Edward Hellenbrand ran a comedy club known as the Comedy Cottage in Rosemont, Illinois. The business was incorporated, with Hellenbrand and his wife as the corporation's sole shareholders. The corporation leased the premises in which the club was located. Hellenbrand hired Jay Berk as general manager of the club. Two years later, Berk was made vice president of the corporation and given 10 percent of its stock. Hellenbrand experienced health problems and moved to Nevada, leaving Berk to manage the daily affairs of the business. Four years later, the ownership of the building where the Comedy Cottage was located changed hands. Shortly thereafter, the club's lease on the premises expired. Hellenbrand instructed Berk to negotiate a new lease. Berk arranged a month-to-month lease, but had the lease agreement drawn up in his name instead of that of the corporation. When Hellenbrand learned of Berk's move, he fired him. Berk continued to lease the building in his own name and opened his own club, the Comedy Company, Inc., there. Hellenbrand sued Berk for an injunction to prevent Berk from leasing the building.

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