Exhibit 10.1
Execution Copy
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“ Agreement ”) is made as of January 8, 2007, by
and among Festival Fun Parks, LLC, a Delaware limited liability
company (the “ Company ”), Palace Entertainment
Holdings, Inc., a Delaware corporation (“ Holdings
”) and Alexander Weber, Jr. (the “ Executive
”), each a “ Party ” and collectively the
“ Parties .” Unless otherwise indicated,
capitalized terms used herein are defined in Section 2.1
.
ARTICLE I
EMPLOYMENT TERMS
1.1
Employment . The Company will employ the Executive,
and the Executive accepts employment with the Company, upon the
terms and conditions set forth in this Agreement for the period
beginning on January 8, 2007 (the “ Effective Date
”) and ending as provided in Section 1.4(a) hereof
(the “ Employment Period ”).
1.2
Position and Duties
.
(a)
Generally . The Executive shall serve as the Chief
Executive Officer and President of each of Holdings and the Company
and, in such capacity shall be responsible for the general
management of the business, affairs and operations of Holdings and
the Company, shall perform such duties as are customarily performed
by a chief executive officer and president of a company of a
similar size and shall have such power and authority as shall
reasonably be required to enable him to perform his duties
hereunder; provided, however, that in exercising such power and
authority and performing such duties, he shall at all times be
subject to the authority and control of the Boards of Directors of
Holdings and the Company. At all times that Executive is
employed by Holdings and/or the Company as the Chief Executive
Officer and President, he shall serve as a member of the Board of
Directors of each of Holdings and the Company.
(b)
Duties and Responsibilities . The Executive shall
report to the Board of Directors of the Company (the “
Board ”) and shall devote his full business time and
attention to the business and affairs of Holdings, the Company and
its Subsidiaries. The Executive shall perform his duties and
responsibilities in a diligent, trustworthy, businesslike and
efficient manner. The Executive shall not engage in any other
business activities that could reasonably be expected to conflict
with the Executive’s duties, responsibilities and obligations
hereunder. During the Employment Period, the Executive shall
promptly bring to the Company or its Subsidiaries, as applicable,
all investment or business opportunities relating to the activities
described in Section 1.9(a) of which the Executive becomes
aware.
1.3
Compensation .
(a)
Base Salary . The Executive’s base salary shall
be $325,000.00 per annum (the “ Base Salary
”). The Base Salary payable for Fiscal Year 2007 shall
be pro-rated based on the number of days from and including
the Effective Date through and including December 31, 2007.
The Base Salary will be payable to the Executive by the Company in
regular installments in accordance with the Company’s general
payroll practices. The Executive shall receive such increases
in his Base Salary as the Board may approve in its sole discretion
from time to time; provided that the Executive’s Base Salary
will be reviewed not less often than annually.
(b)
Annual Bonus . For Fiscal Year 2007 and for each
subsequent Fiscal Year during the Term (as defined below), the
Executive shall be eligible to receive an annual cash bonus (the
“ Annual Cash Bonus ”) in an amount equal to
100% of Executive’s Base Salary if the Company’s
revenue, EBITDA and cash flow for a Fiscal Year are equal to or
greater than the Bonus Target for such Fiscal Year. Annual
Cash Bonuses shall be payable to Executive on or before the end of
the fourth month following the end of the relevant Fiscal Year, but
in the event that the Company has not received its audited
financial statements for the relevant Fiscal Year by the date that
is three and one-half months after the end of such relevant Fiscal
Year, the Company shall make such payment within fifteen days (but
not later than the last day of the calendar year following such
Fiscal Year) after the Company’s receipt of audited financial
statements for such Fiscal Year, so long as Executive is employed
by the Company on the last day of such Fiscal Year.
(c)
Supplemental Bonus . For Fiscal Year 2007 and for each
subsequent Fiscal Year during the Term, the Executive may also be
eligible to receive a supplemental cash bonus (the “
Supplemental Cash Bonus ”), in addition to the Annual
Cash Bonus and in an amount to be determined pursuant to a
supplemental bonus program to be adopted in the discretion of the
Board, if the Company’s revenue, EBITDA and cash flow for a
Fiscal Year are greater than the Bonus Target for such Fiscal
Year. Supplemental Cash Bonuses, if any, shall be payable to
Executive at the same time as Annual Cash Bonuses.
(d)
Withholding . All payments made under this Agreement
(including Base Salary, bonus payments, and other amounts) shall be
subject to withholding for income taxes, payroll taxes and other
legally required deductions.
(e)
Expenses . The Company will reimburse the Executive
for all reasonable expenses incurred by him in the course of
performing his duties under this Agreement which are consistent
with the Company’s policies in effect at that time with
respect to travel, entertainment and other business expenses,
subject to the Company’s requirements with respect to
reporting and documentation of such expenses.
(f)
Vacation; Holiday Pay and Sick Leave . The Executive
shall be entitled to four (4) weeks’ paid vacation in each
calendar year, which if not taken during any year may be carried
forward to any subsequent year. Executive shall receive
holiday pay and paid sick leave as provided to other executive
employees of Holdings and the Company. Upon cessation of
Executive’s employment for any reason, Executive shall
receive pay for all accrued and unused vacation, calculated at his
Base Salary rate in effect at the time of the cessation of his
employment, provided that the amount of vacation that Executive
shall be entitled to accrue during the Term shall be in accordance
with Company policy and in no event shall such accrued vacation
exceed four (4) weeks at any given time.
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(g)
Additional Benefits . During the Employment Period,
the Executive shall be entitled to participate (for himself and, as
applicable, his dependents) in the group medical, life, 401(k) and
other insurance programs, employee benefit plans and perquisites
which may be adopted by the Board for participation by the
Company’s senior management or executives, as well as dental,
life and disability insurance coverage, with payment of, or
reimbursement for, such insurance premiums by the Company, subject
to, in all cases, the terms and conditions established by the Board
with respect to such plans (collectively, the “
Benefits ”); provided, however, that the Board, in its
discretion, may revise the terms of any Benefits so long as such
revision does not have a disproportionately negative impact on the
Executive vis-à-vis other Company employees, to the
extent applicable.
(h)
Incentive Unit Grant . On the Effective Date, the
Executive shall receive a grant (the “ Equity Grant
”) of 1020.28 Class B-1 Units, 1700.47 Class B-2 Units and
680.19 Class B-3 Units (as defined in the LLC Agreement) of Palace
Holdings Group, LLC. The Equity Grant shall be subject to the
terms and provisions of the LLC Agreement including, without
limitation, the vesting, forfeiture, repurchase and giveback
provisions of Sections 3.1(d), 10.3 and 11.3 of the LLC
Agreement.
(i)
Director and Officer Insurance . The Company shall use
commercially reasonable efforts to purchase and maintain a
Directors and Officers liability insurance policy on terms and
conditions deemed acceptable to the Board, acting in good faith,
which policy will cover Executive at all times during his
employment.
(j)
Potential Adjustments for Significant Transactions .
In the event that the Company acquires a material Family
Entertainment Center or similar business, then the Company and
Executive shall discuss in good faith adjustments to
Executive’s overall compensation package to compensate
Executive for increases in his job duties.
(k)
Relocation Expenses . The Company shall reimburse the
Executive for all reasonable and necessary expenses incurred by the
Executive in relocating to the Newport Beach, California area,
including packing and moving expenses but excluding real estate
brokerage commissions, in accordance with the Company’s
policies (including repayment policies) as in effect from time to
time. The Company shall also pay or reimburse the Executive
for the cost of temporary housing for the Executive and his family
for a period of up to twelve (12) months from the Effective Date
and three house-hunting trips for Executive and his
spouse.
1.4
Term and Termination
.
(a)
Duration . The Employment Period shall commence on the
Effective Date and shall terminate four (4) years from the
Effective Date (the “ Term ”), unless earlier
terminated by the Company or the Executive as set forth in this
Section 1.4 . The Term of the Agreement shall renew
automatically for one-year periods, unless either party gives the
other party written notice of its intention not to renew the
Agreement no later than 90 days prior to the expiration of the then
current Term. This Agreement may be terminated during the Term upon
the first to occur of (i) termination of the Executive’s
employment by the Company for Cause, (ii) termination of
the
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Executive’s employment by the
Company without Cause, (iii) the Executive’s resignation with
Good Reason, (iv) the Executive’s resignation other than for
Good Reason, or (v) the Executive’s death or
Disability. The Executive shall not terminate the Agreement
with or without Good Reason, unless he gives the Company written
notice that he intends to terminate the Agreement at least 90 days
prior to the Executive’s proposed Termination Date.
Upon termination of this Agreement, the Executive shall execute and
deliver to the Company a release that is in form and substance
acceptable to the Company.
(b)
Severance Upon Termination Without Cause or Upon Resignation by
the Executive For Good Reason . If the Employment Period
is terminated by the Company without Cause or if the Executive
resigns for Good Reason, subject to the Executive’s continued
performance of the terms of this Agreement that survive the
Termination Date, the Executive will be entitled to receive (1) (i)
if such termination occurs prior to May 31, 2008, his Base Salary
for the greater of (x) twelve months and (y) the period of time
remaining in the period between the Effective Date and May 31,
2008, (ii) if such termination occurs after May 31, 2008, his Base
Salary equal to twelve months and (2) if such termination or
resignation occurs between July 1 and December 31 in a Fiscal Year
during the Term, Executive will be entitled to a prorated Annual
Cash Bonus based on the number of days during the relevant Fiscal
Year that precede the Termination Date (each of (1) and (2)
referred to as the “ Severance Payment ”).
The Severance Payment shall be payable to the Executive in
accordance with the Company’s general payroll practices for
the payment of Base Salary and Annual Cash Bonus, as
applicable. The Executive also shall be entitled to receive
payment for all reimbursable expenses or other entitlements then
due and owing to the Executive as of the Termination Date. In
the event that the Executive breaches his obligations under
Section 1.6 , 1.7 , 1.8 or 1.9 of this
Agreement, the Company’s obligation to make any Severance
Payment and provide any Benefits shall cease as of the date of such
breach.
(c)
Death and Disability . In the event of the Company
terminates this Agreement due to the death or Disability of the
Executive, the Executive shall be entitled to no severance or other
termination benefits from and after the termination of his
employment, except that the Executive or his estate shall be
entitled to the Severance Payment as provided in Section
1.4(b) hereof. Any other rights and benefits the
Executive may have under employee benefit plans and programs of the
Company generally in the event of the Executive’s Disability
shall be determined in accordance with the terms of such plans and
programs. In the event of Executive’s death, any rights
and benefits that the Executive’s estate or any other person
may have under employee benefit plans and programs of the Company
generally in the event of the Executive’s death shall be
determined in accordance with the terms of such plans and
programs.
(d)
Salary and Other Payments Through Termination . If the
Executive’s employment with the Company is terminated during
the Term (i) by the Company for Cause or (ii) by the Executive
other than for Good Reason, the Executive will be entitled to
receive his Base Salary through the Termination Date, but will not
be entitled to receive any Severance Payments or Benefits after the
Termination Date. The Executive shall be entitled to receive
payment for all reimbursable expenses or other entitlements then
due and owing to the Executive as of the Termination
Date.
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(e)
Other Rights . Except as set forth in Section
1.4(b) , all of the Executive’s rights to Base Salary,
Benefits and Annual Cash Bonuses hereunder (if any) which accrue or
become payable after the termination of the Employment Period shall
cease upon such termination.
1.5
Key Man Life Insurance . The Company shall have the
right to purchase in the Executive’s name a “key
man” life insurance policy naming the Company or any of its
Subsidiaries as the sole beneficiary thereunder. The
Executive agrees to take all reasonable measures necessary to
effect the foregoing, including without limitation submitting to a
physical examination for the purpose of determining eligibility
therefore and cooperating with any matters related to the
application for, and if obtained, the maintenance of, such
insurance policy. If Executive is found ineligible for some
reason for such “key man” life insurance either at the
inception of his employment or at anytime thereafter, this
ineligibility will not affect Executive’s employability under
this Agreement or constitute Cause for termination of
Executive’s employment.
1.6
Confidential Information .
(a)
The Executive shall not disclose or, directly or indirectly, use at
any time, during the Employment Period or thereafter, any
Confidential Information (as defined below) of which the Executive
is or becomes aware, whether or not such information is developed
by him, except to the extent that (i) such disclosure or use is
required by the Executive’s performance of the duties
assigned to the Executive by the Board, (ii) the Executive is
required by subpoena or similar process to disclose or discuss any
Confidential Information, provided, that in such case, the
Executive shall promptly inform the Company of such event and shall
cooperate with the Company in attempting to obtain a protective
order or to otherwise restrict such disclosure, or (iii) such
Confidential Information becomes generally known to and available
for use by the public, other than as a result of any action or
inaction by the Executive. At the Company’s expense,
the Executive shall take all appropriate steps to safeguard
Confidential Information and to protect it against disclosure,
misuse, espionage, loss and theft. The Executive acknowledges
that the Confidential Information obtained by him during the course
of his employment with the Company and its Subsidiaries is the sole
and exclusive property of the Company and its Subsidiaries, as
applicable.
(b)
The Executive understands that the Company and its Subsidiaries
will receive from third parties confidential or proprietary
information (“ Third Party Information ”)
subject to a duty on the part of the Company and its Subsidiaries
to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the Employment
Period and thereafter, and without in any way limiting the
provisions of Section 1.6(a) above, the Executive will hold
Third Party Information in the strictest confidence and will not
disclose to anyone (other than personnel of the Company or its
Subsidiaries who need to know such information in connection with
their work for the Company or its Subsidiaries) or use, except in
connection with his work for the Company or its Subsidiaries, Third
Party Information unless expressly authorized by the Board in
writing.
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(c)
As used in this Agreement, the term “ Confidential
Information ” means information that is not generally
known to the public and that is used, developed or obtained by
Holdings and its Subsidiaries (including the Company and its
Subsidiaries) and any of the Company’s predecessor entities
in connection with its business, including but not limited to (i)
business development, growth and other strategic business plans,
(ii) properties available for acquisition, financing development or
sale, (iii) accounting and business methods, (iv) services or
products and the marketing of such services and products, (v) fees,
costs and pricing structures, (vi) designs, (vii) analysis, (viii)
drawings, photographs and reports, (ix) computer software,
including operating systems, applications and program listings, (x)
flow charts, manuals and documentation, (xi) data bases, (xii)
inventions, devices, new developments, methods and processes,
whether patentable or unpatentable and whether or not reduced to
practice, (xiii) copyrightable works, (xiv) all technology and
trade secrets, (xv) confidential terms of material agreements and
customer relationships, and (xvi) all similar and related
information in whatever form. Confidential Information shall
not include any information that has become generally available
to
