**Exhibit10.1**

**RESTATEDASSIGNMENT AGREEMENT**

Agreement No. 06-0102

This Restated AssignmentAgreement (“Agreement”) is made and entered into in Sacramento, California,between Premier Waterworld Sacramento, Inc. (“Premier”), a Californiacorporation and wholly-owned subsidiary of Premier Parks Operations, Inc., theassignor; Palace Entertainment Holdings, Inc. (“Palace Entertainment”), a Delawarecorporation, the assignee; and California Exposition & State Fair (“CalExpo”), an independent entity of state government.  As a matter of convenience, PalaceEntertainment and Cal Expo may be referred to herein as “the Parties.”

**Recitals**

A.                **Whereas**, Premier and Cal Expo, on or about December 30,1999, entered into an Amended and Restated Lease Agreement (“Premier Agreement”)for the purpose of operating, maintaining, and improving a water park,consisting of water slides, wave pools, water rides, and other attractions, onthe property of Cal Expo.

B.                  **Whereas,** on or about January 26, 2006, pursuant to Section21.1 of the Premier Agreement, Premier notified Cal Expo that it was exercisingits option to terminate the lease effective at the end of the 2006 OperatingSeason.  Premier further notified CalExpo that it would be removing its personal property, including water slidesand other rides, at termination in accordance with Section 8.8.2 of the PremierAgreement.

C.                  **Whereas**, in February 2006, Cal Exponotified Premier that prior to termination, Cal Expo would consider either abuy out under Section 20 or an assignment of Premier’s rights and interests toa qualified third party under Section 24 of the Premier Agreement.

D.                 **Whereas,** in November 2006, after extensive negotiations with interested thirdparties, Premier and Cal Expo have reached agreement that Palace Entertainmentwould be assigned Premier’s rights and interests in the Premier Agreement onthe following terms and conditions: Palace Entertainment shall pay Premier the sum of $950,000.00 for theownership rights to all the remaining personal property belonging to Premier,including water slides and other rides; Cal Expo shall pay to Premier thefinal balance (estimated at $240,000.00) for the purchase of the FRC Premisesas full accord and satisfaction of the “Acquisition Agreement” between Cal Expoand Premier dated June 9, 1999 (a copy of the Acquisition Agreement is attachedas Exhibit 1); Palace Entertainment enters into an agreement with Cal Expo,whereby Palace Entertainment accepts the assignment from Premier on the termsand conditions as amended and restated in this Agreement; and by accepting suchassignment pursuant to Section 20 of the Premier Agreement, Cal Expo andPremier forever release and discharge the other from any and all claims whichmay in any way be connected or based on the Premier Agreement and AcquisitionAgreement.

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E.                   **Whereas,**in connection with the Restated Assignment Agreement, due to many changedcircumstances and to clarify amended terms and conditions, Palace Entertainmentand Cal Expo desire to amend and restate the Premier Agreement such thatthe Restated Assignment Agreement supersedes the Premier Agreement and will bea new and separate agreement.

**Now,therefore**, the Parties agree as follows:

**Termsand Conditions**

1.                    Based on andin accordance with the foregoing recitals, Premier hereby assigns all of itsrights and interests in the Premier Agreement to Palace Entertainment; Cal Expohereby consents to the assignment, and Palace Entertainment hereby accepts theassignment from Premier on the terms and conditions set forth below.

2.                    Premises

A.                Grant ofRights, Definition of Terms:  CalExpo grants to Palace Entertainment the exclusive right to equip, improve,operate and maintain an aquatic park consisting of water slides, wave pools,water rides and attractions, and other related developments and facilities onits premises as described and set forth in Exhibit A hereto.  Although the rights conveyed under thisAgreement, except as stated otherwise, are exclusive year-round, the partiesanticipate that the primary commercial use of the Water Park will be Maythrough September of each year.  Subjectto Cal Expo’s approval, Palace Entertainment may provide programs andevents at other times during the year which do not conflict or compete withother events and programs held at Cal Expo.  Palace Entertainment shall pay the same rentas described in this Agreement from revenues from these programs andevents.  All such property and rights,together with the Water Park Premises, shall be referred to in this Agreementas the “Premises.”

B.                  Warranties:  Cal Expo warrants that it has the power toconsummate the transactions and take the actions contemplated under thisAgreement, including the transfer (or ratification thereof) of the rights underthis Agreement, and warrants the quiet enjoyment of the Water Park to PalaceEntertainment for the purposes set forth in this Agreement, subject only tothose encumbrances and limitations set forth in this Agreement.  Palace Entertainment warrants that it has thepower to consummate the transactions and take the actions contemplated underthis Agreement.

C.                  PremisesTaken “As Is”:  Palace Entertainmentaccepts the Premises in its presently existing condition “as is.”  Except as otherwise described in thisAgreement, Cal Expo shall not be obligated to make any alterations, additionsor betterments thereto.

D.                 Consent toJurisdiction and Venue:  ThisAgreement is to be performed in the County of Sacramento, State ofCalifornia.  Palace Entertainment herebyexpressly agrees and consents to the personal jurisdiction of the Courts of theState of California in the 

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County of Sacramento for any purpose or matterwhatsoever alleged by any petition, complaint, or other pleading by Cal Exporelating to this Agreement.  PalaceEntertainment further consents and agrees that service of any process necessaryin connection with any proceeding alleged to arise out of this Agreement may bemade by Cal Expo on Palace Entertainment by registered mail, postage prepaid,to Palace Entertainment at its main offices in Sacramento, which service ofprocess shall be fully effective in all respects as personal service lawfullymade on Palace Entertainment in the State of California.

3.                    Term:  The term of this Agreement shall commence onDecember 15, 2006, and shall terminate on December 31, 2015, unless it iseither extended or sooner terminated in accordance with the provisions of this Agreement.

A.                Option 1:  Palace Entertainment shall have an option toextend this Agreement for an additional ten (10) years, that is, until December31, 2025, provided that Palace Entertainment meets and satisfies the followinginvestment and performance criteria:  (1)on or before May 30, 2009, Palace Entertainment shall invest $2.5 millionin capital improvements and deferred maintenance as approved by Cal Expo; (2) inaddition to the requirement set forth in (1) above, on or before May 30, 2010,Palace Entertainment shall invest a minimum of $350,000.00 on capital improvementsas approved by Cal Expo; and (3) in addition to the requirements set forthin (1) and (2) above, Palace Entertainment shall invest a minimum of $400,000.00 on capital improvements, on orbefore May 30, 2013, as approved by Cal Expo.  In the event Palace Entertainment opts toinvest more than the $2.5 million minimum requirement set forth in (1) above,any overage shall be applied to the requirements set forth in (2) and (3).  In addition to the investment criteria setforth above in (1), (2) and (3), Palace Entertainment must attain an averageannual gross revenue for 2007 through 2013 (adjusted for inflation based on thewholesale price index) that is greater than $2.8 million.

In order to exercise this option, Palace Entertainment must providewritten notice to Cal Expo no later than May 1, 2014, of its intent toexercise the option; satisfy the investment and performance criteria as setforth in the foregoing paragraph; shall reach agreement with Cal Expo on aschedule of capital improvements and deferred maintenance which must becompleted during this ten-year extension; and not be in default under the termsof this Agreement.  In the event thisAgreement is extended for an additional ten years, it is agreed that this ten-yearextension shall be subject to all the terms and conditions of this Agreement,unless otherwise agreed to in writing by the Parties.

B.                  Option 2:  In the event this Agreement is extendedpursuant to Option 1, Cal Expo, in the exercise of its sole discretion, shallhave an option to extend this Agreement for an additional five (5) years, thatis, until December 31, 2030.  In order toexercise this option, Cal Expo must provide written notice to PalaceEntertainment no later than May 1, 2024, of its intent to exercise thisoption.  In the event this Agreement isextended for an additional five years, it is agreed that this five-yearextension shall be 

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subject to all the terms and conditions of thisAgreement, unless otherwise agreed to in writing by the Parties.  In the event the option is not exercised byCal Expo, the Agreement will expire December 31, 2025.

4.                    Payment byPalace Entertainment to Cal Expo:

A.                Annual Payment:  Palace Entertainment shall pay Cal Expo anamount equal to eight percent (8%) of the total Gross Revenues generated foreach year of this Agreement commencing January 1, 2007, and each yearthereafter.

B.                  Monthly Installments:  In making the Annual Payment set forth in (A)above, Palace Entertainment shall make equal monthly payments calculated fromthe Gross Revenues received from the preceding year of this Agreement.  Palace Entertainment shall make such paymentson or before the tenth day of each month.

C.                  Annual Reportand Reconciliation:  Within ninety(90) days after December 31 of each year of this Agreement, PalaceEntertainment shall furnish to Cal Expo a statement of the Gross Revenuesaudited for the preceding calendar year, certified by a Public Accountant.  In the event that such audit statement showsthat Palace Entertainment’s total monthly payments is less than the requiredAnnual Payment, then Palace Entertainment shall pay to Cal Expo the balance duewithin thirty (30) days after the audit statement is certified by the PublicAccountant.  Alternatively, in the eventthat such audit shows that Palace Entertainment’s total monthly payments exceedthe Annual Payment, then Cal Expo shall refund the excess balance to PalaceEntertainment within thirty (30) days of receipt of the audit statementcertified by the Public Accountant or, if not so refunded, at PalaceEntertainment’s option, shall be offset against the monthly payment(s) next dueand payable by Palace Entertainment.

D.                 Notwithstandingsub-paragraph 4B, for the 2007 calendar year only, Palace Entertainment shallmake monthly payments in the amount of $25,000.00 on the tenth day of eachmonth of 2007.

E.                   Notwithstandingsub-paragraph 4A, for calendar years 2007 and 2008, Cal Expo shall grant PalaceEntertainment a total Annual Payment credit of $200,000.00 to be applied asfollows:  $100,000.00 for calendar year2007 and $100,000.00 for calendar year 2008. This payment credit may be made, at Cal Expo’s option, either in theform of a rent credit or a payment to Palace Entertainment.  In either event, Palace Entertainment shalldeem the two payments as marketing contributions.

F.                   Place ofPayment: All payments shall be made by Palace Entertainment to Cal Expo at1600 Exposition Boulevard, Sacramento, California, or at such other location asshall be designated in writing by Cal Expo.

G.                  Late Payments:  In the event a payment is not made on orbefore the due date herein provided, Palace Entertainment shall pay to Cal Expoa late charge on said unpaid 

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payment at the rate of one and one-half (1 1/2)percent per month from and after the due date thereof until the date ofpayment.  Should there be unusual orextenuating circumstances for not paying said payment on or before the due dateherein provided, Cal Expo in its sole discretion may waive the late charge onthe unpaid payment.

H.                 Computation ofGross Revenues and Definition of Terms: For all purposes under this Agreement, the term “Gross Revenues” shallmean all monies or money equivalents paid or payable to Palace Entertainmentfor sales made or services rendered at or from the Water Park Premisesdescribed on Exhibit A hereto, or from any other source including parkingrevenue received from Cal Expo related directly or indirectly to the Water Parkthrough the implementation of the Agreement, without any deductions, providedthat “Gross Revenues” shall not include any sales taxes or other admissionsand/or amusement taxes imposed by any governmental entities and collected byPalace Entertainment.  “Gross Revenues”shall not include “trade-outs” or other arrangements whereby PalaceEntertainment engages in advertising or promotion of the Water Park in exchangefor non-cash benefits.

5.                    CapitalImprovements:  Palace Entertainmentshall make the following capital improvements:

A.                Prior to May 30,2009, Palace Entertainment shall invest not less than $2.5 million in capitalimprovements and deferred maintenance, adjusted by the Wholesale Price Index,of which $650,000.00 shall be spent, not later than May 30, 2007, on a new attraction.

B.                  In addition tothe requirements of paragraph 5(A) above, Palace Entertainment shall invest aminimum of $350,000.00 in capital improvements prior to May 30, 2010.

C.                  In addition tothe requirements of paragraphs 5(A) and 5(B) above, Palace Entertainment shallinvest a minimum of $400,000.00 in capital improvements prior to May 30, 2013.

D.                 The foregoingcapital improvements shall carry forward if Palace Entertainment invests morethan the required amount in capital improvements prior to December 31, 2009(i.e., the overage will apply toward the 2010 and 2013 target date requirements).

E.                   Should theAgreement be extended in accordance with paragraph 3 of this Agreement, theParties shall agree to a schedule of capital improvements and deferredmaintenance investment during the extension period (2016 through 2025, and 2025through 2030).

F.                   All capitalimprovements purchased by Palace Entertainment from Six Flags, and all capitalimprovements provided under this Agreement, shall become the property ofCal Expo at Cal Expo’s sole and exclusive option upon termination ofthe Agreement for any reason other than Cal Expo’s exercise of its buy-outoption pursuant to paragraph 23 of this Agreement.  Cal Expo, if not exercising its buy-outoption pursuant to paragraph 23, may also require that one or more or all capitalimprovements be removed at Palace Entertainment’s sole expense.

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G.                  For the purposesof this Agreement, the definition of a “capital improvement” shall be any ofthe following:

1)                  A structureand/or a fixture permanently attached to the structure and structural ornonstructural improvements of a permanent nature.

2)                  A structure isan improvement of a permanent nature which is constructed or built.

3)                  A fixture is apermanent attachment to a permanent structure (of a permanent nature structureor fixture) which augments the intended use of the structure.

4)                  Permanent naturemeans that the intent is of an enduring or fixed nature not temporary ortransient.

5)                  Extensiveremodeling and replacement of an existing facility may qualify as a capitalimprovement if the useful life of the facility is extended or its usefulnessincreased.

6.                    Quitclaim Deed:  Upon the termination or sooner cancellationof this Agreement in accordance with the terms hereof, including thecancellation of this Agreement by Cal Expo by virtue of an Event of Defaultdescribed in paragraph 22 below by Palace Entertainment, Palace Entertainment shallexecute and deliver to Cal Expo, within thirty (30) days after such terminationor sooner cancellation (but in no event until Cal Expo has paid the requiredbuy-out price if terminated under paragraph 23 hereof), a Quitclaim Deed assigning,transferring and conveying any rights of Palace Entertainment to the Premises(other than Palace Entertainment’s personal property (including, but notlimited to, water slides and other rides)) arising hereunder, which QuitclaimDeed shall be recorded at the sole cost and expense (including payment of allreal property transfer taxes arising therefrom) of: (a) Cal Expo, ifthe expiration or sooner termination of this Agreement is for any reason otherthan an Event of Default (as defined in paragraph 22) by Palace Entertainment,including but not limited to the exercise by Cal Expo of the its buy-out optionwith respect to the Water Park, set forth in paragraph 23 herein, and assuming Cal Expohas paid the required buy-out price thereunder; or (b) Palace Entertainment, ifthe termination occurs by reason of any Event of Default (defined underparagraph 22) by Palace Entertainment.  The granting of said Quitclaim Deed pursuantto this Section, however, shall not constitute an admission by Palace Entertainmentof any breach or acquiescence in any termination, and shall not prevent orestop Palace Entertainment from pursuing all available remedies at law or inequity.  Should Palace Entertainment failor refuse to deliver said Quitclaim Deed, a written notice by Cal Expo recitingsaid failure shall after ten (10) days from the date of recordation of said noticebe conclusive evidence of such termination against Palace Entertainment and allpersons claiming an interest in the Water Park Premises under this Agreement.

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7.                    Parking andAccess to Premises

A.                Parking:  Cal Expo shall provide convenient and adequateparking areas for customers of Palace Entertainment at all times that PalaceEntertainment is conducting activities at the Water Park in accordance withthis Agreement.  Cal Expo may charge forsuch parking in accordance with the terms of this Agreement.  Cal Expo is not required to provide anexclusive parking area for Palace Entertainment’s customers, but Cal Expo shallnot provide to any other party parking rights that would exclude PalaceEntertainment’s customers from parking areas convenient to the Water Park.  Cal Expo shall provide, at no charge,reasonably convenient parking for employees and service personnel of PalaceEntertainment (which parking need not be as convenient as customer parking) atsuch areas as Cal Expo shall designate and redesignate.  Such parking areas may be changed, at CalExpo’s discretion, during the annual California State Fair (“State Fair”).  Cal Expo shall further provide at no chargeconvenient access to the Water Park for construction equipment, service andsupply vehicles related to Palace Entertainment’s activities pursuant to this Agreement.

1)                  Subject to theterms hereof, parking shall be under control of Cal Expo.  Cal Expo expressly reserves the right tocharge for parking provided to customers of the Water Park.  Any fees charged by Cal Expo to PalaceEntertainment’s customers shall not exceed stated public parking fees duringthe State Fair (excluding for this purpose Cal Expo’s car pooling rates or anyother parking promotions).

2)                  Except duringthe period of the annual State Fair, Cal Expo shall pay to Palace Entertainmentone-half (1/2) of the net proceeds of any parking fees charged to PalaceEntertainment’s customers. Such payments shall be made to Palace Entertainmentno later than twenty (20) days following the end of each month.

3)                  For purposes ofthis paragraph 7, “net proceeds” shall be determined by deducting from grossparking revenues paid by Palace Entertainment’s customers, the expenses of CalExpo reasonably incurred for traffic control and fee collection related tothose customers.  In the event that CalExpo should conclude it cannot practically determine actual gross parkingrevenues from Palace Entertainment’s customers, Cal Expo, upon writtennotification to and consultation with Palace Entertainment, shall establish areasonable formula for estimating such gross parking revenues based upon otherascertainable indicia.  In the event thatsuch expenses exceed the total gross parking revenues Cal Expo has collectedfrom Palace Entertainment’s customers, Palace Entertainment shall reimburseCal Expo for such excess expenses upon Palace Entertainment’s receipt ofwritten verification thereof.

B.                  “Drop Off”Area:  Except during the period ofthe State Fair, Cal Expo shall exercise its best efforts to provide a separateautomobile “drop-off” area at points convenient to the pedestrian accessthrough the State Fair site to the Water Park, and shall permit customers ofPalace Entertainment access to these areas at no charge.  The initial automobile drop-off area for the WaterPark Premises shall be at the point closest to the Water Park Premises entranceon the turnaround at Cal Expo’s Main Gate.

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C.                  PedestrianAccess:  Cal Expo shall continue toprovide: (1) pedestrian access through the Cal Expo grounds to the Premises forcustomers, employees, service personnel, and agents of Palace Entertainment, and(2) access to the Premises over the back service road for Palace Entertainment andits agents, employees, vendors and contractors, all of which shall be relatedto Palace Entertainment’s activities pursuant to this Agreement.  The initial pedestrian access for customers ofthe Water Park shall be through Cal Expo’s Main Gate and along Palm Avenueto the Water Park.  Should Cal Expo makechanges in the physical layout of the State Fair site, it may redesignatecustomer pedestrian access for Palace Entertainment, provided Cal Expo shall exercisebest efforts to insure that such redesignated access shall be equivalent inconvenience and quality of appearance to the initial access.

D.                 Gates andParking Lots:  All references toparticular gates and parking lots in this Agreement shall refer to theparticular gates and parking lots as they are designated on the date of thisAgreement.

8.                    ReservedRights of Cal Expo

A.                Cal Expo’sControl Over Balance of Grounds: Except as limited in this Agreement, Cal Expo expressly reservesthe right to grant, during the term hereof or any extension, the right tooperate concessions on the State Fair site other than the Premises including,but not limited to, concessions for food and beverage, souvenirs, novelties,crafts, commercial items and other items and services provided at fairs,expositions, or other interim events on the Cal Expo grounds.

B.                  Cal Expo’sRight to Levy Charges

1)                  During theperiod of the State Fair, Cal Expo may levy a charge for admission to the StateFair site, and, notwithstanding any other provision of this Agreement, suchcharge shall be applicable to all of Palace Entertainment’s customers.

2)                  During periodsother than the State Fair, Cal Expo may, from time to time, in addition to anycharge for parking, levy a separate charge for admission to portions of the Cal Expogrounds, other than the Premises pedestrian access areas, drop off areas andparking areas provided under this Agreement, and such charge may apply to PalaceEntertainment’s customers, employees and service personnel, provided that suchcharge shall not be levied for the sole privilege of access to the Premises.

C.                  Review ofItems Sold:  Except as limited inthis Agreement, Cal Expo reserves the right to prohibit the sale or rental ofany item which it reasonably deems objectionable from the standpoint of taste,quality, or compatibility with Cal Expo’s activities, but shall not 

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exercise this right for the purpose of controlling theeconomic return to Palace Entertainment or to protect exclusive licensing orsimilar arrangements between Cal Expo and others.  Palace Entertainment, upon written request of Cal Expo,shall submit items for approval within a reasonable time prior to proposed saleor rental.  Cal Expo shall respondto requests for approval within five (5) days of receipt of written request forapproval.

D.                 Cal Expo’sRight to Make Improvements:  Cal Expoexpressly reserves the right to inspect, investigate, survey, construct,reconstruct, replace, repair, maintain, and operate water lines, sewer lines,telephone lines, electrical power lines together with appurtenant facilitiesalong the route of such lines and facilities existing throughout the Premises,and to authorize others to do so as necessary as determined by Cal Expo, forthe administrative management and development of the Cal Expo grounds.  Palace Entertainment will be given reasonablenotice when such work may become necessary and shall adjust its operations insuch manner that Cal Expo may proceed expeditiously.  Cal Expo shall not exercise this right insuch a way as to unreasonably interfere substantially with Palace Entertainment’soperations or customer access to the Water Park or in such a way as tounreasonably detract from the appearance of the Water Park or unreasonablydeter or discourage patronage of the Water Park.

E.                   Security:  Palace Entertainment will be allowed toprovide limited security staff to work with the Cal Expo Police Departmentto ensure the safety of the park and the guests.  Nothing contained in this Agreement shall beconstrued to limit Cal Expo’s authority to determine minimum levels of securityreasonably necessary to protect public health and safety, including assigning apolice officer(s) and security guards during operating hours as determined bythe Cal Expo Chief of Police.  PalaceEntertainment agrees to pay Cal Expo its reimbursable rate for such securityprovided by Cal Expo at the Water Park Premises in accordance with PalaceEntertainment’s request, including the costs and expenses actually incurred by CalExpo in connection with any lawful arrests made in furtherance of providingsuch security, including requisite time spent at bookings and courtappearances.  Cal Expo assumes noresponsibility for any loss or damage to the property of Palace Entertainmentas a result of  Palace Entertainment’sdecisions regarding security at the Water Park.

9.                    SpecialDuties of Cal Expo

A.                Quality ofSupport Services, Documentation of Costs: Parking services, security services and any other support service now orlater required of Cal Expo under this Agreement shall be of a reasonablecommercial standard as measured by the standards of other facilities andoperations comparable to those of Palace Entertainment under this Agreement.  Cal Expo shall provide to PalaceEntertainment, at reasonable times and upon reasonable notice, records of costsand receipts of parking operations and reasonable documentation supportingactual costs of security operations or other reimbursable items which supportthe cost reimbursement claims and profit share determinations made by Cal Expo.

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B.                  Restrictionon Commercial Activities in Certain Areas:

1)                  Cal Expo shallnot permit or conduct any sales, concessions, promotions or other commercialuse of the parking areas which are directed toward or substantially affect PalaceEntertainment’s customers, nor adversely affect the attractiveness of PalaceEntertainment’s goods or services to such customers.

2)                  Except during theperiod of the State Fair, Cal Expo shall not permit or conduct any sales,concessions, promotions or other commercial use of the pedestrian access areas providedfor Palace Entertainment’s customers except during periods that othercontractors are sharing that pedestrian access for other activities on the Cal Expogrounds, and during these periods such activities shall be limited to thosedirectly related to such other use, and shall not be directed primarily at PalaceEntertainment’s customers or interfere with their access to the Premises.

10.              Rights of PalaceEntertainment

A.                PalaceEntertainment Activities

1)                  PermittedActivities:  Unless otherwise authorizedby Cal Expo, Palace Entertainment may use the Water Park Premises forcommercial purposes only as follows: all activities normally associated withaquatic park and family oriented entertainment facilities, including, withoutlimitation, various water-oriented entertainments and rides, games, competitions,promotions, concessions, musical, dramatic or other stage shows or similar presentations,and may use the remainder of the Premises for purposes ancillary or incidental thereto(including but not limited to ingress and egress) and otherwise as permitted inthis Agreement.

2)                  In addition tothe obligation set forth in paragraph 15, Palace Entertainment agrees that inthe event of any litigation or claim of damages for copyright infringement orviolation by Palace Entertainment, its agents or licensees, arising from itsconducting or licensing musical, cinematic, dramatic or other similar shows atthe Water Park, Palace Entertainment will hold Cal Expo harmless and PalaceEntertainment will indemnify and defend Cal Expo in the event of any suchaction for or claim of infringement or violation of copyright by PalaceEntertainment, its agents and licensees.

3)                  ExclusiveCommercial Rights on Designated Premises:

a)                   The rightsconveyed under this Agreement include the exclusive right to commercial use ofthe Water Park Premises, except as limited by this Agreement.

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b)                  PalaceEntertainment shall have the sole and exclusive right to enter into concession,licensing, promotion or sponsorship agreements or exclusive use arrangements relatingto the Water Park (or any portion thereof), provided that any privilegesgranted to others by these agreements, including but not limited to signage,public address announcements, distribution of any material (including but notlimited to coupons, fliers and product samples) and access to the Premises forhospitality purposes shall be directed to Palace Entertainment’s customers andshall not be visible to, audible to, or designed to impact any persons otherthan Palace Entertainment’s customers, and shall not be directed toward anyother persons on the Cal Expo grounds or the general public without priorwritten approval of Cal Expo.

c)                   Cal Expo recognizesthat Palace Entertainment does not have complete control over ambient noise orincidental visibility; while the volume of public address announcements will bemodulated to the level necessary to be audible to Water Park patrons, it ispossible that these announcements may be audible outside the Water Park.  Palace Entertainment agrees to abide by the Cityof Sacramento noise control ordinance, Chapter 66 (commencing with Section66.101) of the Sacramento City Code, adopted by the City of Sacramento and ineffect on December 1, 1983.  Amendmentsto the ordinance made after December 1, 1983, are not directly applicable tothe California Exposition and State Fair.

4)                  PalaceEntertainment’s Right to Levy Charges:

a)                   PalaceEntertainment may charge fees, rates or prices as follows:  (1) for the initial admission to theWater Park (except as may be limited by this Agreement for the period of theState Fair); (2) for rides on amusement facilities; (3) for use ofall other facilities operated by Palace Entertainment upon the Premises which areauthorized by Cal Expo in accordance with this Agreement; (4) for sales offood and beverages, goods, services and other concession items on the Premises;and (5) for use of the Premises by concessionaires, licensees, and otherthird parties otherwise authorized by this Agreement.

b)                  Palace Entertainment’sfees, rates or prices shall be at a competitive level with similar itemsthroughout the Cal Expo grounds.  PalaceEntertainment agrees to submit price lists to Cal Expo for review.  If Cal Expo expresses concern over pricescharged, the parties will cooperate to mutually agree on appropriate fees.  If no resolution can be reached, the partieswill proceed with dispute resolution as described in paragraph 18 of thisAgreement.

B.                  Control ofTicket Sales:  Except during the periodof the State Fair, Palace Entertainment shall operate ticket sales for itsoperations.  Cal Expo and PalaceEntertainment shall, from time to time, agree upon appropriate locations forticket sale 

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outlets on the Cal Expo grounds.  Palace Entertainment will follow reasonablerevenue control procedures approved by Cal Expo to monitor revenues.  Cal Expo shall have reasonable access to theticket sale operations to review records of receipts and verify accuracy of theoperations themselves.  Cal Expo may, atPalace Entertainment’s expense, retain personnel to conduct such review andverification, provided that Palace Entertainment’s obligations to compensate CalExpo for the costs of such activities shall not exceed One Thousand Dollars($1,000.00) in any one year.

C.                  IdentifyingSigns:

1)                  Water ParkSign:  Palace Entertainment has anidentifying sign on the existing pylon at the main entrance to Cal Expo,identifying the Water Park.  Cal Exposhall have the right to review and approve any replacements to this signdesired to be made by Palace Entertainment, at its own cost and discretion,including but not limited to location, size, design, content, method ofattachment (if any), and materials used to manufacture the sign; provided, however,Cal Expo hereby acknowledges and consents to any signs existing as of the datehereof..

2)                  Other Signs:  Palace Entertainment, subject to the solediscretion of Cal Expo, and on terms mutually agreed upon by the parties,including reasonable charges levied by Cal Expo for such rights, maylocate other identifying or directional signs at other points on the Cal Expogrounds.

3)                  Approval:  Cal Expo shall not unreasonably withholdapproval of any signs proposed by Palace Entertainment pursuant to this paragraph10(C).  In evaluating any signs proposedby Palace Entertainment, Cal Expo shall use the same standards applied by Cal Expoto its own signs in the area for which the sign is proposed, or, if Cal Expohas no signs in such area, in comparable areas of the Cal Expo grounds.  Palace Entertainment shall have the right tomaintain the current entry signage at the pedestrian entrance of the Water Park,or replacement signage of equivalent quality, size, readability and visibility.

D.                 Promotion andAdvertising:  Palace Entertainment shallhave sole control over advertising and promotion of its facilities andattractions, provided that, without further consent of Cal Expo, PalaceEntertainment shall have the right to use the names “Cal Expo”, “StateFair” or similar terms only for purposes of identifying the location of itsfacilities.  Cal Expo, in its sole discretion,may provide to Palace Entertainment the right to advertise or promote, on otherportions of the Cal Expo grounds, its facilities and activities on thePremises, and Cal Expo may levy a separate charge for such right.

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11.              Duties of PalaceEntertainment

A.                Quality ofOperation

1)                  PalaceEntertainment shall operate the Water Park for a commercially reasonable periodeach year, including during the State Fair.  The operations shall be of first class qualityin all respects which is comparable to similar operations of PalaceEntertainment.  Palace Entertainment shalldiligently pursue a promotional program to increase the use of its services andfacilities.

2)                  PalaceEntertainment shall contract continuously for the personal services of anexpert resident manager of the Water Park (the “Manager”).

3)                  PalaceEntertainment shall establish and schedule hours of operation pursuant tooperating plans that will maximize economic return from operations in PalaceEntertainment’s sole business judgment.  PalaceEntertainment shall prepare and submit to Cal Expo a proposed schedule ofoperating hours.

B.                  PalaceEntertainment’s Employees:

1)                  PalaceEntertainment agrees that at all times its employees shall be clean inappearance and courteous in manner and shall be fully instructed and trained sothat the public and patrons at Cal Expo shall be treated and served with everyreasonable consideration and courtesy.  If,in the reasonable opinion of Cal Expo, any of Palace Entertainment’s employeesfail to meet reasonably such standards then upon written request of Cal Expo settingforth in detail the reasons for such request, Palace Entertainment shallforthwith cause such employee to meet such standards or discontinue theemployment of any such employee or employees at the Water Park.

2)                  PalaceEntertainment’s employees engaged where food and beverage is sold shall complywith all applicable federal, state, city and county sanitary regulations.

C.                  Expenditureson Advertising and Promotion:

1)                  PalaceEntertainment will expend annually on advertising and promotion of the WaterPark, as a minimum, eight percent (8%) of annual gross revenues.

a)                   For purposes ofthis requirement, monies expended by or on behalf of Palace Entertainment foradvertising and other forms of promotion may be taken into account, so long asthe expenditures are made for the primary purpose of promoting the Water Parkand activities conducted thereat by Palace Entertainment, but there shall notbe taken into account the discounting of tickets or in-kind promotions.

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b)                  If PalaceEntertainment fails to make the required expenditures on advertising andpromotion in any year, Palace Entertainment shall pay Cal Expo the amount ofthe shortfall.

2)                  Nothing in thisparagraph 11(C) shall limit the discretion of Palace Entertainment to determinethe method and amount of advertising and promotion expenditures so long asPalace Entertainment complies with the minimum expenditure requirements setforth above.

D.                 Expenditureson Capital Improvements:  PalaceEntertainment shall make new capital improvements on the Water Park Premises asoutlined in paragraph 5 of this Agreement.

1)                  PalaceEntertainment shall annually prepare or revise and submit to Cal Expo a currentCapital Improvements Plan (sometimes referred to herein as the “Plan”) thatidentifies contemplated capital improvements, including any substantial changesor alterations in any existing improvements, during the next following fiveyears.  Except as provided in thisAgreement, Palace Entertainment shall not be required to carry out suchimprovements, but Palace Entertainment shall not carry out any improvementsunless those improvements are set forth in the Plan.

2)                  Cal Expo mayobject to the inclusion of any contemplated capital improvement in the Plan ifthe improvement is materially inconsistent with appropriate standards ofappearance or safety, as measured by the standards applied in other similarfacilities or on the balance of the Cal Expo grounds.  Cal Expo shall, within forty-five (45) daysof receipt of the Plan, notify Palace Entertainment in writing of suchobjections.  Failure of Cal Expo to makesuch objection shall be deemed a waiver of Cal Expo’s right to object to theproposed capital improvement in concept, but shall not waive its right to finalreview and approval of the plans and specifications for such improvement as setforth in this Agreement.  Cal Expo’srefusal to accept a designated capital improvement as part of the Plan shallnot reduce Palace Entertainment’s obligations to provide capital improvementsas set forth in this Agreement.  Cal Expo’sright to withhold consent on the basis of incompatibility with the balance ofthe Cal Expo grounds is intended to insure reasonable compatibility taking intoaccount not only the interests of Cal Expo in the rest of the Cal Expogrounds, but the purposes of this Agreement to establish a commerciallysuccessful Water Park for the duration of this Agreement.  Nothing contained in this provisionauthorizes Cal Expo to reject improvements that are reasonablyfunctionally appropriate for the uses permitted to Palace Entertainment underthis Agreement, although the provision does authorize Cal Expo to imposereasonable requirements with respect to the design and appearance of suchimprovements based upon the need for compatibility with the balance of the Cal Expogrounds.

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3)                  If PalaceEntertainment fails to make the required expenditures on capital improvementsin any year, Palace Entertainment shall notify Cal Expo of said failure within30 days after the completion of that year and submit a written plan to CalExpo, for Cal Expo’s written approval, showing increased expenditures for theWater Park in the following year of 110 percent of the amount of the shortfall. Cal Expo may, in its solediscretion, agree in writing to alternative methods to resolve any suchshortfalls.

4)                  Within ninety(90) days of submission of a Capital Improvements Plan first containing aplanned improvement, Cal Expo shall notify Palace Entertainment in writing ifCal Expo concludes that any contemplated improvement is not a true capitalimprovement that can be credited toward Palace Entertainment’s expenditureobligations under this provision.

5)                  Except as setforth in this paragraph 11(D), the timing of any capital improvements shall beentirely within the discretion of Palace Entertainment.

E.                   ChargesDuring State Fair Period:  PalaceEntertainment and Cal Expo will agree during the period of the State Fair to aschedule of attractions, entertainment, and admission pricing that will beoffered on the Water Park Premises during that period.

F.                   Non-DiscriminationClause:  During the performance ofthis Agreement, Palace Entertainment and its subcontractor*s*shall not unlawfully discriminate, harass, or allow harassment against anyemployee or applicant for employment because of sex, race, color, ancestry,religious creed, national origin, physical disability (including HIV and AIDS),mental disability, medical condition (cancer), age (over 40*),*marital status, and**denial offamily care leave.  Palace Entertainmentand subcontractor*s*shall insure that theevaluation and treatment of their employees and applicants for employment arefree from such discrimination and harassment. Palace Entertainment and subcontractors shall comply with the provision*s* of the Fair Employment and Housing Act (Gov. Code §12990(a-f) et seq.) and the applicable regulations promulgated thereunder (California**Code of Regulations, Title 2, Section 7285 et seq.).  The applicable regulations of the FairEmployment and Housing Commission implementing Government Code Section**12990 (a-f), set forth in Chapter 5 of Division 4 of Title2 of the California Code of**Regulations,**are incorporated into this Agreement by reference and madea part hereof as if set forth in full. Palace Entertainment and its subcontractor*s*shall give written notice of their obligations under this clause to labororganizations with which they have a collective bargaining or other agreement.  Palace Entertainment shall include thenondiscrimination and compliance provisions of this clause in all subcontractsto perform work under this Agreement.

G.                  AmericansWith Disabilities Act:  PalaceEntertainment, by signing this Agreement, assures Cal Expo that it, PalaceEntertainment, and each of its subcontractors, vendors, exhibitors, promoters,agents, and employees, if any, comply with the Americans With Disabilities Act(“ADA”) of 1990 (42 U.S.C. 12101 et. seq.) and California Disability

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Access statutes including, but not limited to, theUnruh Civil Rights Act (Cal. Civ. Code §51 et. seq.), the CaliforniaDisabled Persons Act (Cal. Civ. Code §54 et. seq.), and all relevant provisionsof the Health and Safety and Business and Professions Codes, as well as allapplicable regulations and guidelines issued pursuant to the ADA, namely theAmericans With Disabilities Act Accessibility Guidelines (“ADAAAG”) and allapplicable regulations and guidelines issued pursuant to California lawincluding Title 24 of California’s Building Code.  Failure to comply may subject PalaceEntertainment to civil liability and damages. Palace Entertainment further agrees that this covenant to comply withstate and federal disability access requirements continues for the duration ofthe Agreement.

H.                 Acknowledgementof Cal Expo’s Title, Acquiescence in Reversion to Cal Expo:

1)                  PalaceEntertainment hereby acknowledges the fee title of Cal Expo in and to the WaterPark Premises, including real property improvements existing thereon but excludingPalace Entertainment’s personal property (including, but not limited to,waters1ides and other rides), and hereby covenants and agrees never to contestsaid title.

2)                  At the terminationof this Agreement or in the event of an Event of Default by PalaceEntertainment and cancellation of the Agreement by Cal Expo as a resultthereof, other than if Cal Expo exercises its buy-out provision under paragraph23 of this Agreement, title to the facilities and improvements constructed by thePalace Entertainment and those purchased by Palace Entertainment from Six Flagsin accordance with the terms of this Agreement and any fixtures orappurtenances in connection therewith reverts to Cal Expo.  Within thirty (30) days of such termination, PalaceEntertainment shall remove any of its moveable personal property located on theWater Park Premises.

I.                      No Liens:

1)                  During the term providedfor in this Agreement, subject to the terms hereof, Palace Entertainment (includingany of its contractors or concessionaires), will not in any way encumber orcloud its title to all or any portion of the Water Park Premises real property,or any improvements to it, and will promptly pay and discharge any and alldebts contracted by it in reference thereto for labor, material, or services,or anything connected with or used by it upon the Premises to the end that nosuch liens shall attach unless being contested by or on behalf of PalaceEntertainment in accordance with paragraph 11(I)(2).

2)                  Cal Expo shallhave the right to post such notices as it may desire in order to protect itsinterest in the Water Park Premises, and any portions thereof, against liens.  If, nevertheless, any such lien shall berecorded and Palace Entertainment, within sixty (60) days after notice from CalExpo shall fail to pay, settle, or otherwise release such lien, Cal Expo maypay or otherwise dispose of said lien, or 

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defend, settle, or compromise any suit brought toforeclose the same, in its sole discretion, and all amounts so paid by it orany loss sustained by Cal Expo on that account, including a reasonable amountfor its reasonable attorneys’ fees, shall be repaid to Cal Expo by PalaceEntertainment and shall be in addition to any other payments by way of rental,or otherwise, required under the terms of this Agreement, provided that, if PalaceEntertainment elects to contest the lien, Palace Entertainment may postpone Cal Expo’spayment of the lien by (a) making a deposit in escrow with a California bank ortrust company of a sum sufficient to satisfy such lien in full, or (b) postinga performance bond with a reputable California licensed surety assuring paymentof the claims secured by the lien in the event that such claim proves valid.  In the event Cal Expo does pay such a lien inaccordance with its rights under this Paragraph, Palace Entertainment’s failureto repay any such sum to Cal Expo within thirty (30) days of when Cal Expo has maileda bill therefor to Palace Entertainment shall constitute a breach of thisAgreement.

J.                     Permits:  Palace Entertainment shall at all times abideby and comply with all applicable federal, state, and local laws and at alltimes shall have in good standing necessary licenses or permits to conduct itsoperation on the Cal Expo grounds.

12.              Conduct ofCapital Improvements:

A.                Submission ofPlans and Specifications:  At least forty-five(45) days prior to undertaking any planned capital improvement, PalaceEntertainment shall submit to Cal Expo plans and specifications for suchimprovement, prepared or approved by professional engineer or architectlicensed by the State of California, together with a proposed construction andinspection schedule.  PalaceEntertainment shall also submit an equipment schedule, including catalog cuts,for approval.  Cal Expo may examine thesubmitted materials to ascertain:

1)                  That theproposed improvement is consistent with the improvement described in theCapital Improvement Plan or otherwise consistent with the standards by which Cal Expohas reviewed and approved the Plan.

2)                  That theproposed construction activities and schedule are consistent with Cal Expo’splanned activities on the balance of the Cal Expo grounds

B.                  Cal ExpoComment on Plans and Specifications: If Cal Expo disapproves any drawings, plans or specifications, PalaceEntertainment shall submit necessary modifications and revisions.  Cal Expo shall give approval or specifychanges within fifteen (15) days of receipt of such working drawings, plans andspecifications, and if Cal Expo fails to so approve or specify change, thenapproval is deemed to be given at the end of the I5-day period.

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C.                  Scheduling ofCapital Improvements:  Cal Expo, inits reasonable discretion, may require phasing or rescheduling construction ofcapital improvements to prevent conflict with the annual State Fair and otheruses of the Cal Expo grounds.

D.                 Constructionin Conformance with Plans:  The designand construction of each capital improvement will conform to the workingdrawings, plans, specifications and inspection schedule approved by Cal Expo.No substantial changes or alterations shall be made without prior writtenapproval of Cal Expo.  Time forcompletion may be extended for a reasonable period due to factors beyond thereasonable control of Palace Entertainment, such as fires, riots, floods,earthquakes, wars, civil disturbances, major labor disturbances, acts of God orlaws.  Upon completion, PalaceEntertainment shall file a Notice of Completion of Construction with Cal Expo.

E.                   ProfessionalReview:  Palace Entertainment shallutilize the services of an architect or engineer and contractor all licensed bythe State of California, for the construction of said capital improvements.  Copies of the agreement between PalaceEntertainment and its architect or engineer and its contractor, and allinspection reports, shall be furnished to and consented to in writing by CalExpo.  The architect or engineer’sservices shall include the preparation or approval of working drawings,detailed specifications, estimates of cost of construction, supervision, stage inspection. Upon completion of construction, PalaceEntertainment shall provide certification by its architect or engineer that theproject to be in substantial accordance with the original plans andspecifications.  Cal Expo shall designatea member of its engineering staff to monitor and inspect the progress of theconstruction at no cost to Palace Entertainment.

F.                   Verificationof Costs:

1)                  Within ten (10)days of filing such Notice of Completion with Cal Expo, Palace Entertainment willsubmit a verified cost statement accompanied by substantiating invoices andbills for all direct out-of-pocket expenses incurred in the construction of acapital improvement that it wishes to include in partial satisfaction of itscapital improvement obligations under this Agreement.  These costs shall include the following:  costs of all permits, fees, and licenses; theaggregate amount for the furnishing of labor, materials and tools, financingand related costs; and the cost of any and all professional fees, such asarchitectural and engineering services, directly related to the projectdescribed in such Notice of Completion.

2)                  After examinationby Cal Expo of both construction and equipment cost statements, Cal Expo willestablish the cost of the constructed capital improvements and the equipment inconnection therewith.

3)                  In the event thecost statements are not filed by Palace Entertainment within the ten (10) dayperiod above stated, Cal Expo shall thereupon estimate the cost of either orboth cost statements, if necessary, and such estimate or estimates will becomefinal within ten (10) days after notice thereof to Palace Entertainment.

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4)                  In the event ofa discrepancy or dispute between Cal Expo and Palace Entertainment as to the statementof construction costs or the statement of equipment costs, which discrepancy ordispute cannot be reconciled between Cal Expo and Palace Entertainment, thecost statement or statements shall be submitted to an independent auditorselected by mutual agreement of the parties.  It is agreed that the decision of theindependent auditor shall be final and that the costs of said audit shall beborne equally by Cal Expo and Palace Entertainment.

13.              Records, Reportsand Audits:

A.                Maintenance andDisclosure of Records:  PalaceEntertainment shall keep true and accurate books and records showing all of itsbusiness transactions concerning its operations on the Premises in separaterecords of account in a manner acceptable to Cal Expo and Cal Expo shallhave the right through its representative, and at all reasonable times, toinspect such books and records including State of California sales tax returnand other amusement and/or admissions tax records.  Palace Entertainment hereby agrees that allsuch records and instruments are available to Cal Expo.

B.                  StatementUpon Termination:  In the event thisAgreement is terminated, Palace Entertainment shall submit to Cal Expo, withinninety (90) days after such termination, a gross receipts statement for theperiod of operations not previously reported, certified by a Public Accountantor Certified Public Accountant.  Cal Expofurther reserves the right to examine all such books and records at any timeduring the one (1) year period following the termination of this Agreement.

C.                  Cash RegisterEquipment:  Palace Entertainment agreesthat as part of its record-keeping activity it shall, at its own cost andexpense, install and maintain such cash register equipment as may be deemednecessary by Cal Expo.  Such cashregister equipment shall contain a continuous registering tape or other vehiclefor providing an audit trail acceptable to Cal Expo for the accuraterecording of gross receipts.

14.              Security, Letterof Credit and Bonds:

A.                SecurityRequirement:  Pursuant to thatcertain Agreement for Deposit of Funds to Secure Performance by PremierWaterworld Sacramento Inc. between Cal Expo and Palace Entertainment (the “EscrowAgreement”), Palace Entertainment shall have deposited with Cal Expo theamount of Two Hundred Thousand Dollars ($200,000) (the “Security Deposit” or “EscrowFunds”) as security for the faithful and continuing performance by PalaceEntertainment of all the terms and conditions of this Agreement during theentire term of this Agreement, including but not restricted to the operationand maintenance of the facilities constituting the Water Park as well as anyadditional future developments by Palace Entertainment, and the payment of allrent, fees, taxes or other charges.  Inthe event that Palace Entertainment fails to remedy any Event of Default in theterms of this Agreement ninety (90) days from the receipt by Palace 

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Entertainment of written notice by Cal Expo,Cal Expo may terminate the Agreement and take possession of the Water ParkPremises and seek redress from the Escrow Funds, and, whether or not it does somay pursue other remedies for such breach available at law or equity.

B.                  BondingRequirement:  Prior to thecommencement of construction of any capital improvement or deferred maintenanceitem with a cost in excess of One Hundred Thousand Dollars ($100,000), PalaceEntertainment shall furnish to Cal Expo a Payment Bond of a suretycorporation licensed to transact business by the State of California and in aform satisfactory to Cal Expo, with the persons selected by PalaceEntertainment to construct such capital improvements in accordance with thisAgreement to be named as principals, in a sum not less than fifty percent (50%)of the total contract cost of the construction of the said improvement,guaranteeing the payment for all materials, provisions, provender, supplies andequipment used in, upon, for or about the performances of said constructionwork or labor done thereon of any kind whatsoever and protecting Cal Expo fromany and all liability, losses or damages, arising therefrom.

15.              Hold HarmlessAgreement:

A.                Waiver ofContribution Right:  PalaceEntertainment hereby waives all claims and recourse against Cal Expo includingthe right to contribution for loss or damage to person or property resultingfrom any activities on the Water Park Premises, except for claims arising from thesole negligence of Cal Expo, its officers, agents or employees, and claimsarising out of conditions or occurrences with respect to adjacent areasexisting or occurring on or prior to the date of the Premier Agreement, whichconditions or occurrences do not comply with or may give rise to liabilityunder regulations of any governmental authority, and claims arising under or byvirtue of the Premier Agreement.

B.                  Indemnificationand Hold Harmless:

1)                  PalaceEntertainment shall indemnify, hold harmless and defend Cal Expo and the Stateof California, its officers, agents and employees against any and all claims,suits, actions of every name, kind and description, brought forth from, or onaccount of, damage to property or injuries to or death of any person, includingbut not limited to workers or the public, resulting from any activities on thePremises, except for (1) claims arising out of the sole negligence of Cal Expoand the State of California, its officers, agents or employees, and (2) claimsarising out of conditions or occurrences with respect to the Premises andadjacent areas occurring or existing prior to the date of this Agreement, whichconditions or occurrences do not comply with, or may result in liability underthe environmental laws or regulations of any governmental authority.

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2)                  Cal Expo shallindemnify, hold harmless, and defend Palace Entertainment, its officers, agentsand employees against any and all claims, suits, actions of every name, kindand description, brought forth from, or on account of, damage to property orinjuries to or death of any person, including but not limited to workers andthe public, arising out of (1) the sole negligence of Cal Expo, its officers,agents or employees, or (2) any conditions or occurrences with respect to thePremises and adjacent areas existing or occurring prior to the date of thisAgreement, which conditions or occurrences do not comply with, or may result inliability under the environmental laws or regulations of any governmentalauthority.

3)                  PalaceEntertainment hereby waives all claims and recourse against Cal Expo and theState of California including the right to contribution for loss or damage topersons or property arising from, growing out of, or in any way connected withor incident to this Agreement.  The dutyof Palace Entertainment to indemnify and save harmless includes the duties todefend as set forth in section 2778 of the Civil Code.

4)                  PalaceEntertainment waives any and all rights to any type of express or impliedindemnity against Cal Expo and the State of California, its officers oremployees.

5)                  In the event CalExpo is named as co-defendant, Palace Entertainment shall notify Cal Expo ofsuch fact and shall represent Cal Expo in such legal action unlessCal Expo undertakes to represent itself as co-defendant in such legalaction, in which event Palace Entertainment shall bear Cal Expo’s litigationcosts, expenses, and attorney’s fees.

6)                  Notwithstandingparagraph 15(B), Cal Expo shall not be liable for loss or damage to theproperty owned, leased, or operated by Palace Entertainment.

16.              Insurance:

A.                LiabilityInsurance:  Palace Entertainment shallprovide a general liability insurance policy in the minimum sum of Ten MillionDollars ($10,000,000) per occurrence and annual aggregate, or its equivalentproviding coverage for, but not limited to, the following: Bodily Injury andProperty Damage, Premises/Operations, Products/Completed Operations,Independent Contractors, Automobiles owned, hired and leased, and be inaccordance with all of the limits, terms and conditions set forth herein. Thelimits may be satisfied by a combination of primary and excess liability policies. Palace Entertainment agrees that thiscoverage shall be provided on a primary basis to any other coverage(s) providedor available to Cal Expo.  The policyshall contain the following special endorsements: (1) State of California,California Exposition and State Fair, its Board of Directors, officers, agents,employees, and servants are included as additional insureds; (2) the insurerwill not cancel or reduce the insured’s coverage without thirty (30) days priorwritten notice to Cal Expo; (3) 

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Cal Expo will not be responsible for the paymentof any premiums or assessments on the policy; and (4) the policy shall includecoverage (“Access Area Coverage”) for all claims, suits, actions of any name,kind and description, brought forth from, or on account of, damaged property orinjuries to or death of any person, including but not limited to workers andthe public, arising out of the use of the Cal Expo grounds’ roadways,pedestrian walkways, and parking lots, by Palace Entertainment’s customers foringress or egress to and from the Water Park, excluding from coverage theperiod of the State Fair each year.

Notwithstanding the foregoing, if at any time from and after the dateof this Agreement, the percentage increase (from the date of this Agreement) inPalace Entertainment’s annual liability insurance premiums solely attributableto Access Area Coverage exceeds the percentage increase (from the date of thisAgreement) in Palace Entertainment’s total annual liability insurance premiumsfor the Water Park (excluding Access Area Coverage), and the dollar amount of suchexcess is greater than $15,000, then Palace Entertainment shall have the right,90 days following written notice of such event to Cal Expo, to terminatethe Access Area Coverage; provided, however, that following such notice to Cal Expo,Palace Entertainment and Cal Expo shall use all reasonable efforts tonegotiate in good faith an alternative approach for obtaining Access Area Coverage.

For example, assume the annual liability insurance premiums for AccessArea Coverage increase from $10,000 to $30,000, and the total annual liabilityinsurance premiums for the Water Park (excluding Access Area Coverage) increasefrom $40,000 to $80,000 during the same period.  In this example, the percentage increase inpremiums attributable to Access Area Coverage (200%) exceeds the percentageincrease in total non-Access Area Coverage premiums (100%), but the dollaramount of such excess, $10,000 (100% of $10,000), is less than $15,000.  Therefore, under this example, Palace Entertainmentwould not have the right to terminate Access Area Coverage pursuant to thisparagraph.

By way of additional example, assume the annual liability insurancepremiums for Access Area Coverage increase from $10,000 to $40,000 and thetotal annual liability insurance premiums for the Water Park (excluding AccessArea Coverage) increase from $40,000 to $80,000 during the same period.  In this example, the percentage increase inpremiums attributable to Access Area Coverage (300%) exceeds the percentageincrease in total non-Access Area Coverage premiums (100%) , and the dollaramount of such excess, $20,000 (200% of $10,000), is greater than $15,000.  Therefore, under this example, PalaceEntertainment would have the right to terminate Access Area Coverage pursuantto this paragraph.

Notwithstanding anything in this Agreement to the contrary, if PalaceEntertainment is unable to obtain Access Area Coverage (conforming to the otherrequirements of this paragraph) because insurance companies refuse to provideAccess Area Coverage for the Water Park due to factors beyond PalaceEntertainment’s control, then after Palace 

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Entertainment and Cal Expo have exhausted all reasonable effortsto provide some alternative approach for obtaining Access Area Coverage, PalaceEntertainment shall not be required by this paragraph to obtain such AccessArea Coverage.

The policy with the endorsements shall be submitted to Cal Expo forapproval by California Fair Services Authority (“CFSA”).

Palace Entertainment agrees that the policy herein provided for shallbe in effect at all times during the term of this Agreement.  In the event said insurance expires at anytime or times during the term of this Agreement, Palace Entertainment agrees toprovide at least thirty (30) days prior to said expiration date, a newcertificate of insurance evidencing insurance coverage as provided for hereinfor not less than one (1) year.  Newcertificates of insurance are subject to the approval of CFSA, and PalaceEntertainment agrees that no work or services shall be performed prior to thegiving of such approval.  Saidcertificate of insurance for all areas affected by this Agreement, shall beissued by an insurance company that is acceptable to CFSA, and Cal Expo shallhave the right to reconsider insurance requirements during the term of the Agreement.  The failure of Palace Entertainment to keepin effect at all times insurance coverage as herein provided will constitute abreach of this Agreement.

B.                  AdditionalInsurance Provisions:  PalaceEntertainment agrees to procure and continuously maintain and carry throughoutthe term hereof at its own cost and expense the following:

1)                  Workers’Compensation Insurance:  Allemployees of Palace Entertainment shall be covered by workers’ compensation insuranceas required by law.  Palace Entertainmentshall have the right to act as a self-insurer after qualifying under the lawsof the State of California and submitting a copy of their Certificate ofConsent to Self-Insure to Cal Expo.

a)                   Evidence of workers’compensation insurance shall be submitted prior to commencement of term; or

b)                  PalaceEntertainment has no paid or volunteer employees and Palace Entertainmentexecutes and submits an “Exemption from Workers’ Compensation” form.  This certification does not alter or affectcompliance with the workers’ compensation requirements in the Labor Code of theState of California.

2)                  Palace Entertainmentshall carry all risk insurance for fire, storms, wind and other possiblecasualties in an amount and type satisfactory to Cal Expo.  Such insurance on the improvements, fixtures,furnishings, equipment, and all other personal property, including supplies of PalaceEntertainment on the premises, shall be in an amount adequate to insure thereplacement of said property in the event of loss.

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3)                  All insurancerequired hereunder shall be for the protection of Cal Expo and the State ofCalifornia, as well as Palace Entertainment, shall be written by such companyor companies as Cal Expo shall approve and, in the absence of agreement asto amount, shall be in the amounts customarily carried in each category byoperators of comparable facilities as a minimum.  All losses under any such policies ofinsurance shall be so written as to be payable to “Palace Entertainment, a Delawarecorporation” and/or Cal Expo, State of California as their interests mayappear.

4)                  PalaceEntertainment shall submit copies of insurance policies to Cal Expo forapproval by CFSA prior to the commencement of operation on the Water ParkPremises.  At least thirty (30) daysprior to the expiration of any policy, a renewal policy of insurance showingthat such insurance coverage has been renewed, shall be filed with Cal Expo.

5)                  In the event CalExpo reasonably determines, based upon practices of comparable facilities, thatother insurance than those types specifically listed is believed byCal Expo to be necessary for the protection of the joint interest of theparties hereunder, Palace Entertainment likewise agrees to procure, pay for andcarry such other additional insurance.

C.                  PalaceEntertainment’s Self Insurance:  At anytime, Palace Entertainment may submit to Cal Expo a plan whereby PalaceEntertainment would “self-insure” to the limits required under this paragraph 16. Cal Expo shall promptly review suchproposed plan and shall not unreasonably refuse to approve it as a means ofsatisfying Palace Entertainment’s insurance obligations under this Paragraph.

17.              Taxes:  It is acknowledged by Palace Entertainment thatthis Agreement will create a possessory interest in public property which issubject to property taxation.  PalaceEntertainment agrees to pay any property taxes lawfully levied on suchpossessory interest.  PalaceEntertainment agrees to pay the above and all other lawful taxes, assessmentsor charges which at any time may be levied by the State of California, Countyof Sacramento, City of Sacramento, or any tax assessment levying body upon anyinterest in this Agreement or any possessory right which Palace Entertainment mayhave in or to the Water Park Premises covered hereby or the improvements thereonby reason of its use or occupancy thereof or otherwise, as well as all taxes,assessments, charges on goods, merchandise, fixtures, appliances, equipment,and property owned by it in or about the Premises, provided that PalaceEntertainment may contest the imposition of any such tax and may withholdpayment upon provision of a bond or other financial assurance satisfactory toCal Expo insuring that funds are available for such payment.

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18.              DisputeResolution:  The parties agree to thefollowing dispute resolution procedure to cover any and all disputes arisingunder the lease:

A.                Mediation:  In the event of a dispute, claim orcontroversy arising out of or relating to the Agreement or the breach,termination, enforcement, interpretation or validity thereof, and such dispute,claim or controversy cannot be informally resolved by the parties, the partiesagree to formally mediate the dispute prior to initiating arbitration as setforth in subparagraph (b) below.  Theparties agree to share equally in the costs associated with mediation.

B.                  Arbitration:  In the event mediation fails to resolve adispute, claim or controversy arising out of or relating to the Agreement orthe breach, termination, enforcement, interpretation or validity thereof,including the determination of the scope of applicability of the Agreement toarbitrate, the parties agree to submit the unresolved matter to arbitration andshall be bound by the determination of one arbitrator in Sacramento,California.  The arbitration shall beadministered by JAMS pursuant to its Streamlined Arbitration Rules andProcedures.  Judgment on the award may beentered in any court having jurisdiction. The arbitrator may, in the award, allocate all or part of the costs ofthe arbitration, including the fees of the arbitrator and the reasonableattorneys’ fees of the prevailing party.

C.                  Venue inSacramento:  The parties to thisAgreement agree that any action at law or suit in equity, relating to thisAgreement or any provision thereof, shall only be instituted and maintained ina court of competent jurisdiction in the County of Sacramento, State ofCalifornia.  Each party hereto waives theright to change of venue.

D.                 Notwithstandingthe foregoing, in the event litigation is instituted by one party against theother, the parties agree that, in addition to any other remedies that thisAgreement or the law may allow, the prevailing party in such litigation shallrecover all reasonable costs, including reasonable attorney’s fees.

19.              Maintenance:

A.                PalaceEntertainment’s Responsibilities: Palace Entertainment agrees to maintain any and all facilities at the WaterPark in good order and repair at its own cost and expense during the entire termof this Agreement.  At the beginning ofeach year, Palace Entertainment shall provide Cal Expo with a projectedmaintenance schedule for the upcoming year.

B.                  Cal ExpoInspection:  Cal Expo’s representative,as designated by its General Manager, may make inspections of PalaceEntertainment’s facilities to determine if the maintenance of the facilities isin conformity with this Agreement.  Palace Entertainment shall perform at its own costand expense, any required maintenance and repairs including structuralmaintenance and landscape maintenance, and should Palace Entertainment fail,neglect or refuse to do so, Cal Expo shall have the right to perform suchmaintenance or repairs for Palace Entertainment’s account, and PalaceEntertainment agrees to promptly reimburse Cal Expo for the cost thereof,provided, however, that Cal Expo shall first give Palace Entertainment ten(10) days written 

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notice of its intent to perform such maintenance orrepairs.  Cal Expo shall not beobligated to make any repairs to or maintain any improvements on the subjectpremises.  Palace Entertainment herebyexpressly waives the right to make repairs at the expense of Cal Expo andthe benefit of the provisions of Sections 1941 and 1942 of the Civil Code ofthe State of California relating thereto if any.

C.                  Clean-up ofArea Surrounding Water Park:  PalaceEntertainment expressly agrees at all times during the term of this Agreement,at its own cost and expense, to maintain and operate the Water Park and areasadjacent to said Park, to a distance of not less than fifty (50) feet, in aclean, safe, wholesome and sanitary condition free of trash, garbage orobstructions of any kind and in compliance with any and all present and futurelaws, general rules or regulations of any governmental authority now or at anytime during the term of this Agreement in force relating to sanitation orpublic health, safety, and welfare.  Palace Entertainment shall remedy withoutdelay any defective, dangerous or unsanitary conditions on said Water Park orwithin the area described in this subparagraph.  Notwithstanding the foregoing, PalaceEntertainment’s obligations as described in this subparagraph shall not alter,modify or diminish Cal Expo’s indemnity obligations as set forth inparagraph 15 above.

D.                 OtherMaintenance Services:  PalaceEntertainment further agrees to assume and pay when due all operating expensesfor pest control, garbage and waste removal, janitorial services, and any otheroperating services accruing or payable in connection with its occupancy of the WaterPark and, any part thereof, including deposits, fees, required by the supplierof any such service.

20.              Utilities andServices:

A.                Payment ofUtility Charges:  PalaceEntertainment shall assume and pay when due all charges for gas, power,telephone; light, and any other utility services accruing or payable inconnection with its occupancy of the premises and any part thereof, includingdeposits, connection fees or charges and equipment rental required by thesupplier of any such utility service, provided Palace Entertainment agrees toreimburse Cal Expo for utilities based upon a reasonable estimate of theproportion of such utility services actually used by Palace Entertainment if theutilities are not separately metered.

B.                  RefuseDisposal:  It is understood that Cal Expohas, and will continue to have in the future, an exclusive agreement with arefuse company for the disposal of refuse on the Cal Expo grounds andPalace Entertainment hereby agrees that all of its facilities located on the WaterPark Premises will be subject to the terms, conditions and unit price of said agreementfor the disposal of its refuse.

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C.                  Water:

1)                  The Water Park Premisesare currently served by a well designated as Well Number Three, which will bemaintained by Cal Expo.  No chargeshall be made by Cal Expo for water use by Palace Entertainment during theterm of this Agreement or extension thereof.  Cal Expo does not, however, guarantee anadequate water supply to Palace Entertainment for the term of this Agreement orextension thereof and in the event that the water supply from Well Number Threediminishes or is insufficient to meet the needs of Palace Entertainment, it is understoodthat Palace Entertainment, at its cost and expense, will seek another source ofsupply from the City of Sacramento or other governmental agency.

2)                  Cal Expo representsthat it has no present information indicating that the current water supply inWell Number Three is or will become inadequate or unsuitable, and furthercovenants to cooperate in any reasonable way in assisting Palace Entertainment inobtaining an alternate water supply should that become necessary.

21.              Labor-ManagementRelations:  During the term of thisAgreement, Palace Entertainment shall take all reasonable steps (consistentwith applicable law) necessary to assure satisfactory labor-managementrelations to the end that the operation of Palace Entertainment, Cal Expo orof exhibitors, concessionaires, or others on the Cal Expo grounds shall in noway be affected by strikes, picketing, boycotts, or other labor activities.  Palace Entertainment, however, does notwarrant or guarantee that there will be no such strikes, picketing, boycotts orother labor activities.

22.              Termination Priorto Expiration of Term:

A.                Events ofDefault Defined:  Any of thefollowing acts or omissions shall constitute breach of this Agreement if notcured within applicable notice and cure periods (each referred to herein as an “Eventof Default” or “breach” of this Agreement) which shall give Cal Expo theright to terminate this Agreement as set forth in this paragraph if not curedwithin applicable notice and cure periods and take such other actions toenforce this Agreement as are permitted by law.  Due performance of this Agreement by PalaceEntertainment is an express condition of its continuance, as provided in this paragraph.

1)                  Cessation ofBusiness:  If Palace Entertainment, withoutthe written consent of Cal Expo, during the period Palace Entertainment isrequired to operate the Water Park under this Agreement, closes the Water Parkto the public for a period of either thirty (30) consecutive days or sixty (60)days during any one year; or

2)                  Breach ofAgreement:  If a material breach ismade by Palace Entertainment of any of the terms, conditions or covenantscontained in this Agreement or the Escrow Agreement (as defined in paragraph 14(A))which is not cured within 30 days of receipt of written notice thereof, or if notreasonably capable of being cured within 30 days, as soon thereafter as is commerciallypracticable so long as Palace Entertainment diligently prosecutes such cure tocompletion; or

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3)                  Nonpayment ofRent:  If the required monthly rentis delinquent in the amount of payment, or in the prescribed time of payment,for a period in excess of fifteen (15) days (acceptance by Cal Expo of anyportion of the delinquent rent, at the option of Cal Expo shall not constitutewaiver of said breach); or

4)                  Nuisance:  If Palace Entertainment should create orallow to be created a nuisance on the Water Park Premises.

B.                  Remedies forBreach:  In the event of a breach ofthis Agreement by Palace Entertainment, Cal Expo may send written noticeto Palace Entertainment of said breach.  IfPalace Entertainment shall fail to remedy (1) commence cure of the breachdescribed in such notice within 90 days of receipt or (2) diligently prosecutesuch cure to completion thereafter, Cal Expo, at its option, may declarethis Agreement terminated and may thereupon take immediate possession of theWater Park Premises.  In addition, Cal Expomay seek redress against the Escrow Funds on deposit with Cal Expo as setforth in this Agreement and the Escrow Agreement.

C.                  Bankruptcy:  Subject to the provisions of the UnitedStates Bankruptcy Code, as amended, should Palace Entertainment file avoluntary petition in bankruptcy or be adjudged a bankrupt either upon thevoluntary petition in bankruptcy of Palace Entertainment or upon theinvoluntary petition of creditors of Palace Entertainment, or should Cal Exposeek a remedy afforded by any statute of the United States relating tobankruptcy, or should Palace Entertainment make an assignment for the benefitof its creditors, or should a receiver be appointed over its assets, or shouldan attachment be levied, and permitted to remain for a period of more thanthirty (30) days, upon any interest of Palace Entertainment under thisAgreement, then, all interest of Palace Entertainment in this Agreement, exceptsuch interest as may have been validly assigned by Palace Entertainment pursuantto the conditions of this Agreement, shall at the sole option of Cal Expo terminateupon ninety (90) days written notice to Palace Entertainment and Cal Expo mayenter and take possession of the Water Park Premises.

23.              Buy-Out Provisions:  Notwithstanding any other provision in this Agreementand in addition to any other remedy available, the parties agree to thefollowing buy-out provisions.

A.                Cal Expo’sBuy-Out

1)                  The buy-outprovision cannot, at any time during the term or any extension thereof, beutilized by Cal Expo to replace Palace Entertainment as the operator (anytermination for good cause will not be an exercise of the buy-out provision).

2)                  The buy-outoption may not be utilized by Cal Expo until the end of the 2011 water parkoperating season (i.e., October 1, 2011).

3)                  Cal Expo willhave from October 1, 2011, until December 31, 2011, to notify PalaceEntertainment of its intent to exercise the buy-out clause.

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4)                  If Cal Expoexercises the buy-out clause, Palace Entertainment is entitled to remove (atits sole expense) whatever capital improvements have been purchased on or forthe site and will receive a lump sum payment equivalent to two (2) times one(1) year’s gross revenue received by Palace Entertainment (taking the averageof the previous three (3) years’ gross revenue).

5)                  If Cal Expo doesnot exercise the buy-out clause in 2011, it will have a similar opportunity todo so from and between October 1, 2015, and December 31, 2015, and again fromand between October 1, 2020, and December 31, 2020, with the same buy-outpayment and rights to the assets as set forth in subparagraph 4) above,provided the Agreement is extended in accordance with paragraph 3 of thisAgreement.

B.                  PalaceEntertainment’s Buy-Out

1)                  If Palace Entertainmentelects to terminate this Agreement prior to the expiration of the term or anyextension thereof, it shall provide Cal Expo with 12 months written notice andshall pay Cal Expo two (2) times the annual rent (averaged over the lastthree (3) years of operation).  Inaddition to the payment, Palace Entertainment agrees that all capitalimprovements purchased by Palace Entertainment from Six Flags, and all capitalimprovements constructed or implemented under the terms of this Agreement,shall become the property of Cal Expo at Cal Expo’s sole andexclusive option upon early termination of the Agreement.  Cal Expo, in the exercise of its solediscretion, may require that one or more of the capital improvements be removedat Palace Entertainment’s sole expense.

24.              Notices:  Any notices provided for in this Agreement,or which otherwise may be given by either party to the other, shall be deemedto have been fully given when made in writing and deposited in the UnitedStates mail, certified as registered, postage prepaid and addressed as follows:
| To Palace Entertainment at: | Palace Entertainment                   |
|-----------------------------|----------------------------------------|
|                        | Raging Waters Sacramento               |
|                        | 1600 Exposition Boulevard              |
|                        | Sacramento, CA 95815                   |
|                        | ATTN: General Manager                  |
|                        |                                   |
| To Cal Expo at:             | California Exposition & State Fair |
|                        | 1600 Exposition Boulevard              |
|                        | Sacramento, CA 95815                   |
|                        | ATTN: General Manager                  |

 

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25.              Assignments:

A.                No TransferWithout Cal Expo Consent:  Except asotherwise provided herein, no transfer, conveyance, pledge or assignment by PalaceEntertainment of this Agreement or of any part thereof or interest thereindirectly or indirectly, voluntarily or involuntarily, shall be made unless suchtransfer, conveyance, pledge or assignment is first consented to in writing by Cal Expoas required by, and pursuant to the provisions of this paragraph.

B.                  Assignmentfor Security:  Palace Entertainment’spossessory interest in Palace Entertainment’s improvements under the terms ofthis Agreement, for the purposes of affording security only, may be assigned,transferred or encumbered when first consented to in writing by Cal Expo.  Cal Expo shall give such consent uponverification that such assignee is a responsible commercial lender and thatsuch assignment is made consistent with the requirements and restrictions ofthis Agreement.  No mortgage shall beexecuted and no bonds or other evidence of interest in, or indebtedness uponthe assets or proposed assets of Palace Entertainment shall be issued exceptfor the purposes of acquiring, installing, enlarging or improving plant andequipment and extending facilities for the accommodation of the public, and thenonly upon prior consent in writing in each case obtained from Cal Expo.  In the event of breach and foreclosure onsuch mortgage or such other indebtedness or of other assignment, transfer orencumbrance, the purchaser under the foreclosure sale, shall succeed to the possessoryinterest of Palace Entertainment.  Underthese circumstances, operating rights and privileges shall be as outlined inthis Agreement, however, the right of any person or persons to actually operatethe said premises is subject to the consent of Cal Expo.

C.                  Assignmentfor Other Than Security:  Except asprovided in paragraph 25(A),Palace Entertainment shall neither assign orotherwise convey any interest of any sort granted by this Agreement, to anyperson or persons, entity or entities whatsoever, without prior written consentand approval by Cal Expo.  Before Cal Expoconsiders such assignment, Palace Entertainment shall have adequately carriedout the provisions of this Agreement for a period of no less than three (3)years.  Cal Expo’s consent to anassignment by Palace Entertainment shall not unreasonably be withheld.  In deciding whether to consent, Cal Expo mayconsider the financial capability and stability of the proposed assignee, theexperience of the management of the assignee in operating a water theme park,and the reputation of the assignee.  Cal Expo may further review thoseprovisions of the transfer documents dealing with the transition from assignorto assignee of control over operations at the Water Park to ensure a reasonablysmooth transition of such control.  Allof Cal Expo’s review hereunder will be with a view to satisfy Cal Expothat the quality and financial capability of the operator and the operations atthe Water Park will not materially suffer due to the assignment.  Palace Entertainment’s interest here shall notbe assignable in bankruptcy, nor shall said interest be assignable by operationof law.  Any document by which aninterest is granted, subject to the prior written consent of Cal Expo, shallindicate that the person

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acquiring such interest has been advised of and takeshis interest subject to the terms and conditions of this Agreement.  However, in the event of termination of thisAgreement, Cal Expo, at its sole option, may elect to treat any assignee,subtenant or holder of an interest conveyed by Palace Entertainment as Cal Expo’stenant, subject to the terms and conditions of this Agreement.

D.                 Change inStock Ownership:

1)                  Any singlechange in stock ownership, voluntary, involuntary, by operation of law, orotherwise (excluding a change by reason of inheritance or operation of the CaliforniaCommunity Property Law), which results in a transferee, who is other thaneither the stockholder of Palace Entertainment at the time of executing thisAgreement, or an Affiliate thereof, such that such transferee owns acontrolling interest of the stock after the transfer, shall be deemed as anassignment prohibited by this paragraph unless written consent of Cal Expobe obtained as provided in this paragraph. Cal Expo’s consent shall not be unreasonably withheld, nor shallany unreasonable terms and conditions in connection therewith be imposed.  Cal Expo’s consent shall be based upon considerationof the financial responsibility, character, business ability, morality, andreputation of such person obtaining stock by assignment covered by thisparagraph.  In the event that the stockof Palace Entertainment goes to a public issue, this paragraph shall not applybut the list of stockholders owning more than 5% of the stock and the amount ofstock held shall be submitted to Cal Expo. Notwithstanding the foregoing, this paragraph shall not be applicable aslong as at least 51% of the outstanding shares of voting stock of PalaceEntertainment are owned by the current owners of all of its voting stock or byany persons, corporations or other entities, which directly or indirectlycontrol or are controlled by or under common control with any such current owners.

2)                  As a conditionof obtaining the written consent of Cal Expo, as provided above, PalaceEntertainment shall immediately upon the request of Cal Expo obtain forand supply to Cal Expo in writing such information as Cal Expo mayreasonably request for the purpose of exercising its power of consent.  The consent of Cal Expo need not beobtained if the person obtaining stock contrary to provisions of this paragraphsells or transfers ownership or beneficial interest to a person who was astockholder at time of execution of this Agreement.  The sale or transfer shall be accomplished priorto Cal Expo terminating the Agreement for breach of this paragraph.

26.              Period of StateFair:  No Assurances to Continue Fair:  For purposes of this Agreement, the period ofthe State Fair shall be a period during which Cal Expo conducts the StateFair on all or a portion of the Cal Expo grounds other than the Water ParkPremises.  This period is typically athree-week period in August and September in any year, but Cal Expo reservesthe right to schedule the State Fair or reschedule the State Fair in its solediscretion.  By entering into thisAgreement, however, Cal Expo makes no representation or stipulation as 

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to the type, size, location or duration of publicfacilities to be maintained at the Cal Expo grounds, or to thecontinuation of Cal Expo ownership or operation of the Cal Expogrounds, or the operation of the State Fair.

27.              Time of Essence:  Time shall be of the essence in theperformance of this Agreement.

28.              Conflict ofInterest:  Palace Entertainment warrantsand covenants that no official or employee of Cal Expo nor any businessentity in which an official or employee of Cal Expo’s interested, (1) hasbeen employed or retained to solicit or aid in the procuring of this Agreement;(2) will be employed in the performance of this Agreement without the immediatedivulgence of such fact to Cal Expo. In the event Cal Expo determines that the employment of any suchofficial, employee or business entity is not compatible with such official’s oremployee’s duties as an official or employee of the State of California, PalaceEntertainment, upon request of Cal Expo, shall terminate such employmentimmediately.  For breaches or violationof this paragraph, Cal Expo shall have the right both to annul thisAgreement without liability and, in its discretion, recover the full amount ofany such compensation paid to such official, employee or business entity.

29.              Paragraph Titles:  The paragraph titles in this Agreement areinserted only as a matter of convenience and for reference, and in no waydefine, limit or describe the scope of intent of this Agreement or in any wayaffect this Agreement.

30.              AlcoholicBeverages:  The sale of alcoholic beveragesby Palace Entertainment at the Water Park Premises is hereby approved by Cal Expoprovided that the required permits or licenses are obtained and maintained by PalaceEntertainment.

31.              ManagementRepresentative:

A.                Cal ExpoRepresentative:  For purposes of thisAgreement, the General Manager for Cal Expo, herein called “GeneralManager,” is the Cal Expo representative in direct charge of the Cal Expogrounds.  The General Manager shalldesignate to staff the day-to-day administration of this agreement and to be PalaceEntertainment’s contact with Cal Expo for information, agreementperformance, and other problems that may arise.

B.                  PalaceEntertainment Representative:  PalaceEntertainment shall designate in writing a representative (which may be theManager) who shall be available at the Water Park or otherwise reasonablyavailable during the period when Palace Entertainment’s facilities are in operationand who shall be authorized to take immediate action when necessary uponrequest of Cal Expo.

C.                  Change inRepresentative:  Palace Entertainmentmay change its designated representative from time to time by giving written noticethereof to Cal Expo in the manner herein provided.

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D.                 EntireUnderstanding:  This Agreementcontains and embraces the entire Agreement between the parties hereto andneither it nor any part of it may be changed, altered, modified, limited orextended orally except by written amendment thereto signed by Cal Expo andPalace Entertainment, or their successors in interest.

32.              Waiver of Claims:  Palace Entertainment hereby waives any claimagainst the State of California, its officers, agents or employees for damageor loss from delay or attorney’s fees caused by any suit or proceeding directlyor indirectly attacking the validity of this Agreement, or any part thereof, orby any money judgment or award against Palace Entertainment in any suit orproceeding declaring this Agreement null, void or voidable or delaying the sameor any part thereof from being carried out unless Cal Expo shall fail todefend the validity of this Agreement in any such suit or proceeding.

33.              Cal Expo ApprovalShall Be Reasonably Given:  Except asspecifically provided otherwise in this Agreement, in each case in thisAgreement in which Cal Expo is given a right to consent to or approve, orotherwise has discretion with respect to, any act, policy, or decision of PalaceEntertainment, Cal Expo shall not unreasonably withhold or delay suchconsent or approval, taking into account the standards established herein forsuch consent or approval or exercise of discretion. If no standards areestablished, then the standards shall be those that would reasonably apply tothe prudent operation of an enterprise similar in kind and quality to the WaterPark.  The failure of Cal Expo torespond to any requests by Palace Entertainment for its consent or approvalwithin the periods provided herein shall be deemed to be Cal Expo’s consentto the matters which are the subject of such consent.

34.              Relationship ofthe Parties:  The parties heretoagree that Palace Entertainment, its officers, agents, and employees inperformance of this Agreement shall act in an independent capacity and not asofficials, employees, or agents of Cal Expo.  Nothing in this Agreement shall be construedto create a partnership, joint venture or agency relationship between theparties.

35.              Amendment:  No amendment or variation of the terms ofthis Agreement shall be valid unless made in writing, signed by the parties andapproved as required.  No oralunderstanding or Agreement not incorporated in the Agreement is binding on anyof the parties.

36.              Force Majeure:  Neither party shall be liable to the otherfor any delay in or failure of performance, nor shall any such delay in orfailure of performance constitute default, if such delay or failure is causedby “Force Majeure.”  As used in thissection, “Force Majeure” is defined as follows: Acts of war and acts of godsuch as earthquakes, floods, and other natural disasters such that performanceis impossible.

37.              Miscellaneous

A.                Gender andHeadings:  As used herein, wheneverthe context so requires, the neuter gender includes the masculine and thefeminine, and the singular includes the plural and 

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vice versa. Defined terms are to have their definedmeanings regardless of the grammatical form or number of tenses of such terms.The title headings of the respective paragraphs of this Agreement are insertedfor convenience only, and shall not be deemed a part of this Agreement orconsidered in construing this Agreement.

B.                  Covenants:  Whenever words or provisions imposing anobligation or duty on either party are used herein, such word or provisionshall have the same force and effect as though phrased in the form of expresscovenants.

C.                  Construction:  The language in all parts of this Agreementshall in all cases be construed simply and according to its fair meaning andnot strictly for or against either of the parties.

D.                 Successors andAssigns:  The terms, provisions, andconditions hereof shall be binding upon and inure to the benefit of thesuccessors and assigns of the parties hereto.  All rights, options, privileges andobligations of Cal Expo may be assumed, enforced or performed by any persondesigned by it or by its successors or assigns.

E.                   Definitionsof “Person”:  “Person,” as usedherein, includes any individual, partnership, firm, association, corporation orother entity, natural or artificial, including any instrumentality or agency ofgovernment.

F.                   Diligence:  Palace Entertainment shall conduct theactivities authorized by this Agreement on and in connection with the Premiseswith due diligence and efficiency and in like manner as comparable Californiabusinesses are operated and by methods to produce the maximum net income whichmay be produced by proper manner of operation.

G.                  Definition of“Law”:  “Law,” as used herein,includes all valid laws, statutes, ordinances, rules, orders and regulationspromulgated or issued by federal, state, municipal, local and administrativeauthorities.

H.                 PartialInvalidity:  In the event that anyterm, covenant, provision or condition of this Agreement or any article,section, subsection, sentence, clause or phrase of this Agreement is held to beinvalid by final judgment or any court of competent jurisdiction, suchinvalidity shall not in any way affect the remainder of this Agreement.

I.                      RepresentationsNot Herein Contained:  This Agreementcontains all of the representations, provisions, agreements, understandings andwarranties either express or implied and it is understood that no person,employee, agent or representative of Cal Expo or any instrumentalitythereof, has authority to make, and Palace Entertainment warrants that it isnot relying on any written or oral statement, express or implied, except asherein set forth, leading up to or including it to execute or enter into thisAgreement.

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J.                     Approval:  This Agreement shall not be binding upon CalExpo until it has been duly executed by Cal Expo and, if applicable, approvedby the Department of General Services.

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**EXHIBITA**

**Descriptionof Water Park Premises**

See Exhibit A-I attachedhereto.

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**EXHIBITAA**

Description ofNon-exclusive Use Shared Area

1) Serviceentrance. The area designated as “Red” and shown in red on the map attachedhereto as Exhibit AA-l depicts the service entrance. All vehiclesservicing Palace Entertainment, including, but not limited to, delivery trucksand those Palace Entertainment personnel who have credentials issued by Cal Expofor parking, shall, so long as not blocked, enter gate 12 and exit from gate12, following the area marked in red.  Noauthorization is given to use or be on any other portion of the Cal Expo grounds,so long as said gate 12 remains unblocked and except as permitted in accordancewith paragraph 2 below.

“2) Public entrance.  The area designated as “Blue” shown inblue on the map attached hereto as Exhibit AA-l depicts the entrance andpathway which may be used by the public to gain access to the Water Park.During normal business hours the public will have access through the main gate,which faces Exposition Boulevard, and over the foregoing pathway to the WaterPark.  Other gates, including, but notlimited to, the “West Gate” shown on the attached in Lot B may be madeavailable by Cal Expo for entrance by the public to the Water Park.  The public shall follow the designated routesigns, if any, to the Water Park; otherwise shall follow the foregoing pathway.

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**EXHIBIT B**

**PERMITTED****ENCUMBRANCES**

1.                    THE LIEN OF SUPPLEMENTAL REAL ESTATETAXES, IF ANY, ASSESSED PURSUANT TO CHAPTER 3.5 COMMENCING WITH SECTION 75 OFTHE CALIFORNIA REVENUE AND TAXATION CODE.

2.                    ANY ASSESSMENTSAGAINST THE LAND HEREIN DESCRIBED AND ITS PROPORTION OF ANY GENERAL OUTSTANDINGINDEBTEDNESS OF AMERICAN RIVER FLOOD CONTROL DISTRICT.

3.                    WATER RIGHTS,CLAIMS OR TITLE TO WATER, WHETHER OR NOT SHOWN BY THE PUBLIC RECORD.

4.                    EASEMENT FORUNDERGROUND ELECTRIC SYSTEM AND INCIDENTAL PURPOSES THERETO, GRANTED TOSACRAMENTO MUNICIPAL DISTRICT, A MUNICIPAL UTILITY DISTRICT IN THE INSTRUMENTRECORDED MARCH 25, 1992, BOOK 9203-25, PAGE 844, OFFICIAL RECORDS.

5.                    EASEMENT FORUNDERGROUND ELECTRIC SYSTEM AND INCIDENTAL PURPOSES THERETO, GRANTED TOSACRAMENTO MUNICIPAL DISTRICT, A MUNICIPAL UTILITY DISTRICT IN THE INSTRUMENTRECORDED JANUARY 6, 1992, BOOK 8201-06, PAGE 471, OFFICIAL RECORDS.

6.                    ANY RIGHTS,INTEREST OR CLAIMS WHICH MAY EXIST OR ARISE BY REASON OF THE FOLLOWING, ASSHOWN ON ALTA SURVEY DATED OCTOBER 28, 1996, PREPARED BY WONG &ASSOCIATES, JOB NO. 96050.

a.                    ENCROACHMENTOF ONE STORY WOOD BUILDING ONTO THE EASEMENT RECORDED IN BOOK 8201-06, PAGE471, OFFICIAL RECORDS.

b.                   ENCROACHMENT OFMONORAIL ONTO THE SOUTHEAST PORTION OF SAID LAND.

c.                    THE FACT THATA CONCRETE PEDESTRIAL BRIDGE GOING FROM THE SOUTH PARKING AREA INTO THE WATERPARK EXISTS ON SAID LAND.

d.                   ENCROACHMENT OFFENCELINE, SAND VOLLEYBALL COURT AND COVERED CONCRETE PICNIC AREA ONTOADJOINING PROPERTY TO THE NORTH.

e.                    ENCROACHMENTOF THE WATERSLIDE ONTO THE ADJOINING PROPERTY TO THE WEST.

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f.                      ENCROACHMENTOF CHAIN LINK FENCE ONTO THE ADJOINING PROPERTY TO THE SOUTH.

g.                   THE FACT THATAN OPEN DRAINAGE CANAL EXISTS PARTIALLY ON SAID LAND IN THE SOUTHEAST CORNER.

h.                   EASEMENTS FORSTORM DRAINS, SANITARY SEWER, WATER LINES, AND ELECTRICAL BOXES AS DISCLOSED BYSAID SURVEY.

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**EXHIBITC**

**Copyof the Acquisition****Agreement**

Exhibit C-lattached hereto

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