Exhibit 10.1


 


Execution Copy


EMPLOYMENT
AGREEMENT


THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of January 8, 2007,
by and among Festival Fun Parks, LLC, a Delaware limited liability company (the
“Company”), Palace Entertainment
Holdings, Inc., a Delaware corporation (“Holdings”)
and Alexander Weber, Jr. (the “Executive”),
each a “Party” and collectively
the “Parties.”  Unless otherwise indicated, capitalized terms
used herein are defined in Section 2.1.


ARTICLE I

EMPLOYMENT TERMS


1.1           Employment.  The Company will employ the Executive, and the
Executive accepts employment with the Company, upon the terms and conditions
set forth in this Agreement for the period beginning on January 8, 2007 (the “Effective Date”) and ending as provided in
Section 1.4(a) hereof (the “Employment
Period”).


1.2                                 Position
and Duties.


(a)           Generally. 
The Executive shall serve as the Chief Executive Officer and President
of each of Holdings and the Company and, in such capacity shall be responsible
for the general management of the business, affairs and operations of Holdings
and the Company, shall perform such duties as are customarily performed by a
chief executive officer and president of a company of a similar size and shall
have such power and authority as shall reasonably be required to enable him to
perform his duties hereunder; provided, however, that in exercising such power
and authority and performing such duties, he shall at all times be subject to
the authority and control of the Boards of Directors of Holdings and the
Company.  At all times that Executive is
employed by Holdings and/or the Company as the Chief Executive Officer and
President, he shall serve as a member of the Board of Directors of each of
Holdings and the Company.


(b)           Duties and Responsibilities.  The Executive shall report to the Board of
Directors of the Company (the “Board”)
and shall devote his full business time and attention to the business and
affairs of Holdings, the Company and its Subsidiaries.  The Executive shall perform his duties and responsibilities
in a diligent, trustworthy, businesslike and efficient manner.  The Executive shall not engage in any other
business activities that could reasonably be expected to conflict with the
Executive’s duties, responsibilities and obligations hereunder.  During the Employment Period, the Executive
shall promptly bring to the Company or its Subsidiaries, as applicable, all
investment or business opportunities relating to the activities described in Section
1.9(a) of which the Executive becomes aware.


1.3           Compensation.


(a)           Base Salary. 
The Executive’s base salary shall be $325,000.00 per annum (the “Base Salary”).  The Base Salary payable for Fiscal Year 2007
shall be pro-rated based on the
number of days from and including the Effective Date through and including
December 31, 2007.  The Base Salary will
be payable to the Executive by the Company in regular installments in
accordance with the Company’s general payroll practices.  The Executive shall receive such increases in
his Base Salary as the Board may approve in its sole discretion from time to
time; provided that the Executive’s Base Salary will be reviewed not less often
than annually.









 



(b)           Annual
Bonus.  For Fiscal Year 2007 and for
each subsequent Fiscal Year during the Term (as defined below), the Executive
shall be eligible to receive an annual cash bonus (the “Annual Cash Bonus”) in an amount equal to
100% of Executive’s Base Salary if the Company’s revenue, EBITDA and cash flow
for a Fiscal Year are equal to or greater than the Bonus Target for such Fiscal
Year.  Annual Cash Bonuses shall be
payable to Executive on or before the end of the fourth month following the end
of the relevant Fiscal Year, but in the event that the Company has not received
its audited financial statements for the relevant Fiscal Year by the date that
is three and one-half months after the end of such relevant Fiscal Year, the
Company shall make such payment within fifteen days (but not later than the
last day of the calendar year following such Fiscal Year) after the Company’s
receipt of audited financial statements for such Fiscal Year, so long as
Executive is employed by the Company on the last day of such Fiscal Year.


(c)           Supplemental
Bonus.  For Fiscal Year 2007 and for
each subsequent Fiscal Year during the Term, the Executive may also be eligible
to receive a supplemental cash bonus (the “Supplemental
Cash Bonus”), in addition to the Annual Cash Bonus and in an amount
to be determined pursuant to a supplemental bonus program to be adopted in the
discretion of the Board, if the Company’s revenue, EBITDA and cash flow for a
Fiscal Year are greater than the Bonus Target for such Fiscal Year.  Supplemental Cash Bonuses, if any, shall be
payable to Executive at the same time as Annual Cash Bonuses.


(d)           Withholding.  All payments made under this Agreement
(including Base Salary, bonus payments, and other amounts) shall be subject to
withholding for income taxes, payroll taxes and other legally required
deductions.


(e)           Expenses.  The Company will reimburse the Executive for
all reasonable expenses incurred by him in the course of performing his duties
under this Agreement which are consistent with the Company’s policies in effect
at that time with respect to travel, entertainment and other business expenses,
subject to the Company’s requirements with respect to reporting and
documentation of such expenses.


(f)            Vacation; Holiday Pay and
Sick Leave.  The Executive shall be
entitled to four (4) weeks’ paid vacation in each calendar year, which if not
taken during any year may be carried forward to any subsequent year.  Executive shall receive holiday pay and paid
sick leave as provided to other executive employees of Holdings and the
Company.  Upon cessation of Executive’s
employment for any reason, Executive shall receive pay for all accrued and
unused vacation, calculated at his Base Salary rate in effect at the time of
the cessation of his employment, provided that the amount of vacation that
Executive shall be entitled to accrue during the Term shall be in accordance
with Company policy and in no event shall such accrued vacation exceed four (4)
weeks at any given time.



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(g)           Additional Benefits.  During the Employment Period, the Executive
shall be entitled to participate (for himself and, as applicable, his
dependents) in the group medical, life, 401(k) and other insurance programs,
employee benefit plans and perquisites which may be adopted by the Board for
participation by the Company’s senior management or executives, as well as
dental, life and disability insurance coverage, with payment of, or
reimbursement for, such insurance premiums by the Company, subject to, in all
cases, the terms and conditions established by the Board with respect to such
plans (collectively, the “Benefits”);
provided, however, that the Board, in its discretion, may revise the terms of
any Benefits so long as such revision does not have a disproportionately
negative impact on the Executive vis-à-vis
other Company employees, to the extent applicable.


(h)           Incentive Unit Grant.  On the Effective Date, the Executive shall
receive a grant (the “Equity Grant”)
of 1020.28 Class B-1 Units, 1700.47 Class B-2 Units and 680.19 Class B-3 Units
(as defined in the LLC Agreement) of Palace Holdings Group, LLC.  The Equity Grant shall be subject to the
terms and provisions of the LLC Agreement including, without limitation, the
vesting, forfeiture, repurchase and giveback provisions of Sections 3.1(d),
10.3 and 11.3 of the LLC Agreement.


(i)            Director and Officer
Insurance. The Company shall use commercially reasonable efforts to
purchase and maintain a Directors and Officers liability insurance policy on
terms and conditions deemed acceptable to the Board, acting in good faith,
which policy will cover Executive at all times during his employment.


(j)            Potential Adjustments for
Significant Transactions.  In the
event that the Company acquires a material Family Entertainment Center or
similar business, then the Company and Executive shall discuss in good faith
adjustments to Executive’s overall compensation package to compensate Executive
for increases in his job duties.


(k)           Relocation Expenses.  The Company shall reimburse the Executive for
all reasonable and necessary expenses incurred by the Executive in relocating
to the Newport Beach, California area, including packing and moving expenses
but excluding real estate brokerage commissions, in accordance with the Company’s
policies (including repayment policies) as in effect from time to time.  The Company shall also pay or reimburse the
Executive for the cost of temporary housing for the Executive and his family
for a period of up to twelve (12) months from the Effective Date and three
house-hunting trips for Executive and his spouse.


1.4                                 Term and
Termination.


(a)           Duration.  The Employment Period shall commence on the Effective
Date and shall terminate four (4) years from the Effective Date (the “Term”), unless earlier terminated by the
Company or the Executive as set forth in this Section 1.4.  The Term of the Agreement shall renew
automatically for one-year periods, unless either party gives the other party
written notice of its intention not to renew the Agreement no later than 90
days prior to the expiration of the then current Term. This Agreement may be
terminated during the Term upon the first to occur of (i) termination of the
Executive’s employment by the Company for Cause, (ii) termination of the 



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Executive’s employment by the Company without Cause,
(iii) the Executive’s resignation with Good Reason, (iv) the Executive’s
resignation other than for Good Reason, or (v) the Executive’s death or
Disability.  The Executive shall not
terminate the Agreement with or without Good Reason, unless he gives the
Company written notice that he intends to terminate the Agreement at least 90
days prior to the Executive’s proposed Termination Date.  Upon termination of this Agreement, the
Executive shall execute and deliver to the Company a release that is in form
and substance acceptable to the Company.


(b)           Severance Upon Termination
Without Cause or Upon Resignation by the Executive For Good Reason.  If the Employment Period is terminated by the
Company without Cause or if the Executive resigns for Good Reason, subject to
the Executive’s continued performance of the terms of this Agreement that
survive the Termination Date, the Executive will be entitled to receive (1) (i)
if such termination occurs prior to May 31, 2008, his Base Salary for the
greater of (x) twelve months and (y) the period of time remaining in the period
between the Effective Date and May 31, 2008, (ii) if such termination occurs
after May 31, 2008, his Base Salary equal to twelve months and (2) if such
termination or resignation occurs between July 1 and December 31 in a Fiscal
Year during the Term, Executive will be entitled to a prorated Annual Cash
Bonus based on the number of days during the relevant Fiscal Year that precede
the Termination Date (each of (1) and (2) referred to as the “Severance Payment”).  The Severance Payment shall be payable to the
Executive in accordance with the Company’s general payroll practices for the
payment of Base Salary and Annual Cash Bonus, as applicable.  The Executive also shall be entitled to
receive payment for all reimbursable expenses or other entitlements then due
and owing to the Executive as of the Termination Date.  In the event that the Executive breaches his
obligations under Section 1.6, 1.7, 1.8 or 1.9 of
this Agreement, the Company’s obligation to make any Severance Payment and
provide any Benefits shall cease as of the date of such breach.


(c)           Death and Disability.  In the event of the Company terminates this
Agreement due to the death or Disability of the Executive, the Executive shall
be entitled to no severance or other termination benefits from and after the
termination of his employment, except that the Executive or his estate shall be
entitled to the Severance Payment as provided in Section 1.4(b)
hereof.  Any other rights and benefits
the Executive may have under employee benefit plans and programs of the Company
generally in the event of the Executive’s Disability shall be determined in
accordance with the terms of such plans and programs.  In the event of Executive’s death, any rights
and benefits that the Executive’s estate or any other person may have under
employee benefit plans and programs of the Company generally in the event of
the Executive’s death shall be determined in accordance with the terms of such
plans and programs.


(d)           Salary and Other Payments
Through Termination.  If the
Executive’s employment with the Company is terminated during the Term (i) by
the Company for Cause or (ii) by the Executive other than for Good Reason, the
Executive will be entitled to receive his Base Salary through the Termination
Date, but will not be entitled to receive any Severance Payments or Benefits
after the Termination Date.  The
Executive shall be entitled to receive payment for all reimbursable expenses or
other entitlements then due and owing to the Executive as of the Termination
Date.



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(e)           Other Rights.  Except as set forth in Section 1.4(b),
all of the Executive’s rights to Base Salary, Benefits and Annual Cash Bonuses
hereunder (if any) which accrue or become payable after the termination of the
Employment Period shall cease upon such termination.


1.5           Key Man Life Insurance.  The Company shall have the right to purchase
in the Executive’s name a “key man” life insurance policy naming the Company or
any of its Subsidiaries as the sole beneficiary thereunder.  The Executive agrees to take all reasonable
measures necessary to effect the foregoing, including without limitation
submitting to a physical examination for the purpose of determining eligibility
therefore and cooperating with any matters related to the application for, and
if obtained, the maintenance of, such insurance policy.  If Executive is found ineligible for some
reason for such “key man” life insurance either at the inception of his
employment or at anytime thereafter, this ineligibility will not affect
Executive’s employability under this Agreement or constitute Cause for
termination of Executive’s employment.


1.6           Confidential
Information.


(a)           The Executive shall not
disclose or, directly or indirectly, use at any time, during the Employment
Period or thereafter, any Confidential Information (as defined below) of which
the Executive is or becomes aware, whether or not such information is developed
by him, except to the extent that (i) such disclosure or use is required by the
Executive’s performance of the duties assigned to the Executive by the Board,
(ii) the Executive is required by subpoena or similar process to disclose or
discuss any Confidential Information, provided, that in such case, the
Executive shall promptly inform the Company of such event and shall cooperate
with the Company in attempting to obtain a protective order or to otherwise
restrict such disclosure, or (iii) such Confidential Information becomes
generally known to and available for use by the public, other than as a result
of any action or inaction by the Executive. 
At the Company’s expense, the Executive shall take all appropriate steps
to safeguard Confidential Information and to protect it against disclosure,
misuse, espionage, loss and theft.  The
Executive acknowledges that the Confidential Information obtained by him during
the course of his employment with the Company and its Subsidiaries is the sole
and exclusive property of the Company and its Subsidiaries, as applicable.


(b)           The Executive understands that
the Company and its Subsidiaries will receive from third parties confidential
or proprietary information (“Third Party
Information”) subject to a duty on the part of the Company and its
Subsidiaries to maintain the confidentiality of such information and to use it
only for certain limited purposes. 
During the Employment Period and thereafter, and without in any way
limiting the provisions of Section 1.6(a) above, the Executive will hold
Third Party Information in the strictest confidence and will not disclose to
anyone (other than personnel of the Company or its Subsidiaries who need to
know such information in connection with their work for the Company or its
Subsidiaries) or use, except in connection with his work for the Company or its
Subsidiaries, Third Party Information unless expressly authorized by the Board
in writing.



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(c)           As used in this Agreement, the
term “Confidential Information”
means information that is not generally known to the public and that is used,
developed or obtained by Holdings and its Subsidiaries (including the Company
and its Subsidiaries) and any of the Company’s predecessor entities in
connection with its business, including but not limited to (i) business
development, growth and other strategic business plans, (ii) properties
available for acquisition, financing development or sale, (iii) accounting and
business methods, (iv) services or products and the marketing of such services
and products, (v) fees, costs and pricing structures, (vi) designs, (vii)
analysis, (viii) drawings, photographs and reports, (ix) computer software,
including operating systems, applications and program listings, (x) flow
charts, manuals and documentation, (xi) data bases, (xii) inventions, devices,
new developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (xiii) copyrightable works, (xiv) all
technology and trade secrets, (xv) confidential terms of material agreements
and customer relationships, and (xvi) all similar and related information in
whatever form.  Confidential Information
shall not include any information that has become generally available to the
public prior to the date the Executive proposes to disclose or use such
information or general know-how of the Executive.


1.7           Inventions and Patents.  In the event that the Executive, as part of
his activities on behalf of the Company or any of its Subsidiaries, generates,
authors or contributes to any invention, design, new development, device,
product, method or process (whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable work (whether or not comprising
Confidential Information) or any other form of Confidential Information
relating directly or indirectly to the business of the Company or any of its
Subsidiaries as now or hereinafter conducted (collectively, “Intellectual Property”), the Executive
acknowledges that such Intellectual Property is the sole and exclusive property
of the Company and its Subsidiaries and hereby assigns all right, title and
interest in and to such Intellectual Property to the Company and its
Subsidiaries.  Any copyrightable work
prepared in whole or in part by the Executive will be deemed “a work made for
hire” under Section 201(b) of the 1976 Copyright Act, and the Company and its
Subsidiaries shall own all of the rights comprised in the copyright
therein.  The Executive shall promptly
and fully disclose all Intellectual Property to the Company and shall cooperate
with the Company and its Subsidiaries to protect the Company’s and its
Subsidiaries’ interests in and rights to such Intellectual Property (including,
without limitation, providing reasonable assistance in securing patent
protection and copyright registrations and executing all documents as
reasonably requested by the Company, whether such requests occur prior to or
after termination of the Executive’s employment with the Company).  Anything herein to the contrary
notwithstanding, the obligations of Executive shall be limited to and subject
to the terms and provisions of California Labor Code Section 2870, a copy of
which is attached hereto as Exhibit A.


1.8           Delivery of Materials Upon
Termination of Employment.  As
requested by the Company from time to time and upon the termination of the
Executive’s employment with the Company for any reason, the Executive shall
promptly deliver to the Company all copies and embodiments, in whatever form,
of all Confidential Information, Intellectual Property and property of the
Company and its Subsidiaries in the Executive’s possession or within his
control (including, but not limited to, office keys, access cards, written
records, notes, photographs, 



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manuals, notebooks, documentation, program listings,
flow charts, magnetic media, disks, diskettes, tapes and any other materials
containing any Confidential Information or Intellectual Property) irrespective
of the location or form of such material and, if requested by the Company,
shall provide the Company with written confirmation that all such materials
have been delivered to the Company.


1.9           Non-Compete,
Non-Solicitation.


(a)           The Executive acknowledges and
agrees that the Executive’s services to the Company and its Subsidiaries are
unique in nature and that the Company and its Subsidiaries would be irreparably
damaged if the Executive were to provide similar services to any Person
competing with the Company and its Subsidiaries or engaged in the
Business.  The Executive further
acknowledges that, in the course of his employment with the Company, he will
become familiar with the Company’s and its Subsidiaries’ trade secrets and with
other Confidential Information.  During
the Noncompete Period other than as an employee of the Company, he shall not,
directly or indirectly, whether for himself or for any other Person, permit his
name to be used by or participate in any business or enterprise (including,
without limitation, any division, group or franchise of a larger organization)
that engages or proposes to engage in the Business in the Restricted
Territories.  For purposes of this
Agreement, the term “participate in” shall include, without limitation, having
any direct or indirect interest in any Person, whether as a sole proprietor,
owner, stockholder, partner, member, joint venturer, creditor or otherwise, or
rendering any direct or indirect service or assistance to any Person (whether
as a director, officer, supervisor, employee, agent, consultant or
otherwise).  Nothing herein will prohibit
the Executive from mere passive ownership of not more than five percent (5%) of
the outstanding stock of any class of a publicly held corporation whose stock
is traded on a national securities exchange or in the over-the-counter
market.  As used herein, the phrase “mere
passive ownership” shall include voting or otherwise granting any consents or
approvals required to be obtained from such Person as an owner of stock or
other ownership interests in any entity pursuant to the charter or other
organizational documents of such entity, but shall not include, without
limitation, any involvement in the day-to-day operations of such entity.


(b)           During the Nonsolicitation
Period, the Executive will not directly, or indirectly through another Person,
induce or attempt to induce any customer, supplier, licensee, or other business
relation of the Company or any of its Subsidiaries to cease doing business with
the Company or any of its Subsidiaries, or induce or attempt to induce any
corporate officer, general manager or other employee of the Company or any of
its Subsidiaries to terminate such employee’s employment with the Company or
any of its Subsidiaries, or hire any such person unless such person’s employment
was terminated by the Company or any of its Subsidiaries, or in any way
interfere with the relationship between any such customer, supplier, licensee,
employee or business relation and the Company or any of its Subsidiaries,
including, without limitation, knowingly making any negative statements or
communications concerning the Company or any of its Subsidiaries.  The Executive acknowledges and agrees that
the Company and its Subsidiaries would be irreparably damaged if the Executive
were to breach any of the provisions contained in this Section 1.9(b).


 



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1.10         Enforcement.  If, at the time of enforcement of Section
1.6, 1.7, 1.8 or 1.9, a court holds that the
restrictions stated herein are unreasonable under circumstances then existing,
the Parties agree that, to the extent permitted by applicable law, the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the Noncompete Period, scope or area.  Because the Executive’s services are unique
and because the Executive has access to Confidential Information and Intellectual
Property, the Parties agree that money damages would be an inadequate remedy
for any breach of Section 1.6, 1.7, 1.8 or 1.9.  Therefore, in the event of a breach or
threatened breach of Section 1.6, 1.7, 1.8 or 1.9,
the Company or any of its Subsidiaries or any of their respective successors or
assigns may, in addition to other rights and remedies existing in their favor,
apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security).  The Parties hereby acknowledge and agree that
(a) performance of the services of the Executive hereunder may occur in jurisdictions
other than the jurisdiction whose law the Parties have agreed shall govern the
construction, validity and interpretation of this Agreement, (b) the law of the
State of New York shall govern construction, validity and interpretation of
this Agreement to the fullest extent possible, and (c) Section 1.6, 1.7,
1.8 or 1.9 shall restrict the Executive only to the extent
permitted by applicable law.


1.11         Survival.  Sections 1.6, 1.7, 1.8
and 1.9 will survive and continue in full force in accordance with their
terms notwithstanding any termination of the Employment Period.


1.12         Consideration.  The Executive hereby agrees and acknowledges
that the Equity Grant constitutes good and valuable consideration for the
covenant and obligations incurred by Executive pursuant to Section 1.9.


ARTICLE II

DEFINED TERMS


2.1           Definitions.
For purposes of this Agreement, the following terms will have the following
meanings:


“Acquisition”
means the purchase of the stock of the Company by Holdings, as contemplated by
that certain Stock Purchase Agreement by and among Palace Entertainment, Inc.
the Company and Holdings, dated February 9, 2006.


“Bonus Target”
means for each Fiscal Year the revenue, EBITDA and cash flow target amount
established by the Compensation Committee of the Board not later than March 31,
2007 for the 2007 Fiscal Year and not later than thirty days after the
commencement of each subsequent Fiscal Year during the Term (it being
understood that the Board may, but shall not be obligated to, make adjustments
to adjust for the effect of extraordinary corporate transactions (acquisitions
or dispositions of businesses) during the Fiscal Year and shall be adjusted to
include the aggregate amount of Annual Bonuses and Supplemental Bonuses, if
any, for such Fiscal Year).



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“Business” means the business of owning and
operating Family Entertainment Centers.


“Cause”
means with respect to the Executive one or more of the following:  (i) the commission of a felony or other crime
involving moral turpitude or the commission of any other act or omission
involving dishonesty or fraud with respect to the Company or any of its
Subsidiaries or any of their customers or suppliers, (ii) reporting to work
under the influence of alcohol or illegal drugs, or the use of illegal drugs
(whether or not at the workplace), (iii) substantial and repeated failure to
perform duties as reasonably directed by the Board, (iv) any act or omission
aiding or abetting a competitor, supplier or customer of the Company or any of
its Subsidiaries to the material disadvantage or detriment of the Company and
its Subsidiaries, (v) breach of fiduciary duty, gross negligence or willful
misconduct with respect to the Company or any of its Subsidiaries, or (vi) any
other material breach of this Agreement; provided, however, that if any such
breach is subject to cure, Executive shall be entitled to written notice of and
an opportunity to cure such breach to the Board’s reasonable satisfaction
within 30 calendar days of notice of such breach.


“Disability”
shall have the meaning set forth in a policy or policies of disability
insurance, if any, the Company obtains for the benefit of itself and/or its
employees.  If there is no definition of “disability”
applicable under any such policy or policies, if any, then the Executive shall
be considered disabled due to mental or physical impairment or disability,
despite reasonable accommodations by the Company and its Subsidiaries, to
perform his customary or other comparable duties with the Company or its
Subsidiaries immediately prior to such disability for a period of at least 120
consecutive days or for at least 180 non-consecutive days in any 12-month
period.


“Family
Entertainment Center” means amusement parks, theme parks or similar
facilities that (x) offer water-leisure recreational facilities and other water
attractions and/or (y) offer a broad selection of attractions, including but
not limited to, miniature golf, go kart raceways, batting cages, rides and/or
arcade pavilions.


“Fiscal Year”
means the fiscal year of the Company and its Subsidiaries ended December 31.


“Good Reason”
means the occurrence, without the Executive’s written consent, of one or more
of the following events: (i) the Company reduces the amount of Executive’s Base
Salary or Annual Cash Bonus, (ii) the Company requires that the Executive relocate
his principal place of employment to a site that is more than 50 miles from the
Company’s current headquarters at 4590 MacArthur Boulevard, Newport Beach,
California 92660 or if the Company changes the location of its headquarters
with the consent of Executive to a location that is more than 50 miles from
such location, (iii) the Company materially reduces the Executive’s
responsibilities or (iv) the Company changes Executive’s title or otherwise
materially breaches the terms of this Agreement; provided that no such event
shall constitute Good Reason hereunder unless (a) the Executive shall have
given written notice to the Company of the Executive’s intent to resign for
Good Reason within 60 days after the Executive becomes aware of the occurrence
of any such event and (b) such event or occurrence shall not have been resolved
to the Executive’s reasonable satisfaction within 60 days of the Company’s
receipt of such notice.



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“LLC Agreement”
means the Limited Liability
Company Agreement of Palace Holdings Group, LLC dated April 12, 2006, as
amended from time to time.


“Noncompete Period”
means the Employment Period and 12 months thereafter.


“Nonsolicitation
Period” means the Employment Period and 24 months thereafter.


“Person”
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or the United States of America any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government.


“Restricted
Territories” means the United States of America and its territories
and possessions in which the Company engages in the business as of the
Termination Date.


“Subsidiary”
has the meaning given such term in the LLC Agreement.


“Termination Date”
means the date of the Executive’s termination of employment with the Company.


2.2                                 Other Definitional
Provisions.


(a)           Section references contained
in this Agreement are references to sections in this Agreement, unless
otherwise specified.  Each defined term
used in this Agreement has a comparable meaning when used in its plural or
singular form.  Each gender-specific term
used in this Agreement has a comparable meaning whether used in a masculine,
feminine or gender-neutral form.


(b)           Whenever the term “including”
(whether or not that term is followed by the phrase “but not limited to” or “without
limitation” or words of similar effect) is used in this Agreement in connection
with a listing of items within a particular classification, that listing will
be interpreted to be illustrative only and will not be interpreted as a
limitation on, or an exclusive listing of, the items within that
classification.


ARTICLE III

MISCELLANEOUS TERMS


3.1           Investment.  Within thirty (30) days following the
Effective Date, the Executive shall purchase 500 Class A Units of Palace
Holdings Group, LLC, at the purchase price of $1,000 per unit.  The Executive shall pay the purchase price
for such Class A Units by check or a wire transfer of funds.



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3.2                                 Dispute Resolution.


(a)           Except with respect to
disputes and claims under Section 1.6, 1.7, 1.8 or 1.9
hereof (which may be pursued in any court of competent jurisdiction), each
Party agrees that arbitration, pursuant to the rules of the Federal Mediation
and Conciliation Service (the “FMCS”)
in effect as of the date of commencement of the arbitration (the “FMCS Rules”), shall be the sole and
exclusive method for resolving any claim or dispute (“Claim”) arising out of or relating to the
rights and obligations of the Parties under this Agreement and the employment
of the Executive by the Company (including, without limitation, claims and
disputes regarding employment discrimination, sexual harassment, termination
and discharge), whether such claim arose or the facts on which such Claim is
based occurred prior to or after the execution and delivery of this
Agreement.  The Parties agree that (i)
one arbitrator shall be appointed pursuant to the FMCS Rules to conduct any
such arbitration and (ii) all meetings of the Parties and all hearings with
respect to any such arbitration shall take place in New York, New York, or if
such Claim does not arise out of or include a Claim under Section 1.9,
then such arbitration shall take place in Los Angeles, California.  The Parties further agree that, unless
otherwise determined by the arbitrator, (x) each Party to the arbitration shall
bear its own costs and expenses (including, without limitation, all attorneys’
fees and expenses, except to the extent otherwise required by applicable law)
and (y) all costs and expenses of the arbitration proceeding (such as filing
fees, the arbitrator’s fees, hearing expenses, etc.) shall be borne equally by
the Parties; provided that nothing herein shall be interpreted to preclude the
arbitrator from allocating the costs and expenses of the Parties and of such
proceeding among the Parties in any manner that the arbitrator may lawfully
determine to do so.  The Parties agree
that the judgment, award or other determination of any arbitration under the
FMCS Rules shall be final, conclusive and binding on all of the Parties.  Nothing in this Section 3.2(a) shall
prohibit any Party from instituting litigation to enforce any final judgment,
award or determination of the arbitration. 
Each Party hereby irrevocably submits to the jurisdiction of the United
States District Court for the Southern District of New York, or if such Claim
does not arise out of or include a Claim under Section 1.9, then to the
jurisdiction of the United States District Court for the Central District of
California, and agrees that such court shall be the exclusive forum for the
enforcement of any such final judgment, award or determination of the
arbitration.  Each Party irrevocably
consents to service of process by registered mail or personal service and
waives any objection on the grounds of personal jurisdiction, venue or
inconvenience of the forum.


(b)           Notwithstanding the foregoing,
prior to any Party instituting any arbitration proceeding hereunder to resolve
any Claim, such Party first shall submit the Claim to a mediation proceeding
among the Parties which shall be governed by the prevailing procedures of the
FMCS and shall be conducted in New York, New York, or if such Claim does not
arise out of or include a Claim under Section 1.9, then such mediation
shall be conducted in Los Angeles, California. 
If the Parties have not agreed in writing to a resolution of the Claim
pursuant to the mediation within 45 days after the commencement thereof of if
any Party refuses to participate in the mediation process, then the Claim may
be submitted to arbitration under Section 3.2(a)  



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above.  Unless
otherwise determined by the mediator, each Party shall bear its own costs and
expenses incurred in connection with the mediation, and all costs and expenses
of the mediation proceeding shall be borne equally by the Parties; provided
that nothing herein shall be interpreted to preclude the mediator from
allocating the costs and expenses of the Parties and of such proceeding among
the Parties in any manner that the arbitrator may lawfully determine to do so.


3.3           Notices. Any notice
provided for in this Agreement must be in writing and must be either personally
delivered, mailed by first class mail (postage prepaid and return receipt
requested), sent by reputable overnight courier service (charges prepaid) or
sent by facsimile (voice confirmed) to the recipient at the address or
facsimile number indicated below:


To the Company:


 


4590 MacArthur
Boulevard


Newport Beach,
CA  92660


Telephone:            (949) 797-9721


Telecopy:              (949) 261-1414


Attention:              Chief Executive Officer


 


With copies to:


 


MidOcean Partners,
LP


320 Park Avenue


17th Floor


New York, NY  10022


Telephone:            (212) 497-1400


Telecopy:              (212) 497-1375


Attention:              Tyler Zachem


 


and


 


Morrison Cohen LLP


909 Third Avenue


New York, NY 10022


Telephone:            (212) 735-8716


Telecopy:              (212) 735-8708


Attention:              David A. Scherl, Esq.


 


To the Executive:


 


1282 Audubon Drive


Gastonia, NC 28054


Telephone:            (704) 865-2221


Telecopy:              (866) 436-4407


 



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With a copy to:


 


Robert S. Brown,
Esq.


The Brown Firm
Inc., L.P.A.


2199 Victory
Parkway


Cincinnati, Ohio
45206


Telephone:  (513) 381-2121


Telecopy:    (513) 381-2125


 


or such other address or to the attention of such
other Person as the recipient Party will have specified by prior written notice
to the sending Party.  Any notice under
this Agreement will be deemed to have been given when so delivered or sent or,
if mailed, five days after deposit in the U.S. mail.


3.4           Severability. Whenever
possible, each provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.


3.5           Complete Agreement.  This Agreement, the LLC Agreement, and that
certain Investment Agreement by and among Palace Holdings Group, LLC, a
Delaware limited liability company, and the Investors Listed on Schedule I
thereto, dated April 12, 2006, embody the complete agreement and understanding
among the Parties with regard to the subject matter hereof and supersede and
preempt any prior understandings, agreements or representations by or among the
Parties, written or oral, which may have related to the subject matter hereof
in any way.  To the extent that this
Agreement provides greater benefits to the Executive than available under the
Company’s employee handbook or other corporate policies, then this Agreement
shall prevail.


3.6           Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.


3.7           Assignment.  Without the Executive’s consent, the Company
may not assign its rights and obligations under this Agreement except (i) to a “Successor”
(as defined below) or (ii) to an entity that is formed and controlled by the
Company or any of its Subsidiaries.  This
Agreement is personal to the Executive, and the Executive shall not have the
right to assign the Executive’s interest in this Agreement, any rights under
this Agreement or any duties imposed under this Agreement, nor shall the
Executive have the right to pledge, hypothecate, transfer, assign or otherwise
encumber the Executive’s right to receive any form of compensation hereunder
without the prior written consent of the Board. 
As used in this Section 3.7, “Successor”
shall include any Person that at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets of, or ownership interests in, the Company and its Subsidiaries.



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3.8           Successors and Assigns.  This Agreement is intended to bind and inure to
the benefit of and be enforceable by the Company, the Executive, and their
respective heirs, successors and permitted assigns.


3.9           Choice of Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and construed
in accordance with the domestic laws of the State of New York without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.


3.10         Remedies.  Subject to the provisions of Section 3.2,
each Party will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor.  Nothing herein shall prohibit any
arbitrator or judicial authority from awarding attorneys’ fees or costs to a
prevailing Party in any arbitration or other proceeding to the extent that such
arbitrator or authority may lawfully do so.


3.11         Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement will affect the validity, binding effect or
enforceability of this Agreement.


3.12         Third Party Beneficiaries.  This Agreement will not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.


3.13         The Executive’s
Representations.  The Executive
hereby represents and warrants to the Company that (a) the execution, delivery
and performance of this Agreement by the Executive do not and shall not
conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which the Executive is a
party or by which he is bound including without limitation, that certain
employment agreement between the Executive and MTV Network effective January 1,
2005, a copy of which has been provided to the Company (the “MTVN Agreement”),
(b) the Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other Person other
than the MTVN Agreement, and (c) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding
obligation of the Executive, enforceable in accordance with its terms.


3.14         Amendment to Comply with
Section 409A of the Code.  To the
extent that this Agreement or any part thereof is deemed to be a nonqualified
deferred compensation plan subject to Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”),
and the Treasury Regulations (including proposed regulations) and guidance
promulgated thereunder, (a) the provisions of this Agreement shall be
interpreted in a manner to the maximum extent 



 14
 






 



possible to comply in good faith with Code Section
409A, and (b) the parties hereto agree to amend this Agreement for purposes of
complying with Code Section 409A promptly upon issuance of any Treasury
regulations or guidance thereunder, provided,
that any such amendment shall not materially change the present value of the benefits
payable to the Executive hereunder or otherwise materially adversely affect the
Executive, the Company, or any affiliate of the Company, without the consent of
such party.


[END OF PAGE]

[SIGNATURE PAGE FOLLOWS]



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IN WITNESS WHEREOF, the Parties have executed this
Employment Agreement as of the date first written above.


	
  

  	
  FESTIVAL FUN PARKS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Tyler Zachem

  
	
   

  	
   

  	
  Name: Tyler Zachem

  
	
   

  	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PALACE ENTERTAINMENT HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Tyler Zacham

  
	
   

  	
   

  	
  Name: Tyler Zachem

  
	
   

  	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Alexander J. Weber, Jr.

  
	
   

  	
  ALEXANDER WEBER, JR.

  



 



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