Document:

Exhibit 3

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

FOR

 

JOHN W. STUART

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered

into as of the 12th day of October, 2000 by and between ON STAGE ENTERTAINMENT,

INC., a Nevada corporation (“On Stage” or the “Company”), and JOHN W. STUART,

an individual (“Executive”).

 

WHEREAS, the Company desires to employ the Executive

and the Executive desires to be employed by the Company, on the terms and

conditions set forth herein.

 

NOW, THEREFORE, in consideration of the

mutual covenants and agreements set forth herein and for other good and

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the Company and Executive hereby agree as follows:

 

1.             EMPLOYMENT

 

On the terms and conditions

set forth in this Agreement, the Company agrees to employ the Executive and the

Executive agrees to be employed by the Company for the term set forth in

Section 2 hereof and in the position and with the duties set forth in Section 3

hereof.

 

2.             TERM

 

The Employment of the Executive

by the Company as provided in Section 1 hereof shall commence on the effective

date of this Agreement and end three (3) years thereafter, provided, that the

term of this Agreement shall be extended automatically for additional one (1)

year periods on the first anniversary date of this Agreement and each

subsequent anniversary date, unless and until each party provides written

notice to the other party in accordance with Section 17 hereof not less than

ninety (90) days prior to such anniversary date that such party is terminating

this Agreement, which termination shall be effective as of the end of such

initial term or extended term, as the case may be (the “Expiration Date”), or

until sooner terminated as herein after set forth.

 

3.             POSITION AND DUTIES

 

The Executive shall serve as

Chairman of the Board and founder of the Company, with such duties and

responsibilities as the Company’ Board of Directors (“the Board”) may from time

to time determine and assign to the Executive. 

The Executive shall devote the Executive’s best efforts and full

business time to the performance of the Executive’s duties and the advancement

of the business and affairs of the Company. 

In addition,

 

 

Executive agrees that he will not engage in

any business, civic or other activities that would materially interfere with

the performance of his duties hereunder.

 

The Executive shall be

permitted to serve as a Director or Trustee of other organizations, subject to

the sole discretion of the Board, on a case-by-case basis.  Approval will not be granted if such service

involves a competitor of the Company or materially interferes with the

effective performance of the Executive’s duties under the Agreement.  In connection with the Executive's employment

by the Company, the Executive shall be based at the principal executive offices

of the Company or such other places as the Company and the Executive mutually

agree, except for required travel on Company business.

 

4.             DEFINITIONS

 

For purposes of this

Agreement, the following terms shall have the meanings set forth in this

Section 4:

 

(a)           “Annual Bonus” shall mean a cash payment available

annually (or as otherwise provided for in this document) to Executive in

addition to Base salary, payment of which is contingent upon the performance of

the Company and the Executive during each Calendar Year as determined in

accordance with section 5(b) of this Agreement.

 

(b)           “Annual Bonus Plan” shall mean the annual cash

bonus plan approved by the Board as amended from time to time.  Participants in the Annual Bonus Plan shall

be eligible to receive annual cash payments based on Board assessment of

performance which may be totally discretionary, or based partly or totally on

specific objectives established by the Board for the Company and Executive for the

Fiscal Year.

 

(c)           “Base Salary” shall mean the annual base salary

rate in effect for Executive from time to time during the Term of this

Agreement.

 

(d)           “Calendar” shall mean the one year period ending

December 31 of each year.

 

(e)           “Cause” Shall mean Executive’s:

 

(i)                                     Conviction for

any felony involving moral turpitude;

(ii)                                  Personal

dishonesty, misconduct, breach of fiduciary duty involving personal profit, or

intentional failure to perform stated duties;

(iii)                               Refusal to

provide appropriate information or to otherwise participate and cooperate in

connection with the obtaining by the Company of all licenses, permits, and

approvals necessary to the conduct of it’s business; or

 

 

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(iv)                              Inability to obtain

any license, permit, or other authorization required to be obtained by such

person as a condition to the conduct by the Company of entertainment related

activities.

 

(f)            “Disability” shall be deemed to have occurred if

Executive makes application for or is otherwise eligible for disability

benefits under any Company-sponsored long-term disability program covering

Executive, and Executive qualifies for such benefits.  In the absence of a Company-sponsored long-term disability

program covering Executive, Executive shall be presumed to be totally and

permanently disabled if so determined by the Company’s Board following the

Board’s review of a medical opinion satisfactory to the Board certifying that

Executive will be permanently unable to perform his normal duties as Chairman

of the Board and founder of the Company as a result of a physical or mental

condition.

 

(g)           “Good Reason” shall mean Executive’s Voluntary

Termination of Service from the Company within ninety (90) days following the

occurrence of one or more of the following events, unless such event is

approved in writing by Executive in advance of it’s occurrence:

 

(i)                                     Any reduction

in the Executive’s total compensation opportunity consisting of three pay

components: Base Salary, Target Annual Bonus and Target Annualized value of

long-term incentive awards, including stock options, unless the reduction in

the total compensation opportunity is applied equally to all officers of the

Company.  The target annualized value of

long-term incentives will be determined based on the Executive’s average

long-term incentive award value for the prior three Fiscal Years, calculated

according to the Black Scholes option pricing model as required for proxy

statement disclosure;

(ii)                                  A material

reduction in Executive’s title or responsibilities; or

(iii)                               Relocation of

Executive’s primary place of work to a location more than fifty (50) miles from

Executive’s primary residence as of the date of this Agreement.

 

(h)           “Long Term Incentive Plan” shall mean The Company’s

Amended and Restated Incentive Stock Option Plan or any other form of equity

(real or phantom) or other long-term incentive plan introduced by the Company.

 

(i)            “Service” shall mean Executive’s full-time or

substantially full-time employment with the Company, or any affiliated

organization, including any leave of absence approved by the Board.

 

(j)            “Stock Option Plan” shall mean the Company’s

Amended and Restated Incentive Stock Option Plan.

 

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(k)           “Retirement” shall mean the termination of

employment upon Executive’s attainment of age 65 with the sole approval of the

Board.

 

(l)            “Termination of Service” shall mean Executive’s

termination of Service for any reason whatsoever, including death.

 

5.             COMPENSTATION.

 

(a)           Base Salary. 

The Company shall pay to the Executive an annual base salary of THREE

HUNDRED FIFTY THOUSAND DOLLARS ($350,000.00) per annum (the “Base

Salary”).  The Base Salary shall be

reviewed no less frequently than annually and may be increased at the discretion

of the Board based on prevailing market conditions, performance of the

Executive and other considerations.  If

the Executive’s Base Salary is increased, the increased amount shall be the

Base Salary for the remainder of the employment term hereunder, except that the

Company may reduce the Executive’s Base Salary at any time as part of a general

salary reduction applied to all officers of the Company.

 

(b)           Annual Bonus. 

The Executive shall be eligible to participate each Calendar Year in an

Annual Bonus Plan approved by the Board. 

The actual amount of Annual Bonus earned by Executive for Year 2000 and

subsequent years shall be determined by the Board in accordance with the Annual

Bonus Plan approved by the Board.  Any

Annual Bonus earned by the Executive shall be paid in Cash within one-hundred

twenty (120) days following the completion of the Company’s Fiscal Year or as

otherwise specified in the Annual Bonus Plan. 

It should be noted that in no event shall Executive’s annual bonus be

less than $150,000 per annum (the “Minimum Annual Bonus”).  Executive may elect to have the Minimum

Annual Bonus paid in equal bi-monthly installments.

 

(c)           Long-Term Incentives.  The Executive shall participate in any Long-Term Incentive Plan

that may be designed specifically for the Executive or provided to the officers

and other executives of the Company during the Term of this Agreement.

 

(d)           Medical and Dental Health Plans.  The Company shall provide Executive and his

immediate family with medical and dental health insurance of the type and in

such amounts as is available from time to time to all other executive officers

of the Company.  Nothing contained in

this Agreement shall prevent the Company from changing insurance carriers or

from affecting modifications in insurance coverage for the Executive.

 

(e)           Life and Disability Insurance.  The Company shall purchase life and

disability insurance for Executive of the type and in such amounts as is

available from time to time to all other executives of the Company.

 

(f)            Automobile Allowance.  The Company shall lease for Executive a suitable automobile and

shall pay for all fair and reasonable expenses incurred by Executive in

 

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connection with the operation of such

automobile including, without limitation, insurance, maintenance, gasoline and

oil.  The automobile will be insured

through the Company’s insurance carrier. 

The Company will exercise its best efforts to establish the lease in

such a way that the automobile will not be an income item to Executive for

federal income tax purposes.  The

general parameters of the automobile lease shall be as follows: (i) The basic

monthly lease payment is not to exceed $1,500.00 (excluding taxes and extra

mileage charges); The capitalized cost reduction at the time the lease is

executed shall not exceed $75,000.00 plus customary drive-off costs, such as

taxes and a security deposit; and (iii) The lease term shall be between twelve

(12) and thirty-six (36) months.

 

(g)           Cellular Telephone.  The Company will provide Executive with a cellular telephone, a

cellular car telephone and a pager and will pay for or reimburse Executive for

all fair and reasonable expenses incurred by Executive for the use of said

items in the performance of his services hereunder.

 

(h)           Home Office Expenses.  The Company will pay for the installation and line charges for a

two-line telephone and a fax machine with it own line in Executive’s home to

the extent used in the performance of his services hereunder.  The company will pay for or reimburse to

Executive, whichever the case may be, all reasonable costs associated with

keeping an office at his home, including, but not limited to: a desk, a two-way

telephone, a facsimile machine, a computer, computer software, a copy machine

and all office supplies reasonable related to maintaining an office.

 

(i)            Vacation Holidays.  The Executive shall be entitled to all public holidays observed

by the Company and vacation days in accordance with the applicable vacation

policies (three weeks vacation) for officers of the Company, which shall be

taken at a reasonable time or times.  In

the event Executive is unable to utilize his allotted vacation time, Executive

shall have the right to request that the Company pay him his salary in lieu of

any such unutilized vacation days at the expiration of any given employment

year.

 

6.             EXPENSES

 

The Company shall reimburse

the Executive for all reasonable expenses incurred by the Executive (in

accordance with the policies and procedures in effect for officers of the

Company) in connection with the 

Executive’s services under this Agreement.  The Executive shall account to the Company for such expenses in

accordance with policies and procedures established by the Company.

 

7.             CONFIDENTIAL INFORMATION

 

During the period in which this Agreement

remains in force and while Executive is entitled to receive any benefits under

this Agreement, Executive shall not, without prior written consent of the Board

or pursuant to and consistent with the order of any court, legislative body or

regulatory agency (a) engage directly or indirectly (including, by way of

example only, as principal, partner, venturer, employee, or agent), nor have

any direct

 

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or indirect interest, in any business which competes

with the Company in any material way, or (b) disclose to any third party,

either directly or indirectly, any non-public information regarding the

Company’s business, customers, financial conditions, strategies, or operations

the disclosure of which could possibly harm the Company in any material way.

Clause (a) above shall not apply to any investment by Executive in the stock of

a publicly-traded corporation, provided such investment constitutes less than

five percent (5%) of the corporation’s cumulative voting shares.  In the event that Executive violates clauses

(a) or (b) above, Executive’s rights to any benefits under this Agreement shall

immediately terminate.

 

8.             VESTING OF STOCK OPTIONS UPON A

CHANGE OF CONTROL

 

Upon the effective date of a Change of

Control, all stock options previously granted to the Executive under the

Company’s Long-Term Incentive Plan (excluding any stock options granted under

the Company’s Amended & Restated Incentive Stock Option Plan) shall become

fully vested and exercisable by the Executive.

 

For the purposes of this

Section 8, “Change of Control” shall mean the occurrence of any of the

following events.

 

(a)           When any “person” (as such term is used in Sections 13 (d)

and 14 (d) of the Securities Exchange Act of 1934, as amended) other than the

Company is or becomes the “beneficial owner” (as defined in Rule 13-d-3 under

said Act), Directly or indirectly, of securities of the Company representing

50% or more of the total voting power represented by the Company’s then outstanding

voting securities; or

 

(b)           The approval by the stockholders of the Company of a

merger or consolidation of the Company with any other corporation, other than a

merger or consolidation which would result in the voting securities of the

Company outstanding immediately prior thereto continuing to represent (either

by remaining outstanding or by being converted into voting securities of the

surviving entity) at least fifty percent (50%) of the total voting power

represented by the voting securities of the Company or such surviving security

outstanding immediately after such merger or consolidation; or the stockholders

of the Company approve a plan of complete liquidation of the Company or an

agreement for the sale or disposition by the Company of all or substantially

all the Company’s assets.

 

9.             EXECUTIVE’S RIGHTS UPON

TERMINATION OF SERVICE

 

(a)           For Reason of Voluntary Resignation Constituting Good

Reason or Termination by the Company Without Cause.  In the event of Executive’s Termination of

Service for reason of (i) voluntary resignation by Executive constituting Good

Reason; or (ii) Executive’s Termination of Service by the Company without

cause, Executive (or if Executive dies while benefits remain due under this

Agreement, Executive’s beneficiaries as designated in accordance with the

provisions of Section 12 herein) shall be entitled to receive the following

upon such Termination Service:

 

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(i)                                     Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary and the pro-rata portion of any Annual Bonus owed to Executive (if

necessary, the Company may pay such Annual Bonus when all bonuses for that

calendar year are calculated and paid under the Company’s Annual Bonus Plan)

through the date of the Executive’s Termination of Service;

(ii)                                  Base Salary,

for a period equal to the amount of time remaining under the Term of this

Agreement following such Termination, payable in equal biweekly Installments;

(iii)                               The average of

the actual Annual Bonus payments for the three Calendar Years completed prior

to such Termination, for a period equal to the amount of time remaining under

the Term of this Agreement following such Termination, payable in accordance

with the typical payout schedule of Annual Bonuses earned by the Executive for

the prior three Calendar year.

(iv)                              Continued

participation in fringe benefits and perquisites for balance of the term as

described in Section 5 (d) herein, as available to Executive immediately prior

to Executive’s Termination of Service. 

If continued participation in one or more of these fringe benefits is

not possible due to legal or other constraints, the Company shall provide

Executive with sufficient funds on a monthly basis to enable Executive to

secure fringe benefits, on an after-tax basis, substantially similar to those

which Executive was entitled to immediately prior to Executive’s Termination of

Service;

(v)                                 Immediate

vesting of any stock options or other rights previously provided to Executive

under the Company’s Long-Term Incentive Plan, excluding any stock options

granted under the Company’s Amended & Restated Incentive Stock Option Plan

and any cash-based long-term incentives; and

(vi)                              Payment of any

life insurance, Disability, or other benefits provided to Executive by the

Company in accordance with the terms and conditions of such benefits and this

Agreement.

 

(b)           For Reason of Retirement.  In the event of Executive’s Termination of Service for reason of

Retirement, Executive (or if Executive dies while benefits remain due under

this Agreement, Executive’s beneficiaries as designated in accordance with the

provisions of Section 12 herein) shall be entitled to receive the following

upon such Termination of Service:

 

(i)                                     Payment immediately

upon Executive’s Termination of Service of any previously unpaid Base Salary;

(ii)                                  Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan,

 

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provided such options or

other rights have vested in accordance with any agreement between the Company

and Executive covering such options or other rights; and

(iii)                               Payment of any

retirement benefits provided to Executive by the Company in accordance with the

terms and conditions of such benefits and this Agreement.

 

(c)           For Reason of Disability.  In the event of Executive’s Termination of Service for reason of

Disability, Executive (or if Executive while benefits remain due under this

Agreement, Executive’s beneficiaries as designated in accordance with the

provisions of Section 12 herein) shall be entitled to receive the following

upon such Termination of Service:

 

(i)                                     Payment immediately

upon Executive’s Termination of Service of any previously unpaid Base Salary;

(ii)                                  Continued

participation in fringe benefits and perquisites for twenty-four (24) months as

described in Section 5(d) herein, as available to Executive immediately prior to

Executive’s Termination of Service.  If

continued participation in one or more of these fringe benefits is not possible

due to legal or other constraints the Company shall provide Executive with

sufficient funds on a monthly basis to enable Executive to secure fringe

benefits, on an after-tax basis, substantially similar to those which Executive

was entitled to immediately prior to Executive's Termination of Service;

(iii)                               Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan, provided such options or other rights have vested in accordance

with any agreement between the Company and Executive covering such options or

other rights; and

(iv)                              Payment of any

life insurance, Disability, or other benefits provided to Executive by the

Company in accordance with the terms and conditions of such benefits and this

Agreement.

 

(d)           For Reason of Death.  In the Event of Executive’s Termination for Service for Reason of

Death, Executive’s beneficiaries as designated in accordance with the

provisions of Section 12, herein shall be entitled to receive the following

upon such Termination of Service:

 

(i)                                     Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary;

 

(ii)                                  Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan

 

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provided such options or

other rights have vested in accordance with any agreement between the Company

and Executive covering such options or other rights; and

(iii)                               Payment of any

life insurance benefits provided to Executive by the Company in accordance with

the terms and conditions of such benefits and this Agreement.

 

(e)           For Reason of Voluntary Resignation Not Constituting

Good Reason.  In the event of

Executive’s Termination of Service for reason of voluntary resignation by

Executive not constituting Good Reason, Executive (or if Executive dies while

benefits remain due under this Agreement, Executive’s beneficiaries as

designated in accordance with the provisions of Section 12 herein) shall be

entitled to receive the following upon such Termination of Service:

 

(i)                                     Payment

immediately upon Executives Termination of Service of any previously unpaid

Base Salary;

(ii)                                  Performance of

Company obligations with respect to Executives exercise of any stock options or

other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan, provided such options or other rights have vested in accordance

with any agreement between the Company and the Executive covering such options

or other rights; and

(iii)                               Payment of any

life insurance benefits provided to Executive by the Company in accordance with

the terms and conditions of such benefits and this Agreement.

 

(f)            For Reason of Cause.  In the event of Executive's Termination of Service for Reason of Cause,

the Company's obligation to Executive shall be limited to:

 

(i)                                     Payment

immediately upon Executive's Termination of Service of any previously unpaid

Base Salary;

(ii)                                  Performance of

Company obligations with respect to Executive's exercise of any stock options

or other rights have vested in accordance with agreement between the Company

and Executive covering such options or other rights; and

(iii)                               Payment of any

life insurance benefits provided to Executive by the Company in accordance with

the terms and conditions of such benefits and this Agent.

 

10.          MITIGATION

 

Executive shall not be

required to mitigate the amount of any benefit provided for in this Agreement

by actively seeking alternative employment during the period in which such

Benefits are paid.

 

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11.          LIMITATION OF BENEFITS UNDER THIS

AGREEMENT

 

(a)           In the event that the payment of any benefit due to

Executive under this Agreement (including any early vesting of stock options or

other rights under the Company’s Long-Term Incentive Plan): (i) constitutes a

“parachute payment” within the meaning of Section 280G of the Internal Revenue

Code of 1986, as amended (the “Code”); and (ii) but for this Section would be

subject to the excise tax imposed by Section 4999 of the Code, then the

cumulative benefits due under the Agreement shall be payable either as:

 

	

  (i)

  	

  the full payment, or

  
	

  (ii)

  	

  such lesser amount which

  would result in no portion of the payment being subject to excise tax under

  Section 4999 of the Code, whichever of the foregoing amounts, taking into

  account the applicable Federal, State, and local employment taxes, income

  taxes and the excise tax imposed by Section 4999 of the Internal Revenue

  Code, results in the receipt by the Executive, on an after tax basis, of the

  greatest amount of the payment, notwithstanding that all or some portion of

  the payment may be taxable under Section 4999 of the Code.

  

 

All determinations required

to be made under this Section 11 shall be made in writing by the Company’s

independent public accountants (the “Accounting Firm”).  The Company shall cause the Accounting Firm

to provide detailed supporting calculations of it’s determinations to the

Company and Executive.  Notice must be

given to the Accounting Firm within fifteen (15) business days after an event

entitling Executive to a payment under this Agreement.  All fees and expenses of the Accounting Firm

shall be borne solely by the Company. 

The Accounting Firm’s determinations must be made with substantial authority

(within the meaning of Section 6662 of the Code).

 

(b)           In the event that it is determined by the Board, upon

receipt of a written opinion of the Company’s independent public accountants,

that the enforcement of Section 8 hereof would preclude accounting for any

proposed business combination of the Company as a pooling of interests, and the

Board otherwise desires to approve a proposed business transaction which

requires as a condition to the closing of such transactions that it be

accounted for as a pooling of interests, Section 8 of this Agreement shall be

null and void, but only if the absence of enforcement of such sections hereof

would preserve the pooling treatment. 

For purposes of this Section 11, the Board’s determination shall require

the unanimous approval of the disinterested members of the Board.

 

12.          DESIGNATION

OF BENEFICIARIES

 

Executive shall have the

right at any time to designate any person(s) or trust(s) as beneficiaries to

whom any benefits payable under this Agreement shall be made in the event of

Executive’s death prior to the distribution of all benefits due Executive under

 

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this Agreement.  Each beneficiary designation shall be effective only when filed

in writing with the Company during Executive’s lifetime.  If Executive designates more than one

beneficiary, distributions of cash payments shall be made in equal proportions

to each beneficiary unless otherwise provided for in Executive’s beneficiary

designation.  The filing of a new

beneficiary designation shall cancel all designations previously filed.  Any finalized marriage or divorce (other

than common law marriage) of Executive subsequent to the date of filing a

beneficiary designation shall revoke such designation unless (a) in the case of

divorce, the previous spouse was not designated as beneficiary, and (b) in the

case of marriage, Executive’s new spouse had previously been designated as

beneficiary.  If Executive fails to designate

a beneficiary as provided for above, or if the beneficiary designation is

revoked by marriage, divorce, or otherwise without execution of a new

designation, or if the beneficiary designated by Executive dies prior to

distribution of the benefits due the Executive under this Agreement, the

Company shall direct the distribution of any benefits due under this Agreement

to Executive’s estate.

 

13.          SUCCESSORS

 

Except as provided for in

Section 12 above, the rights and duties of a party hereunder shall not be

assignable by that party; provided, however, that this Agreement shall be

binding upon and shall inure to the benefit of any successor of the Company,

and any such successor shall be deemed substituted for the Company under the

terms of this Agreement.  The term

successor as used herein shall include any person, firm, corporation, or other

business entity which at any time, by merger, purchase or otherwise, acquires

substantially all of the assets or business of the Company.

 

14.          ENTIRE AGREEMENT

 

With

respect to matters specified herein, this Agreement contains the entire

agreement between the parties and supercedes all prior oral and written

agreements, understandings, and commitments between the parties, including the

provisions of any stock option agreement(s) between the Executive and the

Company providing for the acceleration of vesting of vesting of Executive’s

stock option(s) upon Executive’s Termination of Service.  No amendments to this Agreement may be made

except through a written document signed by both parties.

 

15.          VALIDITY

 

In the event that any

provision of this Agreement is held to be invalid, void or unenforceable, the

same shall not affect, in any respect whatsoever, the validity of any other

provision of the Agreement.

 

16.          PARAGRAPHS AND OTHER HEADINGS

 

Paragraphs or other headings

contained in this Agreement are for reference purposes only and shall not

affect in any way the meaning or interpretation of this Agreement.

 

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17.          NOTICE

 

Any notice or demand

required or permitted to be given under this Agreement shall be made in writing

and shall be deemed effective upon the personal delivery thereof if delivered

or, if mailed, 48 hours after having been deposited in the United States mail,

postage prepaid, and addressed in the case of the Company to the attention of

the Board of Directors at the Company’s then principal place of business,

presently 4625 West Nevso Drive, Suite # 9, Las Vegas, Nevada 89103, and in the

case of Executive, presently 8213 Rancho Destino, Las Vegas, Nevada 89123.  Either party may change the address to which

such notices are to be addressed by giving the other party notice in the manner

herein set forth.

 

18.          RIGHT OF EMPLOYMENT

 

Nothing stated or implied by

this Agreement shall prevent the Company from terminating the Service of

Executive at any time, nor prevent Executive from voluntarily terminating

Service at any time.

 

19.          ARBITRATION OF DISPUTES

 

Except as expressly provided

below, in the event of a dispute arising over the interpretation or enforcement

of any of the provisions of this Agreement, or any other controversy or claim

arising out of or relating to the Agreement, the Company and Executive agree to

submit such dispute to binding arbitration in accordance with the Commercial

Arbitration Rules of the American Arbitration Association to the fullest extent

permitted by law. Each party expressly waives it’s entitlement, if any, to have

any such controversy heard before a court or jury.  Either party may, within 90 days of the occurrence of the event

giving rise to the dispute, initiate arbitration by notifying the other in

writing. Failure to initiate arbitration within such 90 day period, or such

extended period as may be mutually agreed in writing within such 90 day period,

shall constitute a waiver of any and all such claims, and they shall be forever

barred.  Both parties shall attempt to

agree upon a mutually acceptable arbitrator. 

If the Company and Executive are unable to agree upon one arbitrator,

then an arbitrator shall be selected in accordance with the then-current rules

of the American Arbitration Association. 

The arbitrator’s decision shall be final and binding on both

parties.  The  Company and Executive agree that the arbitration shall occur in

Las Vegas, Nevada.  The fees and

expenses of the arbitrator for any arbitration under this Agreement shall be

paid by the Company.  The fees and

expenses of counsel and experts retained by each party, the Company and the

Executive, shall be paid by the party retaining the services.  The arbitrator shall have no authority to

award punitive or exemplary damages against any party.  Notwithstanding the foregoing, no disputes

arising under or in connection with any agreement concerning proprietary information

shall be subject to arbitration, and either party may pursue other legal and

equitable remedies in connection therewith. 

As used in the Section 19, the term “Executive” shall also mean, in the

event of Executive’s death, his designated beneficiaries, his personal

representative, or the executor or administrator of his estate.

 

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20.          WITHOLDING TAXES

 

To the extent required by

law, the Company shall withhold from any payments due the Executive due under

this Agreement any applicable federal, state or local taxes and such other

deductions as are prescribed by law or Company policy.

 

21.          APPLICABLE LAW

 

To the full extent

controllable by stipulation of the parties, this Agreement shall be interpreted

and enforced under Nevada law.

 

22.          GOVERNING LAW

 

This Agreement shall be

governed in all respects by the internal laws of the State of Nevada.

 

23.          SUCCESSORS AND ASSIGNS

 

Except as otherwise provided

herein, the provisions hereof shall inure to the benefit of and be binding

upon, the successors, assigns, heirs, executors and administrators of the

parties hereto.

 

24.          AMENDMENT

 

Neither this Agreement nor

any term hereof may be amended, waived, discharged or terminated other than by

written instrument signed by the party against whom enforcement of such

amendment, waiver, discharge or termination is sought.

 

25.          COUNTERPARTS

 

This Agreement may be

executed in any number of counterparts, each of which shall be enforceable

against the parties actually executing such counterparts, and all of which

together shall constitute one instrument.

 

IN WITNESS WHEREOF, the Company has caused

this Agreement to be executed by it’s duly authorized Representative(s) and

Executive has affixed his signature as of the date first written above.

 

	

  EXECUTIVE

  	

  ON STAGE ENTERTAINMENT,

  INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  /s/ John W. Stuart

  	

   

  	

  By:

  	

  /s/ Timothy J. Parrott

  
	

   

  	

  Name:

  	

  TIM PARROTT

  
	

   

  	

  Title:

  	

  CEO & PRESIDENT

  
							

 

13Exhibit 10.2

 

CONFIDENTIALITY AND

NON-COMPETITION AGREEMENT

 

THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT  (the “Agreement”) has been entered into

this 6th day of April 2001, by and between On Stage Entertainment, Inc.,

(hereinafter referred to as “OSE” or the “Company”), and John W. STUART, an

individual (hereinafter referred to as “STUART”).

 

In consideration of the

mutual promises and convenants between the parties in connection with STUART’s

employment agreement executed and dated October 12, 2000, (which is

incorporated herein by reference and referred to as the “Employment

Agreement”), as well as STUART’s future involvement with OSE as its Founder and

Chairman, and for other good and valuable consideration, the parties hereto

agree as follows:

 

1.             CONFLICTING ACTIVITIES.

 

1.1          Involvement

in Business Opportunities.  STUART 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 STUART 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.

 

1.2          Development

of Business Opportunities.  STUART 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 STUART 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 STUART

may develop the business opportunity for himself, provided, however, that such

development may in no way conflict or interfere with the duties owed by STUART

to the Company under his Employment Agreement. 

Further, STUART 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.

 

 

2.             CONFIDENTIALITY OF TRADE SECRETS AND OTHER MATERIALS.

 

2.1          Trade

Secrets.  STUART 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 STUART acquires during his

Employment Agreement and that is not otherwise in the public domain. STUART

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 STUART during the term of this

Agreement. STUART 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 STUART otherwise.

 

2.2          Ownership of Trade Secrets; Assignment of Rights.  STUART 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. 

STUART 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.  STUART hereby assigns to the Company any rights which he or she

may have in any such trade secret or proprietary information.

STUART agrees that for a

period of two (2) years 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, STUART 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 the Employment Agreement for any reason, STUART agrees

that for a period of two (2) years after termination of his employment he will

not, directly or indirectly, compete with Company in the field of live

entertainment, provided the Company continues to pay STUART his Base Salary,

Minimum Guaranteed Bonus, Vacation, Car Allowance and Health/Dental/Vision insurance

benefits at such rates as were in effect as of last date of STUART’s employment

with the Company. STUART understands and agrees that direct competition means

the design, development, production, promotion, presentation, or sale of live

entertainment shows competitive with those of the Company.  Indirect competition means the employment by

any competitor or third party in a role that involves STUART in the design,

development, production, promotion, or sale of live entertainment shows

competitive with those of the Company, and for whom STUART will perform the

same or similar function as he performs for the Company.  STUART further agrees that for a period of

two (2) years after termination of his employment, he

 

 

2

 

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, provided the Company continues to pay STUART his Base Salary,

Minimum Guaranteed Bonus, Vacation, Car Allowance and Health/Dental/Vision

insurance benefits at such rates as were in effect as of last date of STUART’s

employment with the Company.

 

4.             INJUNCTIVE RELIEF. 

The Company and STUART 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 Clark 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 6 day of April, 2001.

 

	

  /s/ John W. Stuart

  	

   

  
	

  JOHN W. STUART, an

  individual

  	

   

  

 

3

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