Reciprocal Easement Agreement

RECIPROCAL EASEMENT AGREEMENT


between


MARINE WORLD JOINT POWERS AUTHORITY


and


PARK MANAGEMENT CORP.


Dated as of November 7, 1997


TABLE ON CONTENTS


ARTICLE 1
OPERATION AND MAINTENANCE - GENERAL


SECTION 1.1. Operation and Maintenance. . . . . . . . . . . . . . . . 2
SECTION 1.2. Damage or Destruction to Improvements on any Parcel. . . 3
SECTION 1.3. Clearing Debris from Razed Improvements. . . . . . . . . 3
SECTION 1.4. Miscellaneous Repairs and Alterations. . . . . . . . . . 3
SECTION 1.5. Liability of Mortgagee . . . . . . . . . . . . . . . . . 4
SECTION 1.6. Limitation on Detrimental Characteristics. . . . . . . . 4
SECTION 1.7. Parking. . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.8. Compliance With Laws . . . . . . . . . . . . . . . . . . 5
SECTION 1.9. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.10. Environmental Matters. . . . . . . . . . . . . . . . . . 5
SECTION 1.11. Conflict with Article 2. . . . . . . . . . . . . . . . . 5

ARTICLE 2
OPERATION AND MAINTENANCE OF PUBLIC AREAS


SECTION 2.1. Operation and Maintenance of Public Areas. . . . . . . . 5
SECTION 2.2. Rules and Regulations. . . . . . . . . . . . . . . . . . 6
SECTION 2.3. Restrictions on Public Areas and Otherwise . . . . . . . 6
SECTION 2.4. Failure of Performance . . . . . . . . . . . . . . . . . 6
SECTION 2.5. Damage to or Destruction of Public Areas . . . . . . . . 6
SECTION 2.6. Operation of the Public Parking. . . . . . . . . . . . . 7
SECTION 2.7. Noninterference with Permittee Circulation . . . . . . . 7
SECTION 2.8. Fences . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.9. Signs and Banners. . . . . . . . . . . . . . . . . . . . 7

ARTICLE 3
RECIPROCAL EASEMENTS


SECTION 3.1. Definitions and Documentation. . . . . . . . . . . . . . 8
SECTION 3.2. Nature of Easements. . . . . . . . . . . . . . . . . . . 8
SECTION 3.3. General Easements. . . . . . . . . . . . . . . . . . . . 9
SECTION 3.4. Easements for Utility Facilities . . . . . . . . . . . . 10
SECTION 3.5. Temporary Construction Easements . . . . . . . . . . . . 11
SECTION 3.6. Termination and Abandonment of Easements.. . . . . . . . 11

ARTICLE 4
GENERAL CONSTRUCTION REQUIREMENTS


SECTION 4.1. "Construction" Defined.. . . . . . . . . . . . . . . . . 12
SECTION 4.2. Construction to Proceed in Reasonable Manner.. . . . . . 12
SECTION 4.3. Construction Barricades. . . . . . . . . . . . . . . . . 12
SECTION 4.4. Safety Matters . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.5. Workmanship. . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.6. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 5
OTHER AGREEMENTS


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SECTION 5.1. Covenant to Perform. . . . . . . . . . . . . . . . . . . 13
SECTION 5.2. Subordination of Leases. . . . . . . . . . . . . . . . . 13
SECTION 5.3. Indemnification by Parties . . . . . . . . . . . . . . . 13
SECTION 5.4. Liability Insurance and Waiver of Subrogation. . . . . . 14
SECTION 5.5. Casualty Insurance . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6. Condemnation . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7. Fire or Other Casualty . . . . . . . . . . . . . . . . . 16
SECTION 5.8. Application of Proceeds and Awards . . . . . . . . . . . 16

ARTICLE 6
REAL ESTATE TAXES OR IMPOSITIONS


SECTION 6.1. Payment of Taxes or Impositions. . . . . . . . . . . . . 17
SECTION 6.2. Contesting Impositions.. . . . . . . . . . . . . . . . . 17
SECTION 6.3. Failure to Pay Impositions.. . . . . . . . . . . . . . . 17
SECTION 6.4. Additional Provisions Regarding Impositions. . . . . . . 17
SECTION 6.5. Other Governmental Charges . . . . . . . . . . . . . . . 19
SECTION 6.6. Exceptions from Impositions; Charges in Lieu of
Impositions. . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 7
ARBITRATION

SECTION 7.1. Disputes Subject to Arbitration. . . . . . . . . . . . . 19
SECTION 7.2. Arbitration Procedures.. . . . . . . . . . . . . . . . . 19
SECTION 7.3. Proceedings. . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 8
NOTICES AND APPROVALS


SECTION 8.1. Notices to Parties.. . . . . . . . . . . . . . . . . . . 19
SECTION 8.2. Time and Form of Approvals.. . . . . . . . . . . . . . . 20
SECTION 8.3. Notice to Mortgagees and Opportunity to Cure . . . . . . 20

ARTICLE 9
AMENDMENT


SECTION 9.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 21


ARTICLE 10
EXPIRATION DATE


SECTION 10.1. Term.. . . . . . . . . . . . . . . . . . . . . . . . . . 21


ARTICLE 11
MISCELLANEOUS


SECTION 11.1. Limited Liability of Parties.. . . . . . . . . . . . . . 21
SECTION 11.2. Exhibits.. . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.3. References to Articles, Sections and Subsections.. . . . 22
SECTION 11.4. Table of Contents and Captions.. . . . . . . . . . . . . 22
SECTION 11.5. Locative Adverbs.. . . . . . . . . . . . . . . . . . . . 22
SECTION 11.6. REA for Exclusive Benefit of the Parties.. . . . . . . . 22
SECTION 11.7. Waiver of Default. . . . . . . . . . . . . . . . . . . . 22
SECTION 11.8. Payment on Default.. . . . . . . . . . . . . . . . . . . 23
SECTION 11.9. No Partnership Joint Venture or Principal Agent
Relationship.. . . . . . . . . . . . . . . . . . . . . . 23


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SECTION 11.10. Successors.. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.11. Severability.. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.12. Governing Laws.. . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.13. Release. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.14. No Dedication. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 11.15. Written Consent Required.. . . . . . . . . . . . . . . . 24
SECTION 11.16. Covenants Run With the Land. . . . . . . . . . . . . . . 24
SECTION 11.17. Rules. . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 11.18. Default Shall Not Permit Termination of REA. . . . . . . 24
SECTION 11.19. Right to Enjoin. . . . . . . . . . . . . . . . . . . . . 25
SECTION 11.20. Rights, Privileges, and Easements with Respect to Liens. 25
SECTION 11.21. Identification of Utility Facilities.. . . . . . . . . . 25
SECTION 11.22. Generally Accepted Accounting Principles.. . . . . . . . 25
SECTION 11.23. Counterparts.. . . . . . . . . . . . . . . . . . . . . . 25
SECTION 11.24. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . 25
SECTION 11.25. Breach Shall Not Defeat Mortgage.. . . . . . . . . . . . 25
SECTION 11.26. Estoppel Certificate.. . . . . . . . . . . . . . . . . . 25
SECTION 11.27. Time of Essence. . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.28. Liability of Mortgagees. . . . . . . . . . . . . . . . . 26

ARTICLE 12
DEFINITIONS
SECTION 12.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . 26
EXHIBIT A DESCRIPTION OF THE LAND EXHIBIT B DESCRIPTION OF THE PRIVATE PARCEL EXHIBIT C DESCRIPTION OF THE PUBLIC PARCEL EXHIBIT D DESCRIPTION OF PUBLIC AREAS EXHIBIT E RULES AND REGULATIONS


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RECIPROCAL EASEMENT AGREEMENT


This Reciprocal Easement Agreement, dated as of November 7, 1997 (the "REA"), is made by and between the Marine World Joint Powers Authority, a joint exercise of powers authority organized and existing under the laws of the State of California (the "Authority"), and Park Management Corp., a California corporation (the "Corporation").


RECITALS


A. All capitalized terms used herein and not defined in the section where first used in this REA are defined in Article 12 hereof or the definition of such capitalized term is referenced in Article 12 hereof.


B. The City of Vallejo (the "City") owns approximately one hundred thirty-eight (138) acres of land located in the County of Solano, State of California, described in Exhibit A attached hereto (the "Land"). The City also owns or controls the right to use the surface of Lake Chabot, a flood control and drainage reservoir consisting of approximately fifty-five (55) acres.


C. Certain improvements to the portion of the Land identified as the "Public Parcel" below were refinanced on January 30, 1997, with the proceeds of certificates of participation in the aggregate principal amount of $63,465,000 (the "Certificates of Participation Financing").


D. In connection with the Certificates of Participation Financing, (i) the City entered into a 1997 Site Lease Relating to Marine World dated as of January 1, 1997 whereby the City leased the Land and rights to use Lake Chabot to the Authority (the "1997 City-Marine World Lease"), (ii) the Authority and the City entered into a 1997 Lease Agreement Relating to Marine World, dated as of January 1, 1997, whereby the Authority leased back to the City a portion of the Land identified in Exhibit C hereto (the "Public Parcel," which Public Parcel shall be hereinafter deemed to include, as appropriate, all Improvements thereon) and rights to use Lake Chabot, (iii) the City and the Redevelopment Agency of the City of Vallejo (the "Agency") entered into a 1997 First Sublease Agreement Relating to Marine World, dated as of January 1 1997, whereby the City subleased to the Agency the Public Parcel and the rights to use Lake Chabot, and (iv) the Agency and the Authority entered into a 1997 Second Sublease Agreement Relating to Marine World, dated as of January 1, 1997, whereby the Agency subleased to the Authority the Public Parcel and the rights to use Lake Chabot (the "1997 Agency-Marine World Lease") to enable the Authority to operate and maintain a park under the name "Marine World/Africa U.S.A."


E. The Authority and the Corporation have entered into a 1997 Management Agreement Relating to Marine World as of February 1, 1997 (said agreements, together with any successor agreement with respect to the management of the improvements on the Public Parcel, being herein called the "Management Agreement") pursuant to which the Corporation acts as the manager of the improvements located on the Public Parcel (the manager under the initial Management Agreement, and any manager of the Improvements on the Public Parcel under any successor Management Agreement, being herein called the "Manager").


F. The Authority, as landlord, and the Corporation, as Tenant, have entered into a Parcel Lease of even dated herewith (the "Parcel Lease") pursuant to which the Authority has leased to the Corporation the land identified in Exhibit B hereto (the "Private Parcel," which Private Parcel shall be hereinafter deemed to


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include, as appropriate, all Improvements thereon).


G. The Improvements to the Public Parcel include parking facilities from time to time maintained on or used in connection with the Public Parcel (the "Parking Areas"), an entry area which includes ticket sales and admission facilities, various public walkways, paths, restrooms, dining facilities, picnic areas and other related or similar areas that are intended for use by patrons of the Public Parcel and/or the Private Parcel in connection with, or are otherwise integral to, the operations of the Public Parcel and the Private Parcel (together with any similar Improvements on or later constructed on the Private Parcel, and all as more completely described in Exhibit D hereto, collectively herein call the "Public Areas"). The Public Areas shall not include any stadia, rides, exhibit facilities or other attractions that relate specifically to the theme and character of the operation of the respective Parcel or which such Public Area is located.


H. The parties to this REA desire to provide for the maintenance and operation of the Public Areas and of the Improvements, and to otherwise create and provide for certain rights, privileges and easements and to impose certain restrictions and covenants on the Public Parcel, the Private Parcel and the Public Areas as hereinafter more specifically set forth, including, but not limited to, certain rights of ingress, egress, and access as specifically set forth herein to and among the Public Areas, various portions of the Private Parcel and various portions of the Public Parcel.


I. It is hereby agreed by the parties hereto that this REA shall run with the Private Parcel and the Public Parcel and shall govern and be binding upon all Persons who shall succeed to any interest in any portion or portions of the Land and any improvements thereon, whether by lease, sublease, or any other conveyance, succession upon default, foreclosure, or operation of law until such time as this REA shall terminate in accordance with its own terms or unless and until every Party and the City, the Agency and every Mortgagee, if any, shall execute and acknowledge a declaration of termination of this REA and cause such declaration to be duly recorded in the Official Records, County of Solano, State of California.

AGREEMENT

ARTICLE 1

OPERATION AND MAINTENANCE - GENERAL


SECTION 1.1 OPERATION AND MAINTENANCE. The Authority shall have full responsibility to operate and maintain the Public Parcel, including any Improvements thereon and any Public Areas therein in a manner consistent with the manner of operations thereof, as a whole, during the two year period preceding the date of this REA, and the Corporation shall have full responsibility to operate and maintain the Private Parcel, including any Improvements thereon and any Public Areas therein in a manner consistent with other regional theme parks operated by PPI or related entities. Each Party shall operate and maintain, at its sole cost and expense, the Improvements on such Party's Parcel in accordance with this REA, the Leases to which it is a party, as applicable, and the Revenue Sharing Agreement. Each Party shall operate and maintain the Improvements on such Party's Parcel in a manner which does not unreasonably impede access between the Public Areas of the Parcels, or otherwise materially interfere with the use or operation of the Public Areas or the respective Parcels on which such Public Areas are located, and in a manner which is otherwise compatible with the uses of the Public Areas as permitted under this REA.


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The Authority has retained the Manager to operate and maintain the Public Parcel as described in the Management Agreement. The Corporation acknowledges receipt of a copy of the Management Agreement in effect on the date hereof, and assents to its terms as they relate to the operation and maintenance of the Public Parcel. The Authority shall provide the Corporation with any proposed amendment to the Management Agreement and any proposed successor Management Agreement at least two weeks prior to its effective date, and shall not enter into any such amendment or successor agreement to which the Corporation shall reasonably object, provided that said objections are delivered in writing during such two week period by the Corporation to the Authority and that said objection or objections relate to: (a) the standards of operation or maintenance of the Public Parcel and the Improvements thereon and the Public Areas therein, or (b) the compensation to be paid to the proposed manager, if such compensation is materially in excess of the then prevailing rate of compensation for managers of regional, non-destination theme parks of comparable size and with comparable annual attendance.

If either Party shall fail to properly maintain its Parcel in accordance with this Section 1.1, then the other Party (or, in the case of the Authority, the Manager on its behalf) shall have the rights under the provisions of Section 2.4 to take action to correct such failures and to collect the costs of such corrective action in the manner provided in Section 11.8.

SECTION 1.2 DAMAGE OR DESTRUCTION TO IMPROVEMENTS ON ANY PARCEL. Unless provided otherwise herein or in any Lease, each Party severally covenants to and with the other Party that in the event of any damage to or destruction of all or any portion of the Improvements, such Party shall, within a reasonable period of time commence and complete (subject to Unavoidable Delays) the restoration, replacement, or rebuilding of the Improvements with such alterations and additions as may be made at the Party's election pursuant to and subject to the terms of the applicable Lease (such restoration, replacement, rebuilding, alterations and additions, together with any temporary repairs and property protection pending completion of the work, being hereinafter called "Restoration"); provided, however, the Party's obligations with respect to such Restoration are limited to the amount of insurance proceeds which are payable to such Party on account of such damage or destruction.

Subject to the provisions of the applicable Lease and Article 5 hereof, in the event such damage or destruction is to or of all or substantially all of the Improvements on a Party's Parcel, or if the insurance proceeds payable to the Party are not sufficient to complete Restoration or if there are no insurance proceeds, or if in the opinion of the Party it is not commercially practicable to undertake Restoration, then such Party shall promptly as practicable either (a) commence and complete (subject to Unavoidable Delays) Restoration of the damaged Improvements, subject to the limitation with respect to insurance proceeds set forth herein, or (b) remove any unusable Improvements and cause the portion of the Parcel occupied by the damaged Improvements as to which the Party has not elected to undertake Restoration to be returned to a safe condition, and thereafter proceed in accordance with Section 1.3.

SECTION 1.3 CLEARING DEBRIS FROM RAZED IMPROVEMENTS. If a Party who owns or leases an Improvement is not obligated herein or in any Lease to which it is a party to rebuild, replace or repair an Improvement that has been damaged or destroyed, and if such Party elects not to do so, then (unless otherwise required hereunder or under a Lease) it shall raze such Improvement (or such part thereof as has been damaged or destroyed) and clear the area of all debris. After such razing has been completed, the area shall be landscaped and shall be so improved by the Party performing the razing so as to match adjacent landscaping and Improvements until such time as rebuilding may occur thereon. All activities that are


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performed by the Party razing the Improvements and constructing the landscaping shall be at such Party's sole cost and expense.

SECTION 1.4 MISCELLANEOUS REPAIRS AND ALTERATIONS. Subject to the preceding Sections of this Article and the other provisions of this REA, each Party may make such repairs, alterations, reconstructions or additions to its Improvements as it deems necessary or advisable under the circumstances.

SECTION 1.5 LIABILITY OF MORTGAGEE. Anything in this Article 1 to the contrary notwithstanding, it is expressly understood and agreed that the provisions of Sections 1.2, 1.3 and 2.5 shall be applicable to any Mortgagee of any Parcel only in the following instances:

(a) where any such Mortgagee acquires title by reason of foreclosure,
or deed in lieu of foreclosure, or by termination for default of a
leaseback in a sale and leaseback transaction or a sublease in a sublease
and leaseback transaction, such Mortgagee or the purchaser at a foreclosure
sale shall only be liable for such reconstruction for damage (whether or
not such damage is caused by a peril included within the risks required to
be insured against under this REA) which occurs subsequent to such
foreclosure, sale, conveyance or termination of leaseback; or

(b) where damage or destruction is either (i) caused by a peril
required to be insured against under this REA; or (ii) is caused by a peril
actually insured against; and occurs prior to such foreclosure sale, any
such Mortgagee who acquires title by reason of foreclosure or deed in lieu
of foreclosure or termination for default of a leaseback, or the purchaser
at the foreclosure sale, shall be liable for such reconstruction but only
to the extent of the insurance proceeds actually received by the Mortgagee
under such insurance.

If a purchaser at the foreclosure sale is not required pursuant to the foregoing subparagraphs to restore, repair or rebuild any Improvement that has been damaged or destroyed and elects not to do so then such purchaser at the foreclosure sale shall promptly raze such Improvement or such part thereof that has been so damaged or destroyed, and clear the premises of all debris. After the area has been cleared, it shall be landscaped and shall be so improved by the Person performing the razing so as to match adjacent landscaping until such time as rebuilding may occur thereon. Nothing in this Section 1.5 shall be construed to relieve a Party of its obligations under Sections 1.2 and 1.3.

SECTION 1.6 LIMITATION ON DETRIMENTAL CHARACTERISTICS. No use or operation will be made, conducted or permitted on any part of the Land which use or operation is clearly detrimental to the development or operation of the Improvements, as provided herein and in the Leases. No portion of any Parcel may be leased, used or occupied as a funeral parlor; industrial manufacturing facility; automobile dealership; adult bookstore or establishment selling, exhibiting or distributing pornographic or obscene materials; massage parlor; so-called "head shop"; body and fender shop; car wash; or off-track betting parlor. Also included among the uses or operations which are prohibited are uses or operations which produce or are accompanied by the following characteristics, which list is not intended to be all-inclusive: (a) any noise, vibration, litter, odor or other activity which constitutes a public or private nuisance or interferes in a material adverse way with the normal conduct of the business of any Party; or (b) any dangerous firing, explosion or other damaging hazards; provided, however, all attractions, amusements and other activities conducted at other theme parks operated by PPI (to the extent permitted under applicable Law including but not limited to any local zoning and land use regulations) shall be permitted notwithstanding the foregoing.


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SECTION 1.7 PARKING. The Authority hereby grants and conveys to the Corporation, for the benefit of the Private Parcel and the Public Parcel, a non-exclusive easement and right to the use, during the Term (as defined in the Parcel Lease) of the Parking Areas for purposes of vehicular parking for the benefit of the Parcels. Notwithstanding the foregoing easements, the Authority shall maintain the Parking Areas as described in Section 2.6 hereof, and shall not obstruct or unreasonably interfere with access, ingress or egress thereto.;

SECTION 1.8 COMPLIANCE WITH LAWS. Each Party shall cause the Public Areas and all buildings and Improvements located on its Parcel to comply in all material respects with all applicable Laws; provided however, that a Party may contest any such Law so long as such contest does not create any material danger of a loss of title to, or material impairment in any way of the use of, all or any portion of the Public Areas for their intended purposes.

SECTION 1.9 MISCELLANEOUS. The easements granted hereby shall be for the benefit of, but not restricted solely to, the Parties and each such Party may grant the benefit of such easement to tenants of the Public Parcel and the Private Parcel for the duration of such occupancy (but not longer than this REA is in effect), and to the customers, employees, agents and business invitees thereof; but same is not intended nor shall it be construed as creating any rights in or for the benefit of the general public nor shall it affect any real property outside of the Parcels (except for the Parking Areas). Such easement areas are reserved for said use so long as this REA is in effect.

SECTION 1.10 ENVIRONMENTAL MATTERS. The Authority represents and warrants that it shall not create, place, store, transport, or dispose of any Environmental Condition or Hazardous Materials in, on, at, around or under or affecting all or any part of the Private Parcel, and further, that the Authority shall be responsible for all Environmental Compliance Liability with respect to the Private Parcel which, and solely to the extent that it, results from the Authority's negligence or willful misconduct or that of its agents, employees or contractors. The Corporation represents and warrants that it shall not create, place, store, transport, or dispose of any Environmental Condition or Hazardous Materials in, on, at, around or under or affecting all or any part of the Public Parcel, and further, that the Corporation shall be responsible for all Environmental Compliance Liability with respect to the Public Parcel which, and solely to the extent that it, results from the Corporation's negligence or willful misconduct or that of its agents, employees or contractors.


SECTION 1.11 CONFLICT WITH ARTICLE 2. In the event of any conflict or inconsistency between the provisions of this Article 1 and Article 2 below, the provisions of Article 2 shall govern.

ARTICLE 2

OPERATION AND MAINTENANCE OF PUBLIC AREAS

SECTION 2.1 OPERATION AND MAINTENANCE OF PUBLIC AREAS. Each Party shall, at its own cost and expense (subject to the Revenue Sharing Agreement) operate, provide policing and adequate lighting and security for, maintain, repair, and to the extent provided for herein, replace, including, to the extent required under any Lease, the provision of adequate reserves to cover the cost of maintenance and repairs, that portion of the Public Areas which are within the Party's Parcel in good order, and sanitary condition and repair in a


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manner at least comparable to those standards generally in effect from time to time in other regional, non-destination theme parks (including those operated by PPI and its subsidiaries), and in accordance with any Rules and Regulations. The Corporation shall advise the Authority in writing of any such standards at parks operated by PPI of which it considers the Authority in violation, and the Authority will advise the Corporation in writing o ...