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extent not covered by insurance, fifty percent (50 of all costs and expenses relating to the handling of such Claims as set forth in the preceding sentence, including without limitation attorneys' fees and costs for OPERATOR'S in -house legal counsel and for outside legal counsel, shall be paid by OPERATOR out of its own funds; provided, however, OPERATOR's obligation is capped at $20,000 per Operating Year. The remaining costs, expenses, losses and damages shall be a Direct Cost. The City shall approve any settlements exceeding $5,000 or any settlements that the OPERATOR intends to classify as a Direct Cost. City shall have the right to approve any legal counsel retained by OPERATOR to defend the City, and to approve all legal bills incurred in such defense. In the event of disagreement on legal counsel to be retained, City may designate legal counsel to be retained. OPERATOR shall use its best efforts to notify CITY of any claims or lawsuits relating to the Golf Course within three (3) days after OPERATOR receives notice of such claims or lawsuits. 12.0 DEFAULT. 12.01 OPERATOR'S and CITY'S Default. The breach of any provision of this Agreement, the failure to keep, observe or perform any material covenant including, without limitation, the occurrence of any one or more of the following events shall constitute a default and breach of this Agreement by OPERATOR: a) OPERATOR's abandonment or vacation of the Premises; b) OPERATOR's expenditure of Direct Costs in excess of 10% of the Direct Cost Budget, where the level of such costs is greater than might reasonably be caused by increased patronage of the Premises, unless such excess costs are authorized in writing by the Director; c) OPERATOR's Cost of Goods Sold for Pro Shop merchandise and food and beverages during a six (6) month period exceeds 75% of gross sales during that period where the level of such costs is greater than might reasonably be caused by increased levels of patronage of the Premises; d) OPERATOR's use of Bank Account funds for any purpose not expressly provided for by this Agreement or approved by the Director in writing; e) The levy of a writ of attachment or execution on this Agreement or on any of the property of OPERATOR located in or on the Premises and such levy or execution is not stayed prior to the enforcement of such writ of attachment or execution; or f) An event of bankruptcy or insolvency including but not limited to: (i) OPERATOR applies for or consents to the appointment of a receiver, trustee or liquidator of OPERATOR or of all or a substantial part of its assets; (ii) OPERATOR files a voluntary petition in bankruptcy or commences a proceeding seeking reorganization, liquidation, or an arrangement with creditors; (iii) OPERATOR files an answer admitting the material allegations of a bankruptcy petition, reorganization proceeding, or insolvency proceeding filed against OPERATOR; (iv) OPERATOR admits in writing its inability to pay its debts as they come due; 40