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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 ").
(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.
(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. Confid
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