SANTA ANA GOLF, LLC (COURSECO, INC.)

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such claims, and retaining legal counsel or experts to defend such claims. All claims handling responsibilities shall be in accordance with Contractor and insurance company requirements, and shall be subject to City's prior written approval, which shall .not be unreasonably withheld or delayed, and paying any losses, damages, and expenses relating to such claims and obtaining fully executed settlement releases on behalf of the City. Contractor shall provide City with monthly and annual reports of claims activities on a schedule and in a format reasonably acceptable to the City. City understands and agrees that with respect to all policies of insurance required under this Article 4(whether such policies are maintained by City or Contractor),the portion of any losses,damages, and expenses paid with respect to such claims which is subject to a deductible amount or a self- insurance or a self-assumption amount shall be the sole responsibility of City. If at any time during the term of this Agreement,City desires to assume responsibility for handling of claims,the parties may amend this provision as provided in Section 12.6 Modifications and Changes, subject to (i) the approval of the applicable insurance companies; and (ii) the reasonable approval of the Contractor. ARTICLE 5 -MANAGEMENT FEES In addition to the costs and expenses to be reimbursed to Contractor pursuant to this Agreement, City shall pay Contractor the Management Fee computed and payable as follows: 5.1 Management Fee. In consideration of Contractor's services during the Operating Period, City shall pay to Contractor a"Management Fee." For the first twelve (12) months of the term of this Agreement, the Management Fee shall equal Ninety-five Thousand Dollars ($95,000) per annum (i.e., ($7,917)per month). The Management Fee shall increase on each anniversary of the Effective Date (until termination of this Agreement) by three percent(3%) of the Management Fee in effect prior to the applicable increase.The Base Management Fee shall be paid to Contractor, in equal monthly installments. The Parties agree to renegotiate, in good faith, the terms of the Incentive Management Fee no later than ninety(90)days prior to expiration of the initial Term and expiration of the first Renewal Terrn. 5.2 Incentive Management Fee. In addition to the Management Fee set forth in Section 5.1, Contractor shall be entitled to an Incentive Management Fee. The Incentive Management Fee shall be calculated as 10% of Gross Revenues in excess of$4.0 million actually received by City in the preceding fiscal year not to exceed an amount equal to 50% of the Management Fee. 5.3 Payment Schedule. Contractor shall be paid monthly and in accordance with the process set forth in Section 6.1.1 below. 5.4 Pavment of Incentive Management Fee. Contractor shall submit to City a written statement detailing Net Operating Income received for each fiscal year (or portion thereof in the event of termination prior to the end of an Operating Year)no later than 21 days following the end of such period, including a calculation of any Incentive Management Fee due. Subject to City's approval, which shall not be unreasonably withheld, Contractor shall withdraw its Incentive Management Fee from the Operating Account no later than thirty (30) days following receipt of the statement and such supporting documents as City may reasonably request. -12-