Document:

Exhibit 10.1

 

LICENSE
AGREEMENT

 

This License
Agreement (this “Agreement”) is
made by and between Festival Fun Parks, LLC, a Delaware limited liability
company (together with its affiliates, “FFP”),
and VisionMaker, LLC, a Delaware limited liability company (“VisionMaker”), as of April 12, 2006
(the “Effective Date”). FFP and
VisionMaker may each be referred to herein as a “Party” or, collectively,
the “Parties.”

 

WHEREAS, FFP
owns and operates Family Entertainment Centers (as defined below);

 

WHEREAS, VisionMaker
has expertise relevant to the acquisition and operation of Family Entertainment
Centers; and,

 

WHEREAS, the
Parties desire to enter into a relationship whereby VisionMaker will license
its Intellectual Property related to Family Entertainment Centers to FFP;

 

NOW,
THEREFORE, in consideration of the mutual covenants contained herein and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:

 

1.         Definitions.

 

As used
herein, the following terms shall have the following meanings:

 

“Affiliate”
shall mean with respect to a Party, any entity controlling, controlled by or
under common control with such Party. “Control” means the possession, directly
or indirectly, of the power to direct or cause the direction of management
policies of a person or entity through the direct or beneficial ownership of
voting securities, voting rights, by contract or otherwise.

 

“Cora
Employment Agreement” means that certain employment agreement, dated April 12,
2006, by and among Palace Entertainment Holdings, Inc., Festival and John
A. Cora, as amended from time to time.

 

“Family
Entertainment Centers” shall mean an amusement park, theme park or similar
facility that (i) offers water-leisure recreational facilities and other
water attractions, and/or (ii) offers a broad selection of attractions,
including, without limitation,, but not limited to, miniature golf, go kart
raceways, batting cages, rides and/or arcade pavilions.

 

“Intellectual
Property” shall mean all (i) patents, patent applications and patent
disclosures, (ii) trademarks, service marks, trade dress, trade names,
logos, corporate names, Internet domain names, and registrations and
applications for the registration thereof together with all of the goodwill
associated therewith, (iii) copyrights and copyrightable works (including,
without limitation, mask words) and registrations and applications thereof, (iv) computer
software (including, without limitation, source code and object code), data, databases
and documentation thereof, (vi) trade secrets and other confidential
information (including, without limitation, ideas formulas, compositions,
inventions, improvements, know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
blueprints, flowcharts,

 

 

schematics, protocols, programmer notes, designs, developments,
discoveries, plans, proposals, technical data, financial and marketing plans
and customer and supplier lists and information), (vii) other similar
proprietary rights and (viii) copies and tangible embodiments thereof (in
whatever form or medium).

 

“Martinez
Employment Agreement” means that certain employment agreement, dated April 12,
2006, by and among Palace Entertainment Holdings, Inc., Festival and
Daniel S. Martinez, as amended from time to time.

 

“Noncompete
Period” has the meaning set forth in the Cora Employment Agreement and the
Martinez Employment Agreement.

 

2.         License Grant; Further
Assurances; Ownership.

 

(a)               VisionMaker hereby grants and shall
grant to FFP a non-exclusive, royalty-free, fully paid-up right and license,
which shall include the right to freely sublicense only to Affiliates of FFP, to any Intellectual Property owned by
VisionMaker, or under which VisionMaker otherwise has the right to grant a
license, for any use related to Family Entertainment Centers including, without
limitation, any know-how related to the operation of amusement centers.

 

(b)              VisionMaker acknowledges and agrees that,
in the event that FFP creates any developments, whether or not based on the
Intellectual Property licensed by VisionMaker to FFP hereunder, as between
VisionMaker and FFP, FFP shall own all right, title and interest in and to such
developments.

 

(c)               Promptly following any request by FFP,
VisionMaker shall provide FFP, its successors, assigns or other legal
representatives, cooperation and assistance at FFP’s expense (including,
without limitation, the execution and delivery of any and all affidavits,
declarations, oaths, exhibits, assignments, powers of attorney or other
documentation as may be reasonably required) in evidencing the rights
described in this Section 2.

 

3.         Term.

 

This Agreement
shall not be effective until it is executed by FFP, VisionMaker and each of the
three (3) members of VisionMaker (on behalf of VisionMaker). The term of
this Agreement shall begin on the Effective Date and shall continue in
perpetuity (or, for each item of Intellectual Property, upon the expiration of
the same). VisionMaker shall have no right to terminate this Agreement for any
reason, including any breach by FFP.

 

4.         Nature of Relationship.

 

The Parties
hereto shall be deemed independent contractors, and neither Party shall be
deemed to be an agent or employee of the other Party. Neither Party shall enter
into any agreement or incur any obligations on the other Party’s behalf, or
commit the other Party in any matter without such Party’s prior written consent.
No employee or agent of either Party shall be deemed an

 

 

employee of the other Party for the purposes of any employee benefit
programs, income tax withholding, FICA taxes, unemployment benefits or
otherwise.

 

5.         Confidentiality and Material Transfer.

 

(a)               VisionMaker may acquire, receive,
observe or generate, alone or jointly with others, information and/or material
either that is confidential or proprietary information of FFP or its
Affiliates, or that is confidential or proprietary information of a third party
in relation to which FFP is under an obligation of confidentiality (“Proprietary
Information”). VisionMaker agrees not to disclose any Proprietary
Information to any third party or to use any Proprietary Information for any
purpose without prior the written consent of FFP.

 

(b)              Proprietary Information subject to Section 5(a)
does not include information which:  (i) is
already in the possession of VisionMaker prior to the date of this Agreement or
is subsequently independently developed by VisionMaker, (ii) is disclosed
to VisionMaker on a non-confidential basis from a third party who is not known
by VisionMaker to be bound by a confidentiality obligation to FFP, (iii) or
is or later becomes available to the public through no breach of this Agreement
by the VisionMaker, (iv) is required to be disclosed under any applicable
law or court order; or (v) the disclosure of which is deemed necessary by
VisionMaker in litigation or any other proceeding in which it or any of its
current or former members, officers, employees, agents, representatives or
Affiliates is threatened to be made a party; provided that, with respect to
clauses (iv) and (v), VisionMaker provides FFP with prior written notice
of the requirement for disclosure detailing the Proprietary Information to be
disclosed and cooperates with FFP to preserve the confidentiality of the
Proprietary Information.

 

(c)               Following the termination of this
Agreement or upon earlier request by FFP, VisionMaker shall promptly deliver
any tangible embodiments of any Proprietary Information, including, without
limitation, all written materials, computer media, or other materials which
record or store or embody Proprietary Information and all copies thereof in
VisionMaker’s possession; and shall delete permanently and in its entirety all
Proprietary Information and any part thereof from every computer disk or
electronic storage facility owned or used by VisionMaker.

 

6.         Noncompete,
Nonsolicitation.

 

(a)               VisionMaker shall not, directly or
indirectly, acquire, invest or participate in the acquisition of any Family
Entertainment Center located in the United States that is competitive to FFP,
other than as a consultant for which it shall receive only arms-length cash
compensation or with respect to the passive ownership of five percent (5%) or
less of any Family Entertainment Center, during the period that either John
Cora or Dan Martinez are employed as executive officers of FFP and until the
later of the expiration of the Noncompete Period for John A. Cora or Daniel S.
Martinez (the “VisionMaker Noncompete Period”).

 

 

(b)              During the VisionMaker Noncompete Period,
VisionMaker shall not directly or indirectly through another entity (i) induce
or attempt to induce any employee of FFP or any Affiliate to leave the employ
of FFP or such Affiliate, or in any way interfere with the relationship between
FFP or any Affiliate and any employee thereof, (ii) hire any person who
was an employee of FFP or any Affiliate within the preceding six (6) months,
or (iii) induce or attempt to induce any customer, supplier, licensee or
other business relation of FFP or any Affiliate to cease doing business with
FFP or such Affiliate, or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and FFP or any
Affiliate.

 

(c)               If, at the time of enforcement of this Section 6,
a court shall hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the Parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law or equity.

 

(d)              In the event of a breach or a threatened
breach by the VisionMaker of any of the provisions of this Section 6,
FFP, in addition and supplementary to other rights and remedies existing in its
favor, may apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce
or prevent any violations of the provisions hereof (without posting a bond or
other security).

 

(e)               VisionMaker agrees and acknowledges
that: (i) the covenants set forth in this Section 6 are
reasonable in geographical and temporal scope and in all other respects; (ii) the
covenants contained herein are necessary to protect FFP’s business and other
legitimate interests; and, (iii) FFP would not have entered into this
Agreement but for the covenants of VisionMaker contained herein.

 

7.         Representations and
Warranties; Certain Covenants.

 

VisionMaker hereby represents, warrants and
covenants that VisionMaker is free to enter into this Agreement and VisionMaker
is not and will not be subject to any conflicting agreements. If at any time
the VisionMaker is or becomes aware of any real or potential conflict of
interest between VisionMaker’s obligations under this Agreement and any other
circumstance, VisionMaker shall promptly (and in no event later than three (3) business
days after becoming aware of same) notify FFP in writing setting out in detail
the circumstances of that conflict. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 7
AND IN SECTION 9(a), VISIONMAKER MAKES NO REPRESENTATION OR WARRANTY OF
ANY KIND. ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY
OPERATION OF LAW OR OTHERWISE, ARE EXPRESSLY DISCLAIMED TO THE FULLEST EXTENT
PERMITTED BY LAW.

 

 

8.         Limitation on Liability.

 

Neither Party shall be liable to the other
Party for lost profits, or for special, incidental, punitive or consequential
damages, whether or not such Party has been advised of the possibility of such
damages.

 

9.         Miscellaneous.

 

(a)               No failure on the part of either
Party to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right or remedy granted hereby or by any related
document or by law. The Parties each hereby represent and warrant that this
Agreement constitutes a valid and binding obligation on each of them,
respectively, enforceable in accordance with its terms.

 

(b)              This Agreement shall be deemed to be a
contract made under the laws of the State
of New York applicable to contracts made and performed entirely within the
State, and for all purposes of this Agreement, and any related or supplemental
documents and notices provided hereunder shall be construed and interpreted in
accordance with and be governed by the law of the State of New York without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of laws of any jurisdiction other than the State of New York. Any
legal proceeding shall be brought in a court sitting in the State of New York. The
Parties hereto hereby submit to the exclusive jurisdiction of such courts.

 

(c)               This Agreement may not be and shall
not be deemed or construed to have been modified, amended, rescinded, canceled
or waived in whole or in part, except by written instrument signed by the
Parties hereto.

 

(d)              All previous discussions, promises,
representations and understandings between the Parties relating to the subject
matter of this Agreement, if any, are superseded by this Agreement.

 

(e)               Neither Party may assign or
transfer any of its rights or obligations under this Agreement; provided,
however, that a change in control of a Party, whether by sale of stock, merger
or otherwise, or the sale of substantially all of the assets of a Party, shall
not be deemed an assignment or transfer for purposes of this Section 9(e).

 

(f)                 Should any provision of this Agreement
be illegal, invalid or unenforceable, all other terms and conditions of this
Agreement shall remain in full force and effect.

 

(g)              The Parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any Party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or

 

 

other injunctive relief in order to enforce or prevent any violations
of the provisions of this Agreement.

 

* * * * *

 

 

IN
WITNESS WHEREOF, the Parties have executed this
Agreement as of the date set forth below.

 

	
  VISIONMAKER, LLC

  	
  FESTIVAL FUN PARKS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ DANIEL S. MARTINEZ

  	
   

  	
  By:

  	
  /s/ JOHN A. CORA

  	
   

  
	
  Its:

  	
  CHIEF OPERATING OFFICER

  	
   

  	
  Its:

  	
  Chief Executive Officer and President

  	
   

  
	
  Address:

  	
  Address:

  	
  4590 MacArthur Boulevard

  Newport Beach, CA 92660

  	
   

  
							

 

	
   

  	
   

  
	
   

  	
   

  
	
  VISIONMAKER MEMBERS (ON

  BEHALF OF VISIONMAKER):

  	
  Date:    April 12,
  2006

  
	
   

  	
   

  
	
  /s/ John A. Cora

  	
   

  	
   

  
	
  John A. Cora

  	
   

  
	
   

  	
   

  
	
  /s/ Daniel S. Martinez

  	
   

  	
   

  
	
  Daniel S. Martinez

  	
   

  
	
   

  	
   

  
	
  /s/ Wayne Bishop

  	
   

  	
   

  
	
  Wayne Bishop

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:     April 12,
  2006Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT
AGREEMENT (this “Agreement”) is
made as of April 12, 2006, by and among Festival Fun Parks, LLC, a Delaware
limited liability company (the “Company”),
Palace Entertainment Holdings, Inc., a Delaware corporation (“Holdings”) and John A. Cora (the “Executive”), each a “Party” and collectively the “Parties.” 
Unless otherwise indicated, capitalized terms used herein are defined in
Section 2.1.

 

ARTICLE I

EMPLOYMENT TERMS

 

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

 

1.2           Position
and Duties.

 

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

 

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

 

1.3           Compensation.

 

(a)           Base
Salary.  The Executive’s base salary
shall be $325,000.00 per annum (the “Base
Salary”).  The Base Salary
payable for Fiscal Year 2006 shall be pro rated based on the number of days
from and including the Effective Date through and including December 31,
2006.  The Base Salary will be payable to
the Executive by the Company in regular installments in accordance with the
Company’s general payroll practices.  The
Executive shall receive such increases in his Base Salary as the Board of Directors
of the Company may approve in its sole

 

 

discretion
from time to time; provided that the Executive’s Base Salary will be reviewed
not less often than annually.

 

(b)           Bonus.

 

(i)  For Fiscal Year 2006, the Executive shall
receive an annual cash bonus, payable to Executive on or before April 30, 2007,
in an amount determined in the sole discretion of the Company’s Board of
Directors, which amount shall be deemed earned if Executive is employed as of
December 31, 2006.

 

(ii)  For Fiscal Year 2007 and for each subsequent
Fiscal Year during the Term (as defined below), the Executive shall be eligible
to receive an annual cash bonus (the “Annual
Cash Bonus”), which shall consist of two separate components and be
payable to Executive on or before the end of the fourth month following the end
of the relevant Fiscal Year, but in the event that the Company has not received
its audited financial statements for the relevant Fiscal Year by the date that
is three and one-half months after the end of such relevant Fiscal Year, the
Company shall make such payment within fifteen days (but not later than the
last day of the calendar year following such Fiscal Year) after the Company’s
receipt of audited financial statements for such Fiscal Year, so long as
Executive is employed by the Company on the last day of such Fiscal Year, as
follows:

 

(A)          if the Company’s EBITDA for a Fiscal Year is
greater than or equal to the EBITDA Target for such Fiscal Year, Executive
shall receive an Annual Cash Bonus for such Fiscal Year equal to 100% of
Executive’s Base Salary; and

 

(B)           if the Company’s EBITDA for a Fiscal Year is greater than or equal to the
EBITDA Target for such Fiscal Year, Executive shall receive an additional
Annual Cash Bonus for such Fiscal Year equal to the product of the Available
Cash Flow Excess multiplied by 25%.

 

(iii) For Fiscal
Year 2007 only, the Annual Cash Bonus, if any, payable to Executive pursuant to
this Section 1.3(b)(ii)(A) and (B), shall be increased on a pro rata
basis to include the complete months in Fiscal Year 2006 following the date the
Acquisition is consummated minus any
annual bonus amount paid to Executive pursuant to Section 1.3(b)(i) (which
shall be deducted first out of any amount payable to Executive pursuant to Section
1.3(b)(ii)(A) and second out of any amount payable to Executive pursuant to
Section 1.3(b)(ii)(B)).

 

(iv)   Notwithstanding anything in this Section
1.3(b) to the contrary and in lieu of any cash obligation, the Company
shall pay all of Executive’s Annual Cash Bonuses in the form of Class C Units
with a Fair Market Value (as defined in the LLC Agreement) equal to the Annual
Cash Bonus owed at such time to the Executive, until the aggregate cost basis
of (x)  Class A Units issued to Executive
under that certain Investment Agreement dated as of the date hereof, (y) any
additional Class A Units purchased pursuant to Section 3.1 and (z) any Class C
Units issued (excluding any Class C Units withheld pursuant to Section 1.3(c))
to Executive in respect of the Annual Cash Bonuses equals $1,250,000.  For purposes of determining Fair Market Value
under this Section 1.3(b)(iv), the Company shall provide Executive a draft
analysis

 

2

 

at least ten (10) business days before such determination and shall
consider in good faith the Executive’s comments and questions prior to
finalizing such determination.  For the
avoidance of doubt, the Class C Units shall be treated identical to Class A
Units that Executive acquires on the date hereof pursuant to the terms of the
Investment Agreement, other than for distributions upon a liquidation as set
forth in Section 10.2 of the LLC Agreement and the requirement for Executive to
disgorge distributions if there are not sufficient profits to allocate to Executive,
as set forth in Section 10.3 of the LLC Agreement.

 

(c)           Withholding.  All payments made under this Agreement
(including Base Salary,   bonus payments,
and other amounts) shall be subject to withholding for income taxes, payroll
taxes and other legally required deductions. 
For bonus payments made in the form of Class C Units, Executive shall
elect whether to have the Company withhold on such amounts by withholding an
appropriate number of Class C Units or other cash compensation payable to
Executive, or by the Executive funding the withholding obligation through a
cash payment to the Company.

 

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

 

(e)           Vacation;
Holiday Pay and Sick Leave.  The
Executive shall be entitled to four (4) weeks’ paid vacation in each calendar
year, which if not taken during any year may be carried forward to any
subsequent year.  Executive shall receive
holiday pay and paid sick leave as provided to other executive employees of
Holdings and the Company.  Upon cessation
of Executive’s employment for any reason, Executive shall receive pay for all
accrued and unused vacation, calculated at his base salary rate in effect at
the time of the cessation of his employment, provided that the amount of
vacation that Executive shall be entitled to accrue during the Term shall be in
accordance with Company policy and in no event shall such accrued vacation
exceed 8 weeks at any given time.

 

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

 

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

 

3

 

the
vesting, forfeiture, repurchase and giveback provisions of Sections 3.1(c),
10.3 and 11.3 of the LLC Agreement.

 

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

 

(i)            Additional
Life Insurance.  In addition to being
entitled to participating in life insurance benefits provided to management and
executives referenced in Section 1.3(f) above, the Company will also purchase
and maintain in full force and effect at all times during the Term a policy of
term insurance on the life of Executive payable to such beneficiary or
beneficiaries as Executive may designate with annual premiums not to exceed
$10,000 per annum.

 

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

 

1.4           Term
and Termination.

 

(a)           Duration.
 The Employment Period shall commence on
the Effective Date and shall terminate three (3) years from the Effective Date
(the “Term”), unless earlier
terminated by the Company or the Executive as set forth in this Section 1.4.  The Term of the Agreement shall renew
automatically for one-year periods, unless either party gives the other party
written notice of its intention not to renew the Agreement no later than 90
days prior to the expiration of the then current Term. This Agreement may be
terminated during the Term upon the first to occur of (i) termination of the
Executive’s employment by the Company for Cause, (ii) termination of the
Executive’s employment by the Company without Cause, (iii) the Executive’s
resignation with Good Reason, (iv) the Executive’s resignation other than for
Good Reason, or (v) the Executive’s death or Disability.  The Executive shall not terminate the
Agreement with or without Good Reason, unless he gives the Company written
notice that he intends to terminate the Agreement at least 90 days prior to the
Executive’s proposed Termination Date. 
Upon termination of this Agreement, the Executive shall execute and
deliver to the Company a release in form and substance acceptable to the
Company.

 

(b)           Severance
Upon Termination Without Cause or Upon Resignation by the Executive For Good
Reason.  If the Employment Period is
terminated by the Company without Cause or if the Executive resigns for Good
Reason, subject to the Executive’s continued performance of the terms of this
Agreement that survive the Termination Date, the Executive will be entitled to
receive (1) (i) if such termination occurs prior to the eighteen-month
anniversary of the Effective Date, his Base Salary for the greater of (x)
twelve months and (y) the period of time remaining in such eighteen-month
period, (ii) if such termination occurs after the eighteen-month anniversary of
the Effective Date, his base salary equal to twelve months and (2) if such
termination or resignation occurs between October 1 and December 31, Executive
will be entitled to a prorated Annual Cash Bonus based on the number of days
during the relevant Fiscal Year that precede the date of termination (each of
(1) and (2) referred to as the

 

4

 

“Severance Payment”).  The Executive also shall be entitled to
receive payment for all reimbursable expenses or other entitlements then due
and owing to the Executive as of the Termination Date.  In the event that the Executive breaches his
obligations under Section 1.6, 1.7, 1.8 or 1.9 of
this Agreement, the Company’s obligation to make any Severance Payments and
provide any Benefits shall cease as of the date of such breach.

 

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

 

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

 

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

 

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

 

1.6           Confidential
Information.

 

(a)           The
Executive shall not disclose or, directly or indirectly, use at any time,
during the Employment Period or thereafter, any Confidential Information (as
defined below) of which the Executive is or becomes aware, whether or not such
information is developed by his, except to the extent that (i) such disclosure
or use is required by the Executive’s performance of the duties assigned to the
Executive by the Board, (ii) the Executive is required by subpoena or similar
process to disclose or discuss any Confidential Information, provided, that in
such case,

 

5

 

the
Executive shall promptly inform the Company of such event and shall cooperate
with the Company in attempting to obtain a protective order or to otherwise
restrict such disclosure or (iii) such Confidential Information becomes
generally known to and available for use by the public, other than as a result
of any action or inaction by the Executive. 
At the Company’s expense, the Executive shall take all appropriate steps
to safeguard Confidential Information and to protect it against disclosure,
misuse, espionage, loss and theft.  The
Executive acknowledges that the Confidential Information obtained by him (i)
during the course of his employment with the Company or (ii) during the course
of his employment with VisionMaker and its Subsidiaries in connection with the
Acquisition is the sole and exclusive property of the Company and its
Subsidiaries, as applicable.

 

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

 

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

 

1.7           Inventions
and Patents.  In the event that the
Executive, as part of his activities on behalf of the Company or any of its
Subsidiaries, generates, authors or contributes to any invention, design, new
development, device, product, method or process (whether or not patentable or
reduced to practice or comprising Confidential Information), any copyrightable
work (whether or not comprising Confidential Information) or any other form of
Confidential Information relating directly or indirectly to the business of the
Company or any of its Subsidiaries as now or hereinafter conducted
(collectively, “Intellectual Property”),
the Executive acknowledges that such Intellectual Property is the sole and
exclusive property of the

 

6

 

Company
and its Subsidiaries and hereby assigns all right, title and interest in and to
such Intellectual Property to the Company and its Subsidiaries.  Any copyrightable work prepared in whole or
in part by the Executive will be deemed “a work made for hire” under Section
201(b) of the 1976 Copyright Act, and the Company and its Subsidiaries shall
own all of the rights comprised in the copyright therein.  The Executive shall promptly and fully
disclose all Intellectual Property to the Company and shall cooperate with the
Company and its Subsidiaries to protect the Company’s and its Subsidiaries’
interests in and rights to such Intellectual Property (including, without
limitation, providing reasonable assistance in securing patent protection and
copyright registrations and executing all documents as reasonably requested by
the Company, whether such requests occur prior to or after termination of the
Executive’s employment with the Company). 
Anything herein to the contrary notwithstanding, the obligations of
Executive shall be limited to and subject to the terms and provisions of
California Labor Code Section 2870, a copy of which is attached hereto as
Exhibit A.

 

1.8           Delivery
of Materials Upon Termination of Employment.  As requested by the Company from time to time
and upon the termination of the Executive’s employment with the Company for any
reason, the Executive shall promptly deliver to the Company all copies and
embodiments, in whatever form, of all Confidential Information, Intellectual
Property and property of the Company and its Subsidiaries in the Executive’s
possession or within his control (including, but not limited to, office keys,
access cards, written records, notes, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks, diskettes,
tapes and any other materials containing any Confidential Information or
Intellectual Property) irrespective of the location or form of such material
and, if requested by the Company, shall provide the Company with written
confirmation that all such materials have been delivered to the Company.

 

1.9           Non-Compete,
Non-Solicitation.

 

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

 

7

 

obtained
from such Person as an owner of stock or other ownership interests in any
entity pursuant to the charter or other organizational documents of such
entity, but shall not include, without limitation, any involvement in the
day-to-day operations of such entity.

 

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

 

1.10         VisionMaker
Relationship.  During the Employment
Period, Executive shall not have any day-to-day involvement in ongoing
VisionMaker, LLC, a Delaware limited liability company, activities and shall
recuse himself from any VisionMaker decision (and shall abstain from voting
upon any matter) concerning a Family Entertainment Center within the Territory.

 

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

 

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

 

8

 

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

 

ARTICLE III

DEFINED TERMS

 

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

 

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

 

“Available Cash Flow Excess” means, for any
Fiscal Year, the product of (x) the amount by which EBITDA for such Fiscal Year exceeds Target EBITDA,
multiplied by (y) 20%; provided that the aggregate amount payable by the
Company to all employees in respect of the Available Cash Flow Excess shall in
no event exceed (i) for Fiscal Year, 2007, $2,250,000 plus a pro rata
increase based on the number of complete months in Fiscal Year 2006 following
the date the Acquisition is consummated, and
(ii) for each subsequent Fiscal Year during the Employment Period, such amount
that is determined by the Company’s Board of Directors, in its sole discretion.

 

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

 

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

 

“Disability” shall have the meaning set
forth in a policy or policies of disability insurance, if any, the Company
obtains for the benefit of itself and/or its employees.  If there is no definition of “disability”
applicable under any such policy or policies, if any, then the Executive shall
be considered disabled due to mental or physical impairment or disability,
despite reasonable accommodations by the Company and its Subsidiaries, to
perform his

 

9

 

customary or other comparable duties with the Company or its
Subsidiaries immediately prior to such disability for a period of at least 120
consecutive days or for at least 180 non-consecutive days in any 12-month
period.

 

“EBITDA” means, for a Fiscal Year, earnings
before interest, taxes, depreciation and amortization determined in good faith
by the Company’s Board of Directors following each Fiscal Year based on the
audited financial statements of the Company and its subsidiaries for such
Fiscal Year using the same methodology used in developing the EBITDA Target for
such Fiscal Year, as adjusted to reflect capital expenditures and changes in
average working capital during the Fiscal Year. 
Notwithstanding the foregoing, not later than 30 days after the
commencement of the Fiscal Year, the Compensation Committee of the Board of
Directors in consultation with the Executive may adjust the criteria to
calculate EBITDA.

 

“EBITDA Target” means for each Fiscal Year
the target amount established by the Company’s Compensation Committee of the
Board of Directors not later than thirty days after the commencement of the
Fiscal Year (it being understood that the Company’s Board of Directors may, but
shall not be obligated to, make adjustments to adjust for the effect of
extraordinary corporate transactions (acquisitions or dispositions of
businesses) during the Fiscal Year and shall be adjusted to include the
aggregate amount of Annual Bonuses for such Fiscal Year).

 

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

 

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

 

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

 

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

 

10

 

“Noncompete Period” means the Employment
Period and 24 months thereafter, provided that if the Employment Period is
terminated by the Company without Cause or if Executive resigns for Good
Reason, then the Noncompete Period means the Employment Period and 12 months
thereafter.

 

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

 

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

 

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

 

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

 

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

 

2.2           Other
Definitional Provisions.

 

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

 

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

 

ARTICLE III

MISCELLANEOUS TERMS

 

3.1           Option
to Acquire Additional Units.  Until
such time as Executive owns Class A and Class C Units issued by Parent with an
aggregate cost basis of $1,250,000, Executive shall have the right to purchase
additional Class A Units of Parent having an aggregate Fair Market Value equal
to $750,000 less the Fair Market Value (at the time of issuance) of all Class C
Units issued to Executive in accordance with Section 1.3(b)(iv).  The purchase price for such Class A Units
shall be equal to the Fair Market Value of such Units at the time of
purchase.  As soon as practicable
following the date that Executive notifies the Company of his intent to
purchase such Class A Units, the Board shall inform Executive of the Fair
Market Value of such Units.  The purchase
price for such Class A Units shall be paid by check or a wire transfer of funds
within

 

11

 

five
(5) business days after the Company notifies Executive of the Fair Market Value
(and purchase price) of such Class A Units.

 

3.2           Dispute
Resolution.

 

(a)           Except
with respect to disputes and claims under Section 1.6, 1.7, 1.8
or 1.9 hereof (which may be pursued in any court of competent
jurisdiction), each Party agrees that arbitration, pursuant to the rules of the
Federal Mediation and Conciliation Service (the “FMCS”) in effect as of the date of commencement of the
arbitration (the “FMCS Rules”), shall
be the sole and exclusive method for resolving any claim or dispute (“Claim”) arising out of or relating to the
rights and obligations of the parties under this Agreement and the employment
of the Executive by the Company (including, without limitation, claims and
disputes regarding employment discrimination, sexual harassment, termination
and discharge), whether such claim arose or the facts on which such Claim is
based occurred prior to or after the execution and delivery of this Agreement.  The Parties agree that (i) one arbitrator
shall be appointed pursuant to the FMCS Rules to conduct any such arbitration
and (ii) all meetings of the Parties and all hearings with respect to any such
arbitration shall take place in New York, New York, or if such Claim does not
arise out of or include a Claim under Section 1.9, then such arbitration shall
take place in Los Angeles, CA.  The
Parties further agree that, unless otherwise determined by the arbitrator, (x)
each Party to the arbitration shall bear its own costs and expenses (including,
without limitation, all attorneys’ fees and expenses, except to the extent
otherwise required by applicable law) and (y) all costs and expenses of the
arbitration proceeding (such as filing fees, the arbitrator’s fees, hearing
expenses, etc.) shall be borne equally by the Parties; provided that nothing
herein shall be interpreted to preclude the arbitrator from allocating the
costs and expenses of the Parties and of such proceeding among the Parties in
any manner that the arbitrator may lawfully determine to do so.  The Parties agree that the judgment, award or
other determination of any arbitration under the FMCS Rules shall be final,
conclusive and binding on all of the Parties. 
Nothing in this Section 3.1(a) shall prohibit any Party from
instituting litigation to enforce any final judgment, award or determination of
the arbitration.  Each Party hereby
irrevocably submits to the jurisdiction of the United States District Court for
the Southern District of New York, or if such Claim does not arise out of or
include a Claim under Section 1.9, then to the jurisdiction of the United
States District Court for the Central District of California, and agrees that
such court shall be the exclusive forum for the enforcement of any such final
judgment, award or determination of the arbitration.  Each Party irrevocably consents to service of
process by registered mail or personal service and waives any objection on the
grounds of personal jurisdiction, venue or inconvenience of the forum.

 

(b)           Notwithstanding
the foregoing, prior to any Party instituting any arbitration proceeding
hereunder to resolve any Claim, such Party first shall submit the Claim to a
mediation proceeding among the Parties which shall be governed by the
prevailing procedures of the FMCS and shall be conducted in New York, New York,
or if such Claim does not arise out of or include a Claim under Section 1.9,
then such mediation shall be conducted in Los Angeles, CA.  If the Parties have not agreed in writing to
a resolution of the Claim pursuant to the mediation within 45 days after the
commencement thereof of if any Party refuses to participate in the mediation
process, then the Claim may be submitted to arbitration under Section 3.1(a)
above.  Unless otherwise determined by
the mediator, each Party shall bear its own costs and expenses incurred in
connection with the mediation, and all costs and expenses of the mediation

 

12

 

proceeding
shall be borne equally by the Parties; provided that nothing herein shall be
interpreted to preclude the mediator from allocating the costs and expenses of
the Parties and of such proceeding among the Parties in any manner that the
arbitrator may lawfully determine to do so.

 

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

 

To the Company:

 

4590 MacArthur Boulevard

Newport Beach, CA 
92660

Telephone:            (949)
797-9721

Telecopy:              (949)
261-1414

Attention:              Chief
Executive Officer

 

With copies to:

 

MidOcean Partners, LP

320 Park Avenue

17th Floor

New York, NY 
10022

Telephone:            (212)
497-1400

Telecopy:              (212)
497-1375

Attention:              Tyler
Zachem

 

and

 

Kirkland & Ellis LLP

655 Fifteenth Street, N.W

Suite 1200

Washington, D.C. 
20005

Telephone:            (202)
879-5000

Telecopy:              (202)
879-5200

Attention:              Andrew
M. Herman, Esq.

 

To the Executive:

 

c/o VisionMaker, LLC

333 City Boulevard West

17th Floor

Orange, CA 
92868

Telephone:            (714)
456-9942

Telecopy:              (714)
242-7440

 

or such other
address or to the attention of such other Person as the recipient Party will
have specified by prior written notice to the sending Party.  Any notice under this Agreement will be

 

13

 

deemed to have
been given when so delivered or sent or, if mailed, five days after deposit in
the U.S. mail.

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

3.10         Remedies.  Subject to the provisions of Section 3.1,
each Party will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor.  Nothing herein shall prohibit any
arbitrator or judicial authority from awarding attorneys’ fees or costs to a
prevailing Party in any arbitration or other proceeding to the extent that such
arbitrator or authority may lawfully do so.

 

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

 

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

 

3.13         The
Executive’s Representations.  The
Executive hereby represents and warrants to the Company that (a) the execution,
delivery and performance of this Agreement by the Executive do not and shall
not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which the Executive is a
party or by which he is bound, (b) the Executive is not a party to or bound by
any employment agreement, noncompete agreement or confidentiality agreement
with any other Person and (c) upon the execution and delivery of this Agreement
by the Company, this Agreement shall be the valid and binding obligation of the
Executive, enforceable in accordance with its terms.

 

3.14         Amendment
to Comply with Section 409A of the Code. 
To the extent that this Agreement or any part thereof is deemed to be a
nonqualified deferred compensation plan subject to Section 409A of the Code and
the Treasury Regulations (including proposed regulations) and guidance
promulgated thereunder, (a) the provisions of this Agreement shall be
interpreted in a manner to the maximum extent possible to comply in good faith
with Code Section 409A, and (b) the parties hereto agree to amend this
Agreement for purposes of complying with Code Section 409A promptly upon
issuance of any Treasury regulations or guidance thereunder, provided, that any such amendment shall
not materially change the present value of the benefits payable to the Executive
hereunder or otherwise materially adversely affect the Executive, the Company,
or any affiliate of the Company, without the consent of such party.

 

[END OF PAGE]

[SIGNATURE PAGE FOLLOWS]

 

15

 

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

 

	
   

  	
  FESTIVAL
  FUN PARKS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel S. Martinez

  
	
   

  	
   

  	
  Name:

  	
  Daniel S. Martinez

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  PALACE
  ENTERTAINMENT HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel S. Martinez

  
	
   

  	
   

  	
  Name:

  	
  Daniel A. Martinez

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  /s/ John A. Cora

  
	
   

  	
  JOHN
  A. CORA

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]