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b) Expense of OPERATOR's corporate office, except for accounting services to be provided by OPERATOR'S employee(s) at OPERATOR'S office at a total cost of $1,850 per month with a $50 increase in the monthly rate effective each Operating Year. c) Employee salaries or any Compensation of any corporate or regional employee of OPERATOR. 8.01.4 Capital Expenditures. Capital Expenditures are expenditures for improvements to existing Facilities or construction of new Facilities, which improvements or construction cost are in excess of Five Thousand Dollars ($5,000), or whatever amount may be established for City departments in the future unless the adjustment is not approved by the Director for the Golf Course, and have a useful life of more than one (1) year. a) All Capital Expenditures are in the CITY's sole control and discretion, and all costs and expenses of Capital Expenditures shall be paid from CITY funds. OPERATOR shall not make any Capital Expenditure prior to obtaining the written approval of the Director, in his or her sole and absolute discretion. Capital Expenditures shall not be included in any category of the Direct Cost budget, unless expressly approved by the Director in writing. b) Except in the event of an emergency threatening imminent injury to persons or damage to property, the parties acknowledge and agree that this Agreement imposes no responsibilities or obligations on the part of OPERATOR with respect to any aspect of a Capital Expenditure project, including design, construction, or supervision. In the event City desires OPERATOR to be involved in any capacity in a Capital Expenditure project, the parties will enter into a separate agreement setting forth the terms and conditions of such involvement, including without limitation fees to be received by OPERATOR for such involvement. 8.01.5 Lesson Expenses. All payment for lessons shall be run through the Pro Shop cash register and Lesson Expenses are defined as, and limited to, that portion of golf lesson fees that are paid to golf instructors. The portion of the golf lesson fees that may be paid to the golf instructors shall not exceed 80 8.02 Direct Cost Budget. 8.02.1 Direct Cost Budget. OPERATOR shall submit to the CITY a Direct Cost Budget as part of the Annual Plan. 8.02.2 No Incentives or Disincentives. OPERATOR shall not be entitled to any portion of the savings if the level of Direct Costs is less than the Direct Cost Budget during an Operating Year, nor shall OPERATOR be required to pay any portion of cost overruns if the level of Direct Costs is more than the Direct Cost Budget during an Operating Year, unless required approvals were not obtained. 8.02.3 Termination for Direct Cost Overruns. If the Direct Costs in any Operating Year are more than 10% of the Direct Cost Budget and the level of such cost overruns is greater 31