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EXHIBIT 10.7
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
This Confidentiality and Non-competition Agreement ("Agreement") is made
and entered into this 6th day of December, 1996, by and between F & H Dallas,
L.P., Midway Entertainment, Ltd., X. Xxxxxxx Entertainment, Ltd. and 505
Entertainment, Ltd., each a Texas limited partnership ("the Partnerships"), and
Xxxxx X. Xxxxxxx ("Xxxxxxx").
WHEREAS, the Partnerships are in the business of developing, owning and
operating sports bar/grille facilities which include specific types and layouts
of pool tables, televisions, music and sound systems and a distinctive ambiance
(hereafter the "Business");
WHEREAS, the Partnerships are possessed of certain Confidential
Information, as hereafter defined, and preserving the confidentiality of such
Confidential Information is of extreme importance to the Partnerships;
WHEREAS, the Partnerships have expended, and will continue to expend,
considerable time, effort and resources to develop the Business;
WHEREAS, Xxxxxxx will have continuing access to Confidential Information
of the Partnerships;
WHEREAS, Xxxxxxx is a key person in the intended development of the
Business and the partners of the Partnerships have required that Xxxxxxx enter
into this Agreement as a condition to the sale of 75% of their interests in the
Partnerships to F & H Restaurant Corp.; and
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the parties agree as follows:
1. Consideration. Xxxxxxx acknowledges that the consideration to be
received by him as a consultant to or employee of the Partnerships constitutes
good and valuable consideration for this Agreement.
2. Confidential Information and Restrictive Covenants.
2.1 Acknowledgment and Definition.
x. Xxxxxxx acknowledges that the Business includes
specialized, proprietary, confidential and trade secret information
and that the Partnerships have a legitimate need to protect such
information.
b. Definition of Confidential Information. For purposes of
this Agreement, the term "Confidential Information" means that
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proprietary information of the Partnerships not otherwise publicly
disclosed. Without limiting the generality of the foregoing, such
proprietary information shall include information not generally
known in the industry which concerns (i) operating and other cost
data, including information regarding salaries and benefits of
employees; (ii) sales, cost and pricing data; (iii) acquisition,
expansion, marketing, financial and other business plans and
methods; (iv) recipes, manuals, files, records, memoranda, plans,
drawings and designs, specifications and computer programs and
records; (v) identification of suppliers and contractors; and (vi)
all information which is a "trade secret" as defined in the Uniform
Trade Secrets Act as adopted in Kansas at K.S.A. 60-3320.
Confidential Information shall include all such information whether
or not legended or otherwise identified as Confidential Information.
2.2 Confidential Information. Xxxxxxx will have access to and
become familiar with Confidential Information of the Partnerships. Xxxxxxx
acknowledges that such Confidential Information is owned and shall
continue to be owned solely by the Partnerships. Xxxxxxx shall not use or
divulge Confidential Information to any person or entity other than the
Partnerships, or persons to whom the Partnerships have given their written
consent, unless such information has become common knowledge and is no
longer Confidential Information.
2.3 Return of Documents. Upon termination of Xxxxxxx'x
participation as a Partner in each of the Partnerships, or his ownership
of an equity interest in an entity which is a partner in each of the
Partnerships, all procedural manuals, guides, specifications, plans,
drawings, designs, records, lists, notebooks, diskettes, customer lists,
pricing documentation and similar documentation which is or contains
Confidential Information, including all copies thereof, in the possession
or control of Xxxxxxx, whether prepared by Xxxxxxx or others, shall be
forthwith delivered by Xxxxxxx to Partnerships.
2.4 Covenant Restricting Competition. For a period of either (i)
two years from the date of this Agreement or (ii) one year from the date
on which Xxxxxxx terminates his relationship as an employee, consultant or
director providing services to one or more of the Partnerships or any
successor entity, whichever is later (the "Restricted Period"), Xxxxxxx
shall not compete with the Partnerships, or any successor to the Business,
as an owner, officer, director, employee, agent, consultant, lender or
otherwise with any person or entity engaged in a business involving Sports
Bars (a "Competing Business"). As used herein, the term "Sports Bar" shall
mean a facility having pool tables and in which the presence of multiple
television sets offering diverse programming is a primary attraction when
compared to other bar or restaurant facilities wherein the availability of
television is limited and would normally be considered a secondary
attraction by customers. Xxxxxxx acknowledges the intention of the
Partnerships to
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develop the Business on a nationwide basis and agrees that, accordingly,
the geographic scope of the covenants set forth in this Section 2.4 shall
include the entire United States.
Notwithstanding any other provision herein, the parties agree that
Xxxxxxx may, during the period covered by this Agreement, invest Xxxxxxx'x
personal, private assets as a passive investor in not more than three
percent (3%) of the total outstanding shares of any publicly traded
company engaged in a Competing Business, so long as Xxxxxxx does not
participate in the management or operations of the affairs of such
company.*
2.5 Solicitation of Employees. During the Restricted Period,
Xxxxxxx shall not, without the prior written approval of the President of
Fox & Hound, II, Inc. directly or indirectly solicit, raid, entice, or
induce any person who presently is, or at any time during the term hereof
shall be, an employee (manager level or above) of the Partnerships to
become employed by any other person, firm, or corporation in any business
in which Xxxxxxx has an interest. Furthermore, Xxxxxxx shall inform the
Partnerships in writing if any other person employed by the Partnerships
contacts Xxxxxxx for the purpose of seeking employment during such
Restricted Period.
2.6 Reasonableness of Restrictions, Reformation, and Severability.
x. Xxxxxxx has carefully read and considered the provisions of
this Section 2 and, having done so, agrees that the restrictions set
forth herein, including, but not limited to, the duration of the
Restricted Period and the scope of the restriction, are fair and
reasonable and are reasonably required for the protection of the
interests of the Partnerships.
b. In the event that, notwithstanding the foregoing, any part
of the covenants set forth in Section 2 shall be held to be invalid
or unenforceable, the remaining parts thereof shall nevertheless
continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included therein. In the event that
any provision of this Section 2 relating to the time period and/or
scope of restrictions shall be declared by a court of competent
jurisdiction to exceed the maximum time period or area as such court
deems reasonable and enforceable, said time period and/or areas of
restrictions shall be deemed to become and thereafter be the maximum
time period and/or scope which such court deems reasonable and
enforceable.
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* Notwithstanding, Xxxxxxx may develop one (1) facility, in Salem, Illinois,
which operation may include television sets and pool tables.
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c. Any provision hereof otherwise prohibited by or
unenforceable under any applicable law or public policy in any
jurisdiction which cannot be reformed in accordance with the
provisions herein, shall, as to such jurisdiction, be ineffective
without affecting any other provision of this Agreement, or shall be
deemed to be severed or otherwise modified to conform with such law
or public policy; and the remaining provisions of this Agreement
shall remain in force, provided that the purpose of this Agreement
can be effected. To the full extent, however, that the provisions of
such applicable law or public policy may be waived, this Agreement
shall be deemed to be a waiver thereof. The parties hereto
understand and agree that all the covenants set forth herein are and
shall be separately enforceable, each to the full extent permitted
by applicable law.
2.7 Tolling Period. If it should become desirable or necessary for
the Partnerships to seek compliance with this Section 2 by judicial
proceedings, the period during which Xxxxxxx shall comply with its
provisions shall extend to the first anniversary of the date of the final,
nonappealable order requiring such compliance.
2.8 Remedies. It is agreed that the Partnerships would be
irreparably damaged by reason of any violation of the provisions of this
Agreement, and that any remedy at law for a breach of the provisions of
this Agreement, and that any remedy at law for a breach of the provisions
of this Agreement would be inadequate. Therefore, the Partnerships shall
be entitled to seek injunctive or other equitable relief in a court of
competent jurisdiction against Xxxxxxx, Xxxxxxx'x agents, Xxxxxxx'x
affiliates, partners, or other associates, for any breach or threatened
breach of this Agreement, without the necessity of proving actual monetary
loss. It is expressly understood that the remedy described in this
Paragraph 2.8 shall not be the exclusive remedy of the Partnerships for
any breach of this Agreement, and the Partnerships shall be entitled to
seek such other relief or remedy at law or in equity to which it may be
entitled as a consequence of any breach of this Agreement.
3. Miscellaneous.
3.1 Definition. For purposes of this Agreement, "Partnerships"
shall include any successor to the Business.
3.2 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
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3.3 Amendment; Waiver. This Agreement may not be amended,
supplemented, canceled or discharged except by written instrument executed
by the party affected thereby. No failure to exercise, and no delay in
exercising, any right, power or privilege hereunder shall operate as a
waiver thereof. No waiver of any breach of any provision of this Agreement
shall be deemed to be a waiver of any preceding or succeeding breach of
the same or any other provision.
3.4 Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of any successor of the
Partnerships by reorganization, merger or consolidation, or any assignee
of all or substantially all of the Partnerships' businesses and
properties. Xxxxxxx'x rights or obligations under this Agreement may not
be assigned by Xxxxxxx.
3.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
3.6 Governing Law; Interpretation. This Agreement shall be
construed in accordance with, and governed for all purposes by, the laws
and public policy of the State of Kansas applicable to contracts executed
and to be wholly performed within such State.
3.7 Further Assurances. Each of the parties agree to execute,
acknowledge, deliver and perform, and/or cause to be executed,
acknowledged, delivered and performed, at any time and/or from time to
time, as the case may be, all such further acts, assignments, transfers,
conveyances, powers of attorney and/or assurances as may be necessary
and/or proper to carry out the provisions and/or intent of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
F & H DALLAS, L.P.;
/s/ Xxxxx X. Xxxxxxx MIDWAY ENTERTAINMENT, LTD.
Xxxxx X. Xxxxxxx X. XXXXXXX ENTERTAINMENT, LTD.
505 ENTERTAINMENT, LTD., by
F & H Restaurant Corp., General Partner
By:/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, President
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