Exhibit 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
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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,
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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,
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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
