the
same were in prior to such damage. Owner shall cause such repair to be made with all
reasonable dispatch so as to complete the same at the earliest possible date.
ARTICLE 9
INDEMNIFICATION
9.1Owner’s Indemnification Obligations. Except as provided in Section 7.3, Owner
shall defend, indemnify, and hold KSM and its Affiliates and each of their shareholders,
members, officers, directors, managers, employees, agents, and representatives (the “KSM
Related Parties”) harmless of and from all liability, loss, damage, cost, or expense (including,
without limitation, reasonable attorneys’ fees and expenses) arising from or relating to (i) the
performance of the Transition Services or the Management Services on behalf of Owner, and (ii)
the ownership, leasing, organization, development or construction of the Courses or the Property;
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and (iii) Hazardous Materials or other conditions existing at the Courses or the Property; and (iv)
the use by KSM of Course trade names, trademarks, logos, or other intellectual property used in
connection with the Courses; and (v) any acts or omissions of Owner (or its officers, directors,
agents, employees, representatives, contractors and others for whom Owner is responsible); and
(vi) any activities in connection with the transition of the management of the Courses to KSM;
and (vii) any acts or omissions occurring in connection with the operation or management of the
Courses prior to the Term and (viii) the relationship between Owner or any of Owner’s Affiliates
and the prior lessee of the Courses or any acts or omissions of the prior lessee;to the fullest
extent permitted by law, except to the extent such liabilities were caused by KSM’s willful or
criminal misconduct, gross negligence, ordinary negligence, or fraud. Owner’s duty to defend
and indemnify KSM and the KSM Related Parties shall extend to all liability, loss, damage, cost,
or expenses hereunder arising from or relating to any event or occurrence taking place prior to,
during, or after the Term.
9.2 KSM’s Indemnification Obligations. Except as provided in Section 7.3, KSM
shall defend, indemnify and hold Owner and Owner’s elected and appointed officials, officers,
employees, agents, representatives, and insurers, (the “Owner Related Parties”) harmless of and
from all liability, loss, damage, cost, or expense (including, without limitation, reasonable
attorneys’ fees and expenses) arising from or relating to the negligent acts or omissions of KSM
(or its officers, directors, agents, employees, representatives, contractors, and others for whom
KSM is responsible), to the fullest extent permitted by law, except to the extent such acts or
omissions were directed or approved by Owner, or such liabilities were caused by Owner’s
willful or criminal misconduct, gross negligence, ordinary negligence or fraud. KSM’s duty to
defend and indemnify Owner and the Owner Related Parties shall extend to all liability, loss,
damage, cost, or expenses hereunder arising from or relating to any event or occurrence taking
place prior to, during, or after the Term. Notwithstanding anything else contained herein, Owner
acknowledges that KSM shall not be responsible for any damage to property under the Owner’s
care, custody, and control (except to the extent caused by KSM’s willful or criminal misconduct,
gross negligence, or fraud), and that Owner shall ensure that all such damage is covered by
appropriate insurance coverage.
9.3 Survival. The defense and indemnification obligations contained in this Article 9
shall survive the expiration or termination of this Agreement, and any and all extensions and
renewal hereof, for any reason.
ARTICLE 10
RIGHT TO CURE
10.1Performance. Other than with respect to Owner’s obligations pursuant to Section
5.5 to 5.6 hereof, if, after the expiration of any permitted grace period or notice and cure period,
a party hereto shall have failed to cure any default in the performance of any representation,
covenant, or obligation on its part to be performed, then the other party may, at any time
thereafter, without further notice, perform the same for the account and at the expense of the
other party. Notwithstanding the above, in the case of an emergency, either party may, after
notice to the other party, so reasonably perform in the other party’s stead prior to the expiration
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of any applicable grace period; provided, however, the other party shall not be deemed in default
under this Agreement.
10.2Reimbursement. If, pursuant to this Article, either party at any time is compelled
or elects (as permitted by the immediately preceding Section) (i) to pay any sum of money, (ii) to
do any act which will require the payment of any sum of money, or (iii) to incur any expense
(including reasonable attorneys’ fees) in instituting, prosecuting, and/or defending any action or
proceeding instituted by reason of the other party’s failure to perform, as described in the
immediately preceding Section, the sum or sums paid or payable by such party, with all interest,
cost, and damages, shall be immediately due from the other upon receipt of a statement and
reasonable documentation therefor.
10.3Disgorgement. If the incurring of any debt or the payments of money or transfers of
property made to KSM by or on behalf of Owner, pursuant to this Agreement or any related
documents shall subsequently be declared to be “void” or “voidable” within the meaning of
any state or federal law relating to creditors’ rights, including, without limitation, fraudulent
conveyances, a preference, or otherwise voidable or recoverable, in whole or in part, for any
reason under the federal Bankruptcy Code or any other federal or state law (individually, a
“Voidable Transfer”), and if KSM is required to repay or restore any such Voidable Transfer
or the amount or any portion thereof, or upon the advice of its counsel is advised to do so,
then, as to any such Voidable Transfer or the amount repaid or restored (including all
reasonable costs, expenses and attorneys’ fees of Servicer on behalf of KSM related thereto),
the obligations to KSM, or portion thereof, paid or deemed satisfied by such Voidable
Transfer or such amount shall automatically be revived, reinstated and restored to the extent
that such obligation to KSM, or portion thereof, existed immediately prior to such Voidable
Transfer, and such indebtedness to KSM, or portion thereof, shall exist as though such
Voidable Transfer had never been made, and this Agreement and all liens granted hereunder
shall be revived, reinstated and restored as though such Voidable Transfer had never been
made. Moreover, KSM shall be entitled to the imposition of a constructive trust and
equitable lien on all of Owner’s assets to the extent any liens and security interest under this
Agreement are not revived, reinstated or restored and there remains amounts due and owing
under this Agreement as a consequence of a Voidable Transfer.
ARTICLE 11
EVENTS OF DEFAULT
The occurrence of any one or more of the following events which is not cured within the
specified cure period, if any, shall constitute a default under this Agreement (hereinafter referred
to as an “Event of Default”):
11.1Failure to Pay Sums Due. Either party’s failure to pay any sums payable under
this Agreement when and as the same shall become due and payable and such failure shall
continue for a period of fifteen (15) days (unless a longer period of time is specifically provided
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for elsewhere in this Agreement) after written notice (specifying the item not paid) thereof from
the other party to the defaulting party.
11.2Failure to Comply. Either party’s material failure to comply with any of the
covenants, agreements, terms, or conditions contained in this Agreement and such failure shall
continue for a period of thirty (30) days after written notice thereof from the other party to the
defaulting party specifying in detail the nature of such failure. Notwithstanding the foregoing, in
the event any such failure cannot with due diligence be cured within such 30-day period, if the
defaulting party proceeds promptly and diligently to cure the same and thereafter diligently
prosecutes the curing of such failure, the time within which the failure may be cured shall be
extended for an additional period of thirty (30) days. Any extension of time for cure beyond the
additional thirty (30) day period shall require the approval of both parties hereto.
11.3Bankruptcy. If either party (i) applies for or consents to the appointment of a
receiver, trustee, or liquidator of itself or any of its property, (ii) is unable to pay its debts as they
mature or admits in writing its inability to pay its debts as they mature, (iii) makes a general
assignment for the benefit of creditors, (iv) is adjudicated as bankrupt or insolvent, or (v) files a
voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an
arrangement with creditors, or taking advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or admits the material allegations
of a petition filed against it in any proceedings under any such law, or if any action shall be taken
by said party for the purpose of effecting any of the foregoing (collectively, an “Insolvency
Proceeding”).
11.4Reorganization; Receiver. An order, judgment, or decree is entered without the
application, approval, or consent of either party by any court of competent jurisdiction approving
a petition seeking reorganization of said party or appointing a receiver, trustee, or liquidator of
said party, or of all or a substantial part of any of the assets of said party, and such order,
judgment, or decree remains unstayed and in effect for a period of ninety (90) days from the date
of entry thereof.
ARTICLE 12
REMEDIES
12.1Owner’s Remedies. Upon the occurrence of an Event of Default by KSM, Owner
may:
12.1.1Seek specific performance of KSM’s obligations or injunctive relief, as
applicable;
12.1.2Demand and receive payment of all amounts due Owner under the terms of this
Agreement and the payment of all costs, damages, expenses, and reasonable
attorneys’ fees of Owner arising due to KSM’s Event of Default; and
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12.1.3Terminate this Agreement by written notice of termination to KSM. Upon proper
termination of this Agreement, KSM shall surrender occupancy of the Property to
Owner.
No remedy granted to Owner is intended to be exclusive of any other remedy herein or by law
provided, but each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law, in equity, or by statute. No delay or omission by
Owner to exercise any right accruing upon an Event of Default shall impair Owner’s exercise of
any right or shall be construed to be a waiver of any Event of Default or acquiescence thereto.
IN NO EVENT SHALL KSM BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR
PERFORMANCE OR NON-PERFORMANCE HEREUNDER (INCLUDING BUT NOT
LIMITED TO LOST PROFITS, LOST BUSINESS AND LOSS OF GOODWILL) EVEN IF
ADVISED OR AWARE OF THE POSSIBILITY OF SUCH DAMAGES
.
12.2KSM’s Remedies. Upon the occurrence of an Event of Default by Owner, KSM
may:
12.2.1Seek specific performance of Owner’s obligations or injunctive relief, as
applicable;
12.2.2Demand and receive payment of all amounts due KSM under the terms of this
Agreement and the payment of all costs, damages, expenses, and reasonable
attorneys’ fees of KSM due to Owner’s Event of Default; and
12.2.3Terminate this Agreement by KSM’s written notice of termination to Owner. In
such event, Owner shall pay to KSM within thirty (30) days of termination an
amount equal to the total unpaid Management Fees that KSM would have earned
had the Agreement remained in effect until the Termination Date.
No remedy granted to KSM is intended to be exclusive of any other remedy herein or by law
provided, but each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law, in equity, or by statute. No delay or omission by
KSM to exercise any right accruing upon an Event of Default shall impair KSM’s exercise of
any right or shall be construed to be a waiver of any Event of Default or acquiescence thereto.
ARTICLE 13
TERMINATION
13.1Events of Termination. This Agreement shall terminate upon the occurrence of
any of the events set forth below:
13.1.1An Event of Default by KSM, and Owner sends to KSM a notice of termination
for cause (after the expiration of any applicable cure period);
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13.1.2An Event of Default by Owner, and KSM sends to Owner a notice of termination
for cause (after the expiration of any applicable cure period);
13.1.3Both parties agree in writing to terminate this Agreement; and
13.1.4Upon the expiration or termination of this Agreement according to its terms.
13.2Payments Upon Expiration or Termination. Upon expiration or termination of
this Agreement, all sums owed by either party to the other shall be paid within thirty (30) days of
the effective date of such termination.
13.3 Employee and Other Obligations Upon Termination. Only upon a termination of
this Agreement for any reason, Owner shall remain responsible for payment of obligations
connected with the Management Services rendered through the effective date of termination
(including all Operating Expenses, all Gross Payroll obligations, as well as the Management Fees
and all out of pocket expenses). Such obligations shall include all amounts to become due and
owing to the terminated staff of KSM at the Courses through the effective date of termination.
Owner shall pay all accrued wages for the terminated staff through such termination date and
shall reimburse and/or hold harmless KSM for workers compensation insurance and other
employee benefits paid or accrued by KSM on behalf of Owner to the terminated staff as of the
termination date. Additionally, Owner shall be responsible for the payment of any earned and
accrued vacation owed or due to the terminated staff as a result of the termination as well as any
manual adjustments of wages and any unclaimed wages due the terminated staff accruing prior to
the termination date and shall, if requested by KSM, reimburse KSM for any such payments
made by KSM. Any amounts owed to KSM pursuant to this Section shall be paid to KSM
within thirty (30) days of written request therefor.
ARTICLE 14
NOTICES
14.1Notices. Any notices or other communications required or permitted hereunder
shall be sufficiently given if in writing and (i) delivered personally, (ii) sent by certified mail,
return receipt requested, postage prepaid (“Mail”), or sent by nationally-recognized overnight
mail or courier service (“Overnight Courier”), addressed as shown below, or to such other
address as the party concerned may substitute by written notice to the other. Any notice will be
deemed received (A) upon the date personal delivery is made, (B) three (3) business days after
the date it is deposited in the Mail, (C) one (1) business day after it is deposited with an
Overnight Courier, or (D) the date upon which attempted delivery of such notice, whether by
Mail, Overnight Courier or personal delivery, is refused or rejected.
If to Owner: Jacob J. Winzenz
Assistant City Manager/Director of
Administrative Services
Municipal Building
18 North Jackson Street
P.O. Box 5005
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Janesville, WI 53547-5005
with a copy to: Jean Ann Wulf
City Clerk-Treasurer
Municipal Building
18 North Jackson Street
P.O. Box 5005
Janesville, WI 53547-5005
If to KSM: Kemper Sports Management, Inc.
500 Skokie Boulevard, Suite 444
Northbrook, Illinois 60062
Attention: Steven K. Skinner, Chief Executive
Officer
with a copy to: Kemper Sports Management, Inc.
500 Skokie Boulevard, Suite 444
Northbrook, Illinois 60062
Attention: Corporate Counsel
The addresses and addressees may be changed by giving notice of such change in the
manner provided herein for giving notice. Unless and until such written notice is received, the
last address and addressee given shall be deemed to continue in effect for all purposes.
ARTICLE 15
MISCELLANEOUS
15.1Exhibits. All Exhibits attached hereto are incorporated herein by this reference as
if fully set forth herein. If any Exhibits are subsequently changed by the mutual written
agreement of the parties, the Exhibits shall be modified to reflect such change or changes and
dated and initialed by the parties.
15.2Entire Agreement. This Agreement and the Exhibits hereto embody the entire
agreement and understanding of the parties relating to the subject matter hereof and supersede all
prior representations, agreements, and understandings, oral or written, relating to such subject
matter.
15.3Amendment and Waiver. This Agreement may not be amended or modified in
any way except by an instrument in writing executed by all parties hereto; provided, however,
either party may, in writing, (i) extend the time for performance of any of the obligations of the
other, (ii) waive any inaccuracies and representations by the other contained in this Agreement,
(iii) waive compliance by the other with any of the covenants contained in this Agreement, and
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(iv) waive the satisfaction of any condition that is precedent to the performance by the party so
waiving of any of its obligations under this Agreement.
15.4Proprietary Information. The trade names, trademarks, and logos of Owner
(collectively, the “Owner Marks”) shall be used by KSM only in connection with the
performance of the services provided under this Agreement and as otherwise provided in this
Agreement or as agreed upon by Owner; provided, however, that Owner agrees that KSM may
use the Owner Marks in its marketing and promotional materials as courses managed by KSM.
All specifically identifiable information developed by KSM for Owner at the expense of Owner
shall be the property of both KSM and Owner and such information may continue to be used by
Owner at the Courses beyond any expiration or termination of this Agreement; provided,
however, that Owner may not use or grant others the right to use such information at any other
location nor disclose or grant any rights to such information to any third party. All of KSM’s
proprietary information, including (i) trade names, trademarks and logos as well as programs that
have been or may be developed by KSM, and (ii) software and technology, shall remain the
exclusive property of KSM and neither Owner nor any of its affiliates or successors may use or
disclose such proprietary information without the advance written consent of KSM. The
obligations and restrictions contained in this Section shall survive the expiration or termination
of this Agreement for any reason.
15.5No Partnership or Joint Venture. Nothing contained herein shall be deemed or
construed by the parties hereto or by any third party as creating the relationship of (i) a
partnership, or (ii) a joint venture between the parties hereto; it being understood and agreed that
neither any provisions contained herein nor any acts of the parties hereto shall be deemed to
create any relationship between the parties hereto other than the relationship of independent
contractor.
15.6Restrictions as to Employees. During the Term and for a period of two (2) years
after the end of the Term, it is agreed that Owner and/or its agents and contractors shall not,
directly or indirectly, seek to contact, entice, or discuss employment with any Key Employee of
KSM nor shall Owner, its agents and/or contractors employ or seek to employ, directly or
indirectly, any such Key Employee, without first obtaining the written consent of KSM. For
purposes hereof, a “Key Employee” of KSM shall mean any individual holding any of the
following positions at any time during the Term: the general manager, superintendent,
accountant/bookkeeper, head professional or assistant superintendent of either of the Courses, or
any employee of KSM’s corporate office.
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15.7Assignment; Successors and Assigns.
15.7.1This Agreement may not be assigned by either party hereto without the express
written consent of the other party, except that KSM may assign this Agreement to
any of its Affiliates.
15.7.2This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, legal representatives, and permitted
assigns.
15.8Severability. Except as expressly provided to the contrary herein, each section,
part, term, or provision of this Agreement shall be considered severable, and if for any reason
any section, part, term, or provision herein is determined to be invalid and contrary to or in
conflict with any existing or future law or regulation by a court or governmental agency having
valid jurisdiction, such determination shall not impair the operation of or have any other affect
on other sections, parts, terms, or provisions of this Agreement as may remain otherwise
intelligible, and the latter shall continue to be given full force and effect and bind the parties
hereto, and said invalid sections, parts, terms, or provisions shall not be deemed to be a part of
this Agreement.
15.9Survival. All covenants, agreements, representations, and warranties made herein
shall survive the execution and delivery of (i) this Agreement, and (ii) all other documents and
instruments to be executed and delivered in accordance herewith, and shall continue in full force
and effect.
15.10Accord and Satisfaction; Allocation of Payments. No payment by Owner or
receipt by KSM of a lesser amount than that which is owed to KSM shall be deemed to be other
than on account of such amounts owed to KSM, nor shall any endorsement or statement on any
check or letter accompanying any check or payment to KSM be deemed an accord and
satisfaction, and KSM may accept such check or payment without prejudice to KSM’s right to
recover the balance of the amounts owed to KSM or pursue any other remedy provided for in
this Agreement or as otherwise provided at law or in equity. In connection with the foregoing,
KSM shall have the absolute right in its sole discretion to apply any payment received from
Owner, regardless of Owner's designation of such payments, to any outstanding amount of
Owner then not current and due or delinquent, in such order and amounts as KSM, in its sole
discretion, may elect.
15.11Construction and Interpretation of Agreement. This Agreement shall be governed
by and construed under the laws of the State of Wisconsin.. Should any provision of this
Agreement require judicial interpretation, it is agreed that the court interpreting or considering
same shall not apply the presumption that the terms hereof shall be more strictly construed
against a party by reason of the rule or conclusion that a document should be construed more
strictly against the party who itself or through its agent prepared the same. It is agreed and
stipulated that all parties hereto have equally participated in the preparation of this Agreement
and that legal counsel was consulted by each party before the execution of this Agreement.
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15.12Captions. Captions, titles to sections, and paragraph headings used herein are for
convenience of reference and shall not be deemed to limit or alter any provision hereof.
15.13Governing Document. This Agreement shall govern in the event of any
inconsistency between this Agreement and any of the Exhibits attached hereto or any other
document or instrument executed or delivered pursuant hereto or in connection herewith.
15.14Outside Businesses. Nothing contained in this Agreement shall be construed to
restrict or prevent, in any manner, any party or any party’s affiliates, parent corporations, or
representatives or principals from engaging in any other businesses or investments, nor shall
Owner or KSM have any right to share or participate in any such other businesses or investments
of the other party.
15.15Counterparts; Facsimile or E-Mailed Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of which together
shall be deemed one and the same Agreement. Facsimile signature or scanned and e-mailed
signature shall be as effective as an original signature.
15.16Unavoidable Delays. The provisions of this Section shall be applicable if there
shall occur during the Term any (i) strikes, lockouts, or labor disputes, (ii) inability to obtain
labor or materials, or reasonable substitutes therefor, (iii) acts of God, governmental restrictions,
regulations or controls, enemy or hostile governmental action, civil commotion, fire, or other
casualty, or (iv) other conditions beyond the reasonable control of the party obligated to perform.
If either party shall, as the result of any of the above-described events, fail punctually to perform
any obligation on its part to be performed under this Agreement, then such failure shall be
excused and not be a breach of this Agreement by the party claiming an unavoidable delay (an
“Unavoidable Delay”), but only to the extent the delay is occasioned by such event. If any right
or option of either party to take any action under or with respect to the Term is conditioned upon
the same being exercised within any prescribed period of time or at or before a named date, then
such prescribed period of time or such named date shall be deemed to be extended or delayed, as
the case may be, upon written notice, as provided above, for a time equal to the period of the
Unavoidable Delay. Notwithstanding anything contained herein to the contrary, the provisions
of this Section shall not be applicable to either party’s obligation to pay any sums, monies, costs,
charges, or expenses required to be paid pursuant to the terms of this Agreement.
15.17No Third-Party Beneficiaries. Nothing herein contained shall be deemed to
establish any rights of third parties against the parties hereto; it being the intent that the rights
and obligations set forth herein are those of the parties hereto alone, with no third party
beneficiary rights intended.
15.18Certain Services Excluded. Notwithstanding anything else contained in this
Agreement to the contrary, KSM’s services are limited to those specifically noted in the
Agreement and do not include, amongst others and without limitation, architectural, engineering,
design or general contracting services, facility planning services, accounting or tax-related
assistance or advice, legal advice or services, expert witness services, cost report preparation,
data processing or information services, or feasibility studies. KSM’s services will not constitute
an audit, review or compilation or any other type of financial statement reporting, or consulting
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engagement subject to the rules of the AICPA or other similar bodies. KSM will not be
expressing any professional opinions on and makes no representations or warranties in
conjunction with this engagement.
15.19Bankruptcy Obligations. KSM shall have no obligation to provide any services
under the Agreement in the event that Owner becomes a debtor under the Bankruptcy Code, and,
in accordance with Section 12 hereof, may terminate the Agreement in such event. In the event
that Owner is or becomes a debtor under Chapter 11 of the Bankruptcy Code and KSM agrees to
provide services to Owner post-petition, the parties shall enter into a revised written agreement
or an amendment to this Agreement to govern their respective rights and obligations as part of
Owner’s bankruptcy case. Notwithstanding the foregoing, Owner expressly agrees that KSM
shall be compensated by Owner for all commercially reasonable efforts to comply with all
requirements or requests for information placed upon KSM in an Insolvency Proceeding by
Owner, any receiver, trustee or liquidator for Owner or any property of Owner, any assignee for
the benefit of creditors, or any trustee in any case under chapter 7 of the Bankruptcy Code, at a
hourly rate set by KSM in its reasonable discretion, in addition to the out-of-pocket expenses
(including legal fees) incurred by KSM in connection with the Insolvency Proceeding (the
“Insolvency Administration Fees”). All such Insolvency Administration Fees shall be
considered “Operating Expenses” under this Agreement.
15.20Time of Essence In Performance. All times set forth in this Agreement for
performance by either party shall govern and be strictly enforced since time is of the essence.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
written above.
KEMPER SPORTS MANAGEMENT, INC. CITY OF JANESVILLE, WISCONSIN
By: By:
Steven K. Skinner Name: Eric Levitt
Chief Executive Officer Title: City Manager
By: Jean Ann Wulf
City Clerk-Treasurer
Approved as to Form:
_________________________
Wald Klimczyk, City Attorney
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EXHIBIT A
DEFINITIONS
All capitalized terms referenced or used in the Management Agreement (the
“Agreement”) and not specifically defined therein shall have the meaning set forth below in this
Exhibit A, which is attached to and made a part of the Agreement for all purposes.
Affiliate(s). The term “Affiliate(s)” shall mean a Person that directly or indirectly, or
through one or more intermediaries, controls, is controlled by, or is under common control
with the Person in question and any officer, director, or trustee, and any stockholder or
partner of any Person referred to in the preceding clause owning fifty percent (50%) or more
of such Person. For purposes of this definition, the term “control” means the ownership of
fifty percent (50%) or more of the beneficial interest of the voting power of the appropriate
entity.
Annual Passes. The term “Annual Passes” shall mean the passes for play at the Courses with
such rights and subject to such terms as determined by Owner and KSM.
Courses. The term “Courses” shall mean the golf courses to be operated as “Riverside Golf
Course” and "Blackhawk Golf Course" located on and operated from the Real Property.
EBITDA. The term “EBITDA” shall mean, for any period, Net Operating Income for such
period plus Management Fees for such period.
Environmental Laws. The term “Environmental Laws” shall mean all current and future
federal, state, and local statutes, regulations, ordinances, and rules relating to (i) the emission,
discharge, release, or threatened release of a Hazardous Material into the air, surface water,
groundwater, or land; (ii) the manufacturing, processing, use, generation, treatment, storage,
disposal, transportation, handling, removal, remediation, or investigation of a Hazardous
Material; or (iii) the protection of human health, safety, or the indoor or outdoor
environment, including, without limitation, the Clean Air Act, the Federal Water Pollution
Control Act, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Occupational Safety and
Health Act, all amendments thereto, all regulations promulgated thereunder, and their state or
local statutory and regulatory counterparts.
Gross Revenues. The term “Gross Revenues” shall mean all monthly receipts related to or
derived from the operation of the Courses from cash or credit transactions recognized during
the Term, computed on an accrual basis, including, but not limited to, greens fees, cart rental
fees, guest fees, income derived from the investment of Gross Revenues, the amount of all
sales (wholesale or retail) of food, beverages, goods, wares, or merchandise on, at, or from
the Property, or for services of any nature performed on, at, or from the Property, determined
in accordance with generally accepted accounting principles applied on a consistent basis.
Gross Revenues shall be reduced by any refunds, rebates, discounts, and credits of a similar
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nature given, paid, or returned by KSM or Owner in the course of obtaining such Gross
Revenues.
Gross Revenues shall not include:
Applicable gross receipts taxes, admission, cabaret, excise, sales, and use
o
taxes, or similar governmental charges collected directly from customers or
their guests or as a part of the sales price of any goods or services;
Service charges that are percentage gratuities added to billings, to the extent
o
paid to employees of the Courses;
Proceeds of borrowings by Owner;
o
Proceeds paid as a result of an insurable loss, unless paid for the loss or
o
interruption of business, to the extent such sums are used to remedy said loss;
Interest or investment income earned on distributed Positive Net Cash Flow
o
to Owner or KSM pursuant to the terms of the Agreement; or
Owner’s Advances.
o
Any of the above provisions resulting in a double exclusion from Gross Revenues shall
be allowed as an exclusion only once.
Hazardous Material. The term “Hazardous Material” shall mean any solid, liquid, or
gaseous substance, chemical, compound, product, byproduct, waste, or material that is or
becomes regulated, defined, or designated by any applicable federal, state, or local
governmental authority or by any Environmental Law as hazardous, extremely
hazardous, imminently hazardous, dangerous, or toxic, or as a pollutant or contaminant,
and shall include, without limitation, asbestos, polychlorinated biphenyls, and oil,
petroleum, petroleum products and petroleum byproducts.
Improvements. The term “Improvements” shall mean the improvements, structures, and
fixtures placed, constructed, or installed on the Real Property for the Courses, and any
additions or subsequent modifications thereto.
Insecurity Event. The term “Insecurity Event” shall mean the occurrence of any one or
more of the following events: (a) there shall occur a default under any agreement,
document or instrument, other than this Agreement, to which Owner is a party, the
consequences of which could reasonably be expected to have a Material Adverse Effect;
(b) any statement, report, financial statement or certificate made or delivered by Owner,
or any of its officers, employees or agents, to KSM is untrue, incomplete or incorrect in
any material respect; (c) any of Owner’s assets are attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors and the same is not cured within
thirty (30) days thereafter; (d) an application is made by any person, other than Owner,
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for the appointment of a receiver, trustee, or custodian for any of Owner’s assets and the
same is not dismissed within thirty (30) days after the application therefor; (e) any
material change in Owner’s capital structure or in any of its business objectives, purposes
and operations which might in any way adversely effect the repayment of its obligations
to KSM pursuant to this Agreement; or (f) any other event or occurrence, which, in the
reasonable discretion of KSM, could materially and adversely affects Owner’s ability to
repay its obligations to KSM pursuant to this Agreement.
Intangible Personal Property. The term “Intangible Personal Property” shall mean all
intangible property or rights owned or held by Owner in connection with the Courses,
including, but not limited to, security deposits, prepaid rents, liquor and operating
licenses, and all trademarks related to the Courses.
KSM. The term “KSM” means Kemper Sports Management, Inc., an Illinois
corporation, and its successors, legal representatives, and permitted assigns.
Management Services. The term “Management Services” shall mean the services
provided by KSM pursuant to this Agreement.
Material Adverse Effect. The term “Material Adverse Effect” shall mean any event that
has a material adverse effect on (i) the business, assets, operations or financial or other
condition of Owner, and (ii) Owner’s ability to pay the amounts owed to KSM in
accordance with the terms hereof.
Net Operating Income. The term “Net Operating Income” or “NOI” shall be computed
as the sum of Gross Revenues less Operating Expenses, and the Base Management Fees.
Such calculation shall not include payments associated with maintenance equipment
leases, capital expenditures, interest expense, taxes, depreciation and amortization
Operating Expenses. The term “Operating Expenses” shall mean all operating expenses
incurred or paid in connection with the operations of the Courses, computed on an
accrual basis, including, but not limited to, the following items:
Salaries, wages, employee benefits, and payroll expenses, including without
o
limitation, payroll service bureau fees, payroll taxes, Course profit sharing
programs, and insurance for all employees employed on-site in the direct
operation of the Courses, excluding, however, service charges, which are
defined as percentage gratuities added to billings and paid to employees
(collectively, the “Gross Payroll”);
Marketing, advertising, and promotional expenses;
o
Purchase and replacement, as necessary, of inventories of maintenance parts
o
and supplies, food stores and bar supplies;
Purchase and replacement, as necessary, of silver, chinaware, glassware,
o
cooking utensils, and other similar items of equipment;
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Purchase and replacement, as necessary, of office supplies, computers,
o
printers, facsimile machines, photocopiers, postage, printing, routine office
expenses, and accounting services incurred in the on-site operation of the
Courses;
The costs of IT consultants and other consultants utilized for the Courses;
o
Reasonable travel expenses of on-site employees incurred exclusively in
o
connection with the business of the Courses;
Accrual of a reserve for insurance (including workers’ compensation) and
o
property taxes each month in an amount or at a rate that is sufficient to pay
such insurance premiums or property taxes when they become due and
payable;
Insurance premiums and property taxes, to the extent not provided for in the
o
reserve established therefore and any deductible amounts required to be paid
pursuant to Course insurance coverage;
Accounts receivable previously included within Gross Revenues, to the extent
o
they remain unpaid ninety (90) days after the first billing;
Auditing, accounting costs, computer fees (including costs to license and
o
maintain accounting software), and legal fees incurred in respect of the
operation of the Courses, including any reasonable financial management and
reasonable accounting fees paid to third party accounting firms, if included in
the Budgets;
Costs incurred for utilities, including, but not limited to, all electric, gas, and
o
water costs, and any other private utility charges incurred in connection with
the operation of the Courses;
Ordinary maintenance and repairs, exclusive of any capital improvements or
o
capital replacements, which are hereby excluded;
The amount to be retained for purposes of maintaining Working Capital at an
o
appropriate level;
All out-of-pocket expenses incurred by KSM in providing the services under
o
the terms of the Agreement, including without limitation, reasonable travel for
employees employed on-site at the Property and KSM’s other employees
while engaged in performing the obligations of KSM hereunder, air express,
costs of recruitment (including applicable agent’s fee), and other incidental
expenses included in the Budget;
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Expenses, including legal fees, damages or other costs, involved in defending
o
any employment-related lawsuits, charges or claims involving personnel of
the Courses;
All expenses set forth in the approved Budgets; and
o
All other customary and reasonable expenses incurred in the operation of the
o
Courses and the Improvements.
Any of the above provisions resulting in a double inclusion as an Operating Expense shall
be allowed as an inclusion only once.
Operating Expenses shall not include (i) depreciation or amortization, (ii) principal or
interest payments on indebtedness, (iii) rental or lease payments for major items of
furniture, fixtures, or equipment which, in accordance with generally accepted accounting
principles, are purchased and capitalized as fixed assets, and (iv) federal, state and local
income taxes of any nature or kind incurred by Owner or KSM.
Owner. The term “Owner” means City of Janesville, Wisconsin and its successors, legal
representatives, and permitted assigns.
Person. The term “Person” shall mean any individual, partnership, corporation,
association, or other entity, and the heirs, executors, administrators, legal representatives,
successors, and assigns of such Person where the context so permits; and, unless the
context otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and the neuter, and vice versa.
Personal Property. The term “Personal Property” shall mean the Intangible Personal
Property and the Tangible Personal Property.
Positive Net Cash Flow. The term “Positive Net Cash Flow” shall mean the amount, if
any, by which Gross Revenues exceed Operating Expenses for the particular period being
measured.
Property. The term “Property” shall mean (i) the Improvements, (ii) the Personal
Property, and (iii) the Real Property.
Real Property. The term “Real Property” shall mean those certain parcels of land upon
which the Courses are located, the legal description of which is attached hereto as Exhibit
B.
Tangible Personal Property. The term “Tangible Personal Property” shall mean all
equipment, machinery, fixtures, furnishings, accessories, and other tangible personal
property placed or installed, or to be placed or installed, on or about the Real Property
and used as a part of or in connection with the operation of the Courses.
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Working Capital. The term “Working Capital” shall mean an amount sufficient to pay
Operating Expenses for any given month.
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EXHIBIT B
LEGAL DESCRIPTION OF REAL PROPERTY
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