Exhibit 10.5
CONFIDENTIALITY AND
NON-COMPETITION AGREEMENT
THIS AGREEMENT has been entered into this 1st day of February, 1997 by
and between On Stage Entertainment, Inc., (hereinafter referred to as "OSE" or
the "Company"), and Xxxxx Xxxx, an individual (hereinafter referred to as
"Hope").
In consideration of the mutual promises and covenants between the
parties in connection with Hope's employment agreement executed and dated March
3, 1996, as amended on January 9, 1997 and as further amended on February 1,
1997 (which are incorporated herein by reference and referred to collectively as
the "Employment Agreement"), as well as Hope's future involvement with OSE as
its President, Chief Operating Officer, a member of its Board of Directors and
for other good and valuable consideration, the parties hereto agree as follows:
1. CONFLICTING ACTIVITIES.
1.1 Involvement in Business Opportunities. Hope shall not, during the
term of his Employment Agreement, be engaged in any other business activity
which is or may be competitive with the business of the Company, without the
prior written consent of the Company's Board of Directors; provided, however,
that this restriction shall not be construed as preventing Hope from being a
director of, or investing his personal assets in passive investments in,
business entities which are not in competition with the Company or any of its
affiliates, or from pursuing business opportunities as permitted by paragraph
1.2. The foregoing notwithstanding, Hope may invest in a retail business of
which his wife will be actively involved therein.
1.2 Development of Business Opportunities. Hope hereby agrees to
promote and develop all business opportunities that come to his attention
relating to current or reasonably anticipated future business of the Company, in
a manner consistent with the best interests of the Company and with his duties
under his Employment Agreement. Should Hope discover a business opportunity
which is or may reasonably be anticipated to be related to the business of the
Company, he shall first offer such opportunity to the Company. Should the Board
of Directors of the Company not exercise its right to pursue this business
opportunity within a reasonable period of time, not to exceed sixty (60) days,
then Hope may develop the business opportunity for himself, provided, however,
that such development may in no way conflict or interfere with the duties owed
by Hope to the Company under his Employment Agreement. Further, Hope may develop
such business opportunities only on his own time, and may not use any service,
personnel, equipment, supplies, facility, or trade secrets of the Company in
their development. As used herein, the term "business opportunity" shall not
include business opportunities involving investment in publicly traded stocks,
bonds or other securities, or similar passive investments.
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2. CONFIDENTIALITY OF TRADE SECRETS AND OTHER MATERIALS.
2.1 Trade Secrets. Hope agrees not to disclose to others, or take or
use for his own purposes or the purposes of others, during or after his
employment, any trade secrets, confidential information, knowledge, data or the
like that Hope acquires during his Employment Agreement and that is not
otherwise in the public domain. Hope agrees that these restrictions shall also
apply to (a) information, knowledge, trade secret, data or know-how belonging to
third parties in the Company's possession; and (b) information, knowledge, trade
secret, or data received, originated, discovered or developed by Hope during the
term of this Agreement. Hope recognizes that this obligation applies not only to
technical information, but also to any business, financial or marketing
information that the Company treats as confidential. Any information of the
Company which is not readily available to the public shall be considered to be a
trade secret unless the Company advises Hope otherwise.
2.2 Ownership of Trade Secrets; Assignment of Rights. Hope hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by him or by the
Company during the term of his employment are the property of the Company and
shall not be used by him in any way adverse to the Company's interests. Hope
shall not deliver, reproduce or in any way allow such documents or things to be
delivered or used by any third party without specific direction or consent of
the Board of Directors of the Company. Hope hereby assigns to the Company any
rights which he or she may have in any such trade secret or proprietary
information.
Hope agrees that for a period of one (1) year immediately
following his termination (voluntary or with cause) with the Company, he shall
not interfere with the business of the Company in any manner, including, without
limitation, by inducing an employee or associate to leave the Company, or by
inducing a consultant or other independent contractor to sever that person's
relationship with the Company, or disrupting the Company's relationships with
customers, agents, representatives or vendors or otherwise.
3. UNFAIR COMPETITION AFTER TERMINATION. Because of his employment by the
Company, Hope will have access to trade secrets and confidential information
about the Company, its products, its customers and its methods of doing
business. In the event of the termination of his Employment Agreement for any
reason, the Company shall have the option to pay Hope at the time of such
termination a lump sum payment of fifty percent (50%) of his Base Salary at the
date of termination (in addition to any payment otherwise due to Hope in the
form of severance pay) for up to two (2) years, and in consideration therefore,
Hope agrees that for a similar period of up to two (2) years after termination
of his employment he will not, directly or indirectly, compete with Company in
the field of live theatrical entertainment. For example, if the Company pays to
Hope fifty percent (50%) of one years Base Salary in accordance with this
paragraph of this Agreement, then Hope agrees not to compete directly or
indirectly with the Company for a period of one year from the date of
termination.. Hope understands and agrees that direct competition means the
design, development, production, promotion, presentation, or sale of live
theatrical stage shows competitive with those of the Company. Indirect
competition means the employment by any competitor or third party in a role that
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involves Hope in the design, development, production, promotion, or sale of live
theatrical stage shows competitive with those of the Company, and for whom Hope
will perform the same or similar function as he performs for the Company. Hope
further agrees that for a period of two (2) years after termination of his
employment, he will not directly or indirectly disclose to any third person any
confidential information or trade secrets not otherwise in the public domain,
and to which he gained knowledge during the term of his employment.
4. INJUNCTIVE RELIEF. The Company and Hope hereby acknowledge and agree that any
default under Sections 1 through 3, above, will cause damage to the Company in
an amount which is difficult, if not impossible, to ascertain. Accordingly, in
addition to any other relief to which the Company may be entitled, the Company
shall be entitled to such injunctive relief as may be ordered by any court of
competent jurisdiction including, but not limited to, an injunction restraining
any violation of the above named Sections, and without proof of actual damages
5. ATTORNEY'S FEES. If any party to this Agreement breaches any of the terms of
this Agreement, then that party shall pay to the non-defaulting party all of the
non-defaulting party's costs and expenses, including attorney's fees, incurred
by that party in enforcing the terms of this Agreement.
6. MEDIATION/ARBITRATION. If a dispute arises out of or relates to this
Agreement, the parties agree first to try in good faith to settle the dispute by
mediation under the commercial mediation rules of the American Arbitration
Association, before resorting to arbitration. Thereafter, any remaining
unresolved controversy or claim arising out of or relating to this Agreement
shall be settled by arbitration in Xxxxx County, Nevada, in accordance with
commercial arbitration rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The prevailing party in any arbitration proceeding,
as determined by the arbitrator, shall be entitled to an award of reasonable
attorney's fees and the fees and costs arising out of the arbitration
proceedings, including, but not limited to the arbitration's fees and the
American Arbitration Association's administrative fee. The parties further agree
that the arbitrator, or such other person designated for the purpose by the
American Arbitration Association shall have jurisdiction over all matters
involving provisional remedies just as any court of competent jurisdiction
would, including but not limited to, the imposition of injunctive relief to
protect trade secrets and confidential information.
7. GOVERNING LAW. This Agreement shall be subject to and governed by the laws
of the State of Nevada.
Executed this 1st day of February, 1997.
/s/ Xxxxx Xxxx
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Xxxxx Xxxx
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