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Exhibit 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this " Agreement ") is made as
of February 1, 2007, by and among Festival Fun Parks, LLC, a
Delaware limited liability company (the " Company "), Palace
Entertainment Holdings, Inc., a Delaware corporation ("
Holdings ") and Brett Petit (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 February 1, 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 Senior
Vice President of Marketing & Sales for the Company and shall
be responsible for the overseeing and implementing the general
marketing, advertising, promotional and sales activities of
Holdings and the Company.
(b)
Duties and Responsibilities . The Executive shall
report to the Chief Executive Officer 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.
Specifically, Executive shall provide no marketing, advertising,
sales or related services for any individual or entity involved in
the amusement industry without obtaining the consent of the Chief
Executive Officer in advance. 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
1.8(a) of which the Executive becomes aware.
(a)
Base Salary . The Executive’s base salary shall
be $200,000.00 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 50% 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)
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.
(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 up to a maximum of eight (8) weeks,
at which time vacation accrual will cease until the accrual is
reduced below the eight week cap. 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 eight (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, 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.
(g)
Incentive Unit Grant . On the Effective Date, the
Executive shall receive a grant (the " Equity Grant ") of
204.06 Class B-1 Units, 340.09 Class B-2 Units and 136.04 Class B-3
Units (as defined in the LLC Agreement) of Palace Holdings Group,
LLC. The Equity Grant
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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.
(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, acting in good faith,
which policy will cover Executive at all times during his
employment.
(i)
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.
(j)
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 six (6) months from the Effective Date and
three house-hunting trips for Executive and his spouse. As
far as practicable, anticipated expenses should be submitted for
approval in advance (i.e. moving fees, temporary housing, rental,
etc.). The total amount of reimbursable relocation expenses
may not exceed $50,000.00.
(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 . 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 general release of all claims 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) his
Base Salary equal to twelve months and (2) if such termination
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or resignation occurs between September 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 1.5 , 1.6 , 1.7 or 1.8 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.
(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
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
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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 1.5(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.
1.6
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 Company and its Subsidiaries
and hereby assigns all right, title and interest in
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