SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report: December 15, 2006
(Date
of
earliest event reported)
|
NATHAN'S
FAMOUS,
INC.
|
|
(Exact
Name of Registrant as Specified in its
Charter)
|
|
Delaware
|
1-3189
|
11-3166443
|
||
|
(State
of Incorporation)
|
(Commission
|
(I.R.S.
Employer
|
||
|
File
Number)
|
Identification
No.)
|
| 1400 Old Country Road, Westbury, New York |
11590
|
|
| (Address of Principal Executive Offices) |
(Zip
Code)
|
|
| Registrant's telephone number including area code | (516) 338-8500 |
|
N/A
|
|
(Former
name or former address, if changed since
last report.)
|
Item
1.01 Entry Into Material Definitive Agreement.
As
previously reported in the Nathan’s Famous, Inc. (the “Company”) Form 8-K dated
November 1, 2006, Howard M. Lorber was appointed as Executive Chairman of the
Board of the Company, effective January 1, 2007 and Eric Gatoff was appointed
as
Chief Executive Officer of the Company effective January 1, 2007.
In
connection with the foregoing, on December 15, 2006, the Company entered into
an
employment agreement with Mr. Howard Lorber (the “Lorber Employment Agreement”)
pursuant to which Mr. Lorber will be appointed as Executive Chairman of the
Board of the Company effective January 1, 2007 and an employment agreement
with
Mr. Eric Gatoff (the “Gatoff Employment Agreement”) pursuant to which Mr. Gatoff
will be appointed as Chief Executive Officer effective January 1, 2007. The
Lorber Employment Agreement supercedes Mr. Lorber’s existing
employment agreement.
Under
the
terms of the Lorber Employment Agreement, Mr. Lorber will serve as Executive
Chairman of the Board from January 1, 2007 until December 31, 2012, unless
his
employment is terminated in accordance with the terms of the Lorber Employment
Agreement. Pursuant to the Lorber Employment Agreement, Mr. Lorber will receive
a base salary of $400,000, and will not receive a contractual bonus; provided
that, for the fiscal year ending March 25, 2007, Mr. Lorber will be entitled
to
receive a pro rata portion of the bonus payable to him under his existing
agreement. The Lorber Employment Agreement will further provide for a three-year
consulting period after the termination of employment during which Mr. Lorber
will receive a consulting fee of $200,000 per year in exchange for his agreement
to provide no less than 30 days of consulting services. The Lorber Employment
Agreement will also provide Mr. Lorber the right to participate in employment
benefits offered to other Nathan’s executives. During and after the contract
term, Mr. Lorber is subject to certain confidentiality, non-solicitation and
non-competition provisions in favor of the Company.
In
the
event that Mr. Lorber’s employment is terminated without cause, he will be
entitled to receive his salary and bonus for the remainder of the contract
term.
The Lorber Employment Agreement will further provide that in the event there
is
a change in control, as defined in the agreement, Mr. Lorber will have the
option, exercisable within one year after such event, to terminate his
employment agreement. Upon such termination, will have the right to receive
a
lump sum cash payment equal to the greater of (A) his salary and annual bonuses
for the remainder of the employment term (including a prorated bonus for any
partial fiscal year), which bonus shall be equal to the average of the annual
bonuses awarded to him during the three fiscal years preceding the fiscal year
of termination; or (B) 2.99 times his salary and annual bonus for the fiscal
year immediately preceding the fiscal year of termination, as well as a lump
sum
cash payment equal to the difference between the exercise price of any
exercisable options having an exercise price of less than the then current
market price of our common stock and such then current market price. In
addition, the Company will provide Mr. Lorber with a tax gross-up payment to
cover any excise tax due. In the event of termination due to Mr. Lorber’s death
or disability, he is entitled to receive an amount equal to his salary and
annual bonuses for a three-year period, which bonus shall be equal to the
average of the annual bonuses awarded to him during the three fiscal years
preceding the fiscal year of termination.
Under
the
terms of the Gatoff Employment Agreement, Mr. Gatoff has agreed to serve as
Chief Executive Officer effective from January 1, 2007 until December 31, 2008,
which period shall extend for additional one-year periods unless either party
delivers notice of non-renewal no less than 180 days prior to the end of the
term then in effect. Pursuant to the agreement, Mr. Gatoff will receive a base
salary of $225,000 and an annual bonus equal in an amount of up to 100% of
his
base salary, depending upon the Company’s achievement of performance goals
established and agreed to by the Compensation Committee and Mr. Gatoff for
each
fiscal year during the employment term, provided that the bonus payable to
Mr.
Gatoff for the fiscal year ending March 25, 2007 is to be determined by the
Compensation Committee in its discretion, based on Mr. Gatoff’s status as Vice
President and Corporate Counsel through December 31, 2006 and provided, further,
that Mr. Gatoff will be entitled to a minimum bonus of 50% of his base salary
for the first two years of the Gatoff Employment Agreement. The agreement will
further provide for an automobile allowance in the amount provided to other
executive officers, currently $1,250 per month, and the right of Mr. Gatoff
to
participate in employment benefits offered to other Nathan’s executives. During
and after the contract term, Mr. Gatoff is subject to certain confidentiality,
non-solicitation and non-competition provisions in favor of the Company.
In
the
event that Mr. Gatoff’s employment is terminated without cause, he will be
entitled to receive his salary for the remainder of the contract term. The
Gatoff Employment Agreement will further provide that in the event there is
a
change in control, as defined in the agreement, Mr. Gatoff will have the option,
exercisable within one year after such event, to terminate his employment
agreement. Upon such termination, he will have the right to receive a lump
sum
cash payment equal to his salary and annual bonus for a one-year period in
an
amount equal to the bonus paid or payable to Mr. Gatoff for the for
the
most recently completed fiscal year.
In the
event of termination due to Mr. Gatoff’s death or disability, he will be
entitled to receive an amount equal to his salary and annual bonus for the
balance of the contract term, which bonus shall be equal to the minimum bonus
of
50% of his base compensation in the event of such a termination during the
initial two-year term and the amount of the bonus paid or payable to the
Executive for the preceding fiscal year in the event of such termination during
any renewal term.
Item
9.01 Financial
Statements and Exhibits.
| (c) |
10.1
Employment Agreement between Nathan’s Famous, Inc. and Howard M. Lorber
dated as of December 15, 2006
|
| 10.2 Employment Agreement between Nathan’s Famous, Inc. and Eric Gatoff dated as of December 15, 2006 |
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned,
thereunder duly authorized.
| NATHAN'S FAMOUS, INC. | ||
| |
|
|
| By: | /s/ Wayne Norbitz | |
|
Wayne Norbitz |
||
| President and Chief Operating Officer | ||
Dated:
December 18, 2006
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”), dated as of December 15, 2006 and effective as of January 1,
2007 (the “Effective Date”), by and between Nathan’s Famous, Inc., a Delaware
corporation, with its principal office located at 1400 Old Country
Road, Westbury, New York 11590 (together with its successors and assigns
permitted under this Agreement, “Nathan’s”) and Howard M. Lorber, who
resides at 8061 Fisher Island, Miami, Florida 33109
(“Lorber”).
WITNESSETH:
WHEREAS,
Nathans’
has determined that it is in the best interests of Nathan’s and its stockholders
to continue to employ Lorber and to set forth in this Agreement the obligations
and duties of both Nathan’s and Lorber; and
WHEREAS,
Nathan’s
wishes to assure itself of the services of Lorber for the period hereinafter
provided, and Lorber is willing to be employed by Nathan’s for said period, upon
the terms and conditions provided in this Agreement;
WHEREAS,
this
Agreement supercedes any and all prior employment agreements between Nathan’s
and Lorber (the “Prior Agreements”);
NOW,
THEREFORE, in
consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually
acknowledged, Nathan’s and Lorber (individually a “Party” and together the
“Parties”) agree as follows:
|
1.
|
Definitions.
|
(a) “Beneficiary” shall
mean the person or persons named by Lorber pursuant to Section 19 below or,
in the event that no such person is named who survives Lorber, his
estate.
(b) “Board”
shall
mean the Board of Directors of Nathan’s.
(c) “Cause”
shall
mean:
(i) Lorber’s
conviction of a felony involving an act or acts of dishonesty on his part and
resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of Nathan’s;
(ii) willful
and continued failure of Lorber to perform his obligations under this Agreement,
resulting in demonstrable material economic harm to Nathan’s; or
(iii) a
material breach by Lorber of the provisions of Sections 16 or 17 below
to the demonstrable and material detriment of Nathan’s.
Notwithstanding
the foregoing, in no event shall Lorber’s failure to perform the duties
associated with his position caused by his mental or physical disability
constitute Cause for his termination.
For
purposes of this Section 1(c), no act or failure to act on the part of
Lorber shall be considered willful unless it is done, or omitted to be done,
by
him in bad faith or without reasonable belief that his action or omission was
in
the best interests of Nathan’s. Any act or failure to act based upon authority
given pursuant to a resolution adopted by the Board or based upon the advice
of
counsel for Nathan’s shall be conclusively presumed to be done, or omitted to be
done, by Lorber in good faith and in the best interests of
Nathan’s.
(d) “Change
in Control”
shall
mean the occurrence of any of the following events:
(i) the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 as
amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting
securities of Nathan’s when such acquisition causes such Person to own
15 percent or more of the combined voting power of the then outstanding
voting securities of Nathan’s entitled to vote generally in the election of
directors (the “Outstanding Nathan’s Voting Securities”); provided, however,
that for purposes of this subsection (i), the following acquisitions shall
not be deemed to result in a Change in Control: (A) any acquisition
directly from Nathan’s, (B) any acquisition by Nathan’s, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Nathan’s or any corporation controlled by Nathan’s, or
(D) any acquisition pursuant to a transaction that complies with
clauses (A), (B) and (C) of subsection (iii) below; and provided,
further, that if any Person’s beneficial ownership of the Outstanding Nathan’s
Voting Securities reaches or exceeds 15 percent as a result of a
transaction described in clause (A) or (B) above, and such Person
subsequently acquires beneficial ownership of additional voting securities
of
Nathan’s, such subsequent acquisition shall be treated as an acquisition that
causes such Person to own 15 percent or more of the Outstanding Nathan’s
Voting Securities; or
(ii) individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Effective
Date whose election, or nomination for election by Nathan’s stockholders, was
approved by a vote of at least a majority of the directors then comprising
the
Incumbent Board shall be considered as though such individual were a member
of
the Incumbent Board, but excluding for this purpose any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a
Person other than the Board; or
2
(iii) consummation
of a reorganization, merger or consolidation or sale or other disposition of
all
or substantially all of the assets of Nathan’s or the acquisition of assets of
another entity (“Business Combination”); excluding, however, such a Business
Combination pursuant to which (A) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Nathan’s Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60 percent of,
respectively, the then outstanding shares of common stock or the combined voting
power of the then outstanding voting securities entitled to vote generally
in
the election of directors, as the case may be, of the corporation resulting
from
such Business Combination (including, without limitation, a corporation that
as
a result of such transaction owns Nathan’s or all or substantially all of
Nathan’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such
Business Combination of the Outstanding Nathan’s Voting Securities, (B) no
Person (excluding any employee benefit plan (or related trust) of Nathan’s or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 15 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for
such Business Combination; or
(iv) approval
by the stockholders of Nathan’s of a complete liquidation or dissolution of the
Company.
(e) “Code”
shall
mean the Internal Revenue Code of 1986, as amended from time to
time.
(f) “Committee”
shall
mean the Compensation Committee of the Board.
(g) “Consulting
Fee”
shall
mean the compensation paid to Lorber pursuant to Section 13.
(h) “Consulting
Period”
shall
mean the period specified in Section 13 during which Lorber serves as a
consultant to Nathan’s.
(i) “Disability”
shall
mean the illness or other mental or physical disability of Lorber, as determined
by a physician acceptable to Nathan’s and Lorber, resulting in his failure
during the Employment Term, (i) to perform substantially his applicable
material duties under this Agreement for a period of nine consecutive months
and
(ii) to return to the performance of his duties within 30 days after
receiving written notice of termination.
3
(j) “Employment
Term”
shall
mean the period specified in Section 2(b) below.
(k) “Fiscal
Year”
shall
mean the 12-month period ending on the last Sunday in March, or such other
12-month period as may constitute Nathan’s fiscal year at any time
hereafter.
(l) “Good
Reason”
shall
mean, at any time during the Employment Term, without Lorber’s prior written
consent or his acquiescence:
(i) diminution,
reduction or other adverse change in incentive compensation opportunities
available to Lorber (with respect to the level of incentive compensation
opportunities, the applicable performance criteria and otherwise the manner
in
which incentive compensation is determined) in the aggregate from those
available as of the Effective Date in accordance with Section 4(a)
below;
(ii) Nathan’s
failure to pay Lorber any amounts otherwise vested and due him hereunder or
under any plan or policy of Nathan’s;
(iii) diminution
of Lorber’s titles, position, authorities or responsibilities, including not
serving on the Board;
(iv) assignment
to Lorber of duties incompatible with his position of Executive Chairman of
the
Board of Directors;
(v) i mposition
of
a requirement that Lorber report other than directly to the full
Board;
(vi) a
material breach of the Agreement by Nathan’s that is not cured within 10
business days after written notification by Lorber of such breach;
or
(vii) relocation
of Nathan’s corporate headquarters to a location more than 35 miles from
the location first above described, other than to its office at 6300 N.W.
31st Avenue,
Fort Lauderdale, Florida, or more than 35 miles from such Florida
office.
(m) “Retirement”
shall
mean termination of Lorber’s employment, other than due to death, with
eligibility to receive a benefit under the terms of Nathan’s Supplemental
Executive Retirement Plan as then in effect.
(n) “Salary”
shall
mean the annual Salary provided for in Section 3 below, as adjusted from
time to time.
4
(o) “Subsidiary”
shall
mean any corporation of which Nathan’s owns, directly or indirectly, more than
50 percent of its voting stock.
|
2.
|
Employment
Term, Positions And
Duties.
|
(a) Employment
of Lorber.
Nathan’s hereby continues to employ Lorber, and Lorber hereby accepts continued
employment with Nathan’s, in the positions and with the duties and
responsibilities set forth below and upon such other terms and conditions as
are
hereinafter stated. Lorber shall render services to Nathan’s principally at
Nathan’s corporate headquarters, but he shall do such traveling on behalf of
Nathan’s as shall be reasonably required in the course of the performance of his
duties hereunder.
(b) Employment
Term.
The
Employment Term shall commence on the Effective Date and shall terminate on
December 31, 2012.
|
3.
|
Titles
And Duties.
|
Until
the
date of termination of his employment hereunder, Lorber shall be employed as
Executive Chairman of the Board of Directors, reporting to the full Board.
In
such capacity, Lorber shall have the customary powers, responsibilities and
authorities of the chairman of the board of corporations of the size, type
and
nature of Nathan’s.
|
4.
|
Time
and Effort.
|
(a) Lorber
agrees to devote his best efforts and abilities, and such of his business time
and attention as he determines is reasonably necessary, to the affairs of
Nathan’s in order to carry out his duties and responsibilities under this
Agreement. The Parties hereby acknowledge that Lorber is President and Chief
Executive Officer of and a director of Vector Group Ltd., Chairman of the Board
of Ladenburg Thalman Financial Services, Inc., and Chairman and that during
the
Employment Term he will be devoting time and attention to those and other
business activities.
(b) Notwithstanding
the foregoing, nothing shall preclude Lorber from (A) serving on the boards
of a reasonable number of trade associations, charitable organizations and/or
businesses not in competition with Nathan’s, (B) engaging in charitable
activities and community affairs, and (C) managing his personal investments
and affairs; provided, however, that, such activities do not materially
interfere with the proper performance of his duties and responsibilities
specified in Section 3(a) above.
|
5.
|
Salary.
|
Lorber
shall receive from Nathan’s a Salary, at the rate of $400,000 per
annum.
5
|
6.
|
Bonuses.
|
Lorber
shall be eligible to receive bonuses during the Employment Term. The Committee
shall determine, in its discretion, the occasion for payment, and the amount,
of
any such bonus.
|
7.
|
Long-term
Incentive.
|
During
the Employment Term, Lorber shall be eligible for awards under any long-term
incentive compensation plan established by Nathan’s for the benefit of Lorber
or, in the absence thereof, under any such plan established for the benefit
of
members of the senior management of Nathan’s.
|
8.
|
Equity
Opportunity.
|
During
the Employment Term and, to the extent permitted by the terms of any applicable
Nathan’s plan during any Consulting Period, Lorber shall be eligible to receive
grants of options to purchase shares of Nathans’ stock and awards of shares of
Nathans’ stock, either or both as determined by the Committee, under and in
accordance with the terms of applicable plans of Nathan’s and related option and
award agreements.
|
9.
|
Expense
Reimbursement; Certain Other
Costs.
|
During
the Employment Term and any Consulting Period, Lorber shall be entitled to
prompt reimbursement by Nathan’s for all reasonable out-of-pocket expenses
incurred by him in performing services under this Agreement, upon his submission
of such accounts and records as may be reasonably required by Nathan’s. In
addition, Lorber shall be entitled to payment by Nathan’s of all reasonable
costs and expenses, including attorneys and consultants fees and disbursements,
incurred by him in connection with adoption of this Agreement and any related
compensatory arrangements that Nathan’s adopts solely for his
benefit.
|
10.
|
Perquisites.
|
During
the Employment Term and, to the extent required in connection with his
performance of consulting services pursuant to Section 13 during any
Consulting Period, Nathan’s shall provide Lorber with the use of an automobile
and payment of related expenses on the same terms as are in effect on the
Effective Date or, if more favorable to Lorber, as are made available generally
to other executive officers of Nathan’s at any time thereafter.
|
11.
|
Employee
Benefit Plans.
|
(a) General.
During
the Employment Term, Lorber shall be entitled to participate in all employee
benefit plans and programs that are made available to Nathan’s senior executives
or to its employees generally, as such plans or programs may be in effect from
time to time, including, without limitation, pension and other retirement plans,
profit-sharing plans, savings and similar plans, group life insurance,
accidental death and dismemberment insurance, travel accident insurance,
hospitalization insurance, surgical insurance, major and excess major medical
insurance, dental insurance, short-term and long-term disability insurance,
sick
leave, holidays, vacation (not less than four weeks in any calendar year) and
any other employee benefit plans or programs that may be sponsored by Nathan’s
from time to time, including plans that supplement the above-listed types of
plans, whether funded or unfunded.
6
(b) Disability
Benefit.
In
consideration of the benefit payable to Lorber in the event of termination
of
his employment due to Disability, as provided in Section 12(e) below, Nathan’s
shall not be obligated to provide Lorber with long-term disability insurance.
Notwithstanding the foregoing, if Nathan’s does provide Lorber with such
insurance, he shall be the owner of any individual policies obtained and shall
pay the premiums thereon.
|
12.
|
Termination
of Employment.
|
(a) Termination
by Mutual Agreement.
The
Parties may terminate this Agreement by mutual agreement at any time. If they
do
so, Lorber’s entitlements shall be as the Parties mutually agree.
(b) General.
Notwithstanding anything to the contrary herein, in the event of termination
of
Lorber’s employment under this Agreement, he or his Beneficiary, as the case may
be, shall be entitled to receive (in addition to payments and benefits under,
and except as specifically provided in, subsections (c) through (h)
below, as applicable):
(i) his
Salary through the date of termination;
(ii) any
unused vacation from prior years;
(iii) any
annual bonus for the current Fiscal Year, prorated to the date of
termination;
(iv) any
annual or special bonus previously awarded but not yet paid to him;
(v) any
deferred compensation under any incentive compensation plan of Nathan’s or any
deferred compensation agreement then in effect; and
(vi) any
other
compensation or benefits, including, without limitation, long-term incentive
compensation described in Section 7 above, benefits under equity grants and
awards described in Section 8 above and employee benefits under plans
described in Section 11 above, that have vested through the date of
termination or to which he may then be entitled in accordance with the
applicable terms and conditions of each grant, award or plan.
7
(c) Termination
due to Retirement.
In the
event that Lorber’s employment terminates due to Retirement, he shall be
entitled to the compensation and benefits specified in
Section 12(b).
(d) Termination
due to Death.
In the
event that Lorber’s employment terminates due to his death, his Beneficiary
shall be entitled, in addition to the compensation and benefits specified in
Section 12(b), to his Salary and annual bonuses payable for a three-year
period. For the purposes hereof, such annual bonus shall be equal to the average
of the annual bonuses awarded to him during the three Fiscal Years preceding
the
Fiscal Year of termination.
(e) Termination
due to Disability.
In the
event of Disability, Nathan’s or Lorber may terminate Lorber’s employment. If
Lorber’s employment terminates due to Disability, he shall be entitled, in
addition to the compensation and benefits specified in Section 12(b), to
his Salary and annual bonuses payable for a three-year period, offset by any
long-term disability insurance benefit that Nathan’s has provided for him and
for which it has paid the applicable group or individual insurance premiums.
For
the purposes hereof, such annual bonus shall be equal to the average of the
annual bonuses awarded to him during the three Fiscal Years preceding the Fiscal
Year of termination.
(f) Termination
by Nathan’s for Cause.
Nathan’s may terminate Lorber’s employment hereunder for Cause only upon written
notice to Lorber not less than 30 days prior to any intended termination,
which notice shall specify the grounds for such termination in reasonable
detail. Cause shall in no event be deemed to exist except upon a finding
reflected in a resolution approved by a majority (excluding Lorber) of the
members of the Board (whose findings shall not be binding upon or entitled
to
any deference by any court, arbitrator or other decision-maker ruling on this
Agreement) at a meeting of which Lorber shall have been given proper notice
and
at which Lorber (and his counsel) shall have a reasonable opportunity to present
his case.
In
the
event that Lorber’s employment is terminated for Cause, he shall be entitled
only to the compensation and benefits specified in Sections 12(b)(i), (ii)
and (iv).
(g) Termination
Without Cause or by Lorber for Good Reason.
(i) Termination
without Cause shall mean termination of Lorber’s employment by Nathan’s and
shall exclude termination (A) due to Retirement, death, Disability or Cause
or (B) by mutual agreement of Lorber and Nathan’s. Nathan’s shall provide
Lorber 15 days’ prior written notice of termination by it without Cause,
and Lorber shall provide Nathan’s 15 days’ prior written notice of his
termination for Good Reason.
(ii) In
the event
of termination by Nathan’s of Lorber’s employment without Cause or of
termination by Lorber of his employment for Good Reason, he shall be entitled,
in addition to the compensation and benefits specified in Section 12(b),
to:
8
(A) his
Salary, payable for the remainder of the Employment Term at the rate in effect
immediately before such termination;
(B) annual
bonuses for the remainder of the Employment Term (including a prorated bonus
for
any partial Fiscal Year) equal to the average of the annual bonuses awarded
to
him during the three Fiscal Years preceding the Fiscal Year of termination,
such
bonuses to be paid at the same time annual bonuses are regularly paid by
Nathan’s to Lorber;
(C) continued
participation in all employee benefit plans or programs available to Nathan’s
employees generally in which Lorber was participating on the date of termination
of his employment until the end of the Employment Term; provided; however,
that
(x) if Lorber is precluded from continuing his participation in any
employee benefit plan or program as provided in this clause (E), he shall
be entitled to the after-tax economic equivalent of the benefits under the
plan
or program in which he is unable to participate until the end of the Employment
Term, and (y) the economic equivalent of any benefit foregone shall be
deemed to be the lowest cost that Lorber would incur in obtaining such benefit
on an individual basis;
(D) the
perquisites provided to Lorber pursuant to Section 10 hereof until the end
of the Employment Term;
(E)
other
benefits in accordance with applicable plans and programs of the Company until
the end of the Employment Term.
Prior
written consent by Lorber to any of the events described in Section 1(k)
above shall be deemed a waiver by him of his right to terminate for Good Reason
under this Section 12(g) solely by reason of the events set forth in such
waiver.
(h) Change
in Control.
In the
event of any termination of Lorber’s employment within a one-year period
following a Change in Control for any reason other than Cause, Retirement,
death
or Disability, Lorber shall be entitled, in addition to the compensation and
benefits specified in Section 12(b) to:
(i) a
lump
sum cash payment equal to the greater of:
(A) his
Salary and annual bonuses for the remainder of the Employment Term (including
a
prorated bonus for any partial fiscal year), which bonus shall be equal to
the
average of the annual bonuses awarded to him during the three Fiscal Years
preceding the Fiscal Year of termination; or
(B) 2.99 times
his Salary and annual bonus for the Fiscal Year immediately preceding the Fiscal
Year of termination;
9
(ii) continued
participation in all employee benefit plans or programs available to Nathan’s
employees generally in which Lorber was participating on the date of termination
of his employment until the end of the Employment Term; provided; however,
that
(x) if Lorber is precluded from continuing his participation in any
employee benefit plan or program as provided in this clause (E), he shall
be entitled to the after-tax economic equivalent of the benefits under the
plan
or program in which he is unable to participate until the end of the Employment
Term, and (y) the economic equivalent of any benefit foregone shall be
deemed to be the lowest cost that Lorber would incur in obtaining such benefit
on an individual basis;
(iii) the
perquisites provided to Lorber pursuant to Section 10 hereof until the end
of the Employment Term;
(iv) a
lump
sum cash payment equal to the difference between the exercise price of any
exercisable options having an exercise price of less than the then current
market price of Nathan’s common stock and such then current market price;
and
(v) other
benefits in accordance with applicable plans and programs of the Company for
the
remainder of the Employment Term.
|
13.
|
Consulting
Period.
|
(a) General.
Effective upon the end of the Employment Term (but only if the Employment Term
ends by reason of its expiration or, if earlier, upon termination of Lorber’s
employment (i) by mutual agreement, (ii) by Retirement, or
(iii) due to a Change in Control), Lorber shall become a consultant to
Nathan’s, in recognition of the continued value to Nathan’s of his extensive
knowledge and expertise. Unless earlier terminated, as provided in
Section 13(e), the Consulting Period shall continue for three
years.
|
(b)
|
Duties
and Extent of Services.
|
(i) During
the Consulting Period, Lorber shall consult with Nathan’s and its senior
executive officers regarding its business and operations. Lorber shall make
himself available to perform such consulting services at the request of Nathan’s
on reasonable notice; provided, that performance of such consulting services
shall not require more than 50 days in any calendar year, nor more than one
day in any week, it being understood and agreed that during the Consulting
Period Lorber shall have the right, consistent with the prohibitions of
Sections 16 and 17 below, to engage in full-time or part-time
employment with any business enterprise that is not a competitor of
Nathan’s.
(ii) Lorber’s
service as a consultant shall only be required at such times and such places
as
shall not result in unreasonable inconvenience to him, recognizing his other
business commitments that he may have to accord priority over the performance
of
services for Nathan’s. In order to minimize interference with Lorber’s other
commitments, his consulting services may be rendered by personal consultation
at
his residence or office wherever maintained, or by correspondence through mail,
telephone, fax or other similar mode of communication at times, including
weekends and evenings, most convenient to him.
10
(iii) During
the Consulting Period, Lorber shall not be obligated to serve as a member of
the
Board or to occupy any office on behalf of Nathan’s or any of its
Subsidiaries.
(c) Compensation.
During
the Consulting Period, Lorber shall receive a Consulting Fee of $200,000 per
year.
(d) Disability.
In the
event of Disability during the Consulting Period, Nathan’s or Lorber may
terminate Lorber’s consulting services.
(e) Termination.
The
Consulting Period shall terminate after three years or, if earlier, upon
Lorber’s death or upon his failure to perform consulting services as provided in
Section 13(b), pursuant to 30 days’ written notice by Nathan’s to
Lorber of the grounds constituting such failure and reasonable opportunity
afforded Lorber to cure the alleged failure. Upon any such termination, payment
of consulting fees and benefits shall cease.
(f) Other.
During
the Consulting Period, Lorber shall be entitled to expense reimbursement,
perquisites and benefits pursuant to the terms of Sections 9, 10
and 11, respectively.
|
14.
|
No
Duty to Mitigate; No
Offset.
|
Lorber
shall not be required to mitigate damages or the amount of any payment provided
for under this Agreement by seeking other employment or otherwise, nor will
any
payment hereunder be subject to offset in the event Lorber does receive
compensation for services from any other source.
|
15.
|
Parachutes.
|
(a) Application.
If all,
or any portion, of the payments provided under this Agreement, and/or any other
payments and benefits that Lorber receives or is entitled to receive from
Nathan’s or a Subsidiary, whether or not under an existing plan, arrangement or
other agreement, constitutes an “excess parachute payment” within the meaning of
Section 280G(b) of the Code (each such parachute payment, a “Parachute
Payment”) and will result in the imposition on Lorber of an excise tax under
Section 4999 of the Code, then, in addition to any other benefits to which
Lorber is entitled under this Agreement, Nathans shall pay him an amount in
cash
equal to the sum of the excise taxes payable by him by reason of receiving
Parachute Payments, plus the amount necessary to put him in the same after-tax
position (taking into account any and all applicable federal, state and local
excise, income or other taxes at the highest possible applicable rates on such
Parachute Payments (including, without limitation, any payments under this
Section 15) as if no excise taxes had been imposed with respect to
Parachute Payments (the “Excise Tax Gross-up”).
11
(b) Computation.
The
amount of any payment under this Section 15 shall be computed by a
certified public accounting firm of national reputation selected by Nathan’s and
acceptable to Lorber. If Nathan’s or Lorber disputes the computation rendered by
such accounting firm, Nathan’s shall select an alternative certified public
accounting firm of national reputation to perform the applicable computation.
If
the two accounting firms cannot agree upon the computations, Lorber and Nathan’s
shall jointly appoint a third certified public accounting firm of national
reputation within 10 calendar days after the two conflicting computations have
been rendered. Such third accounting firm shall be asked to determine within
30 calendar days the computation of the Excise Tax Gross-up to be paid to
Lorber, and payments shall be made accordingly.
(c) Payment.
In any
event, Nathan’s shall pay to Lorber or pay on his behalf the Excise Tax Gross-up
as computed by the accounting firm initially selected by Nathan’s by the time
any taxes payable by him as a result of the Parachute Payments become due,
with
Lorber agreeing to return the excess amount of such payment over the final
computation rendered from the process described in Section 15(b). Lorber
and Nathan’s shall provide the accounting firms with all information that any of
them reasonably deems necessary in order to compute the Excise Tax Gross-up.
The
cost and expenses of all the accounting firms retained to perform the
computations described above shall be borne by Nathan’s.
In
the
event that the Internal Revenue Service (“IRS”) or the accounting firm computing
the Excise Tax Gross-up finally determines that the amount of excise taxes
thereon initially paid was insufficient to discharge Lorber’s excise tax
liability, Nathan’s shall make additional payments to him as may be necessary to
reimburse him for discharging the full liability.
Lorber
shall apply to the IRS for a refund of any excise taxes paid and remit to
Nathan’s the amount of any such refund that he receives. Nathan’s shall
reimburse Lorber for his expenses in seeking a refund of excise taxes and for
any interest and penalties imposed on excise taxes that he is required to
pay.
|
16.
|
Confidential
Information.
|
(a) General.
(i) Lorber
understands and hereby acknowledges that as a result of his employment with
Nathan’s he will necessarily become informed of and have access to certain
valuable and confidential information of Nathan’s and any of its Subsidiaries,
joint ventures and affiliates, including, without limitation, inventions, trade
secrets, technical information, computer software and programs, know-how and
plans (“Confidential Information”), and that any such Confidential Information,
even though it may be developed or otherwise acquired by Lorber, is the
exclusive property of Nathan’s to be held by him in trust solely for Nathan’s
benefit.
12
(ii) Accordingly,
Lorber hereby agrees that, during the Employment Term and subsequent thereto,
he
shall not, and shall not cause others to, use, reveal, report, publish, transfer
or otherwise disclose to any person, corporation or other entity any
Confidential Information without prior written consent of the Board, except
to
(A) responsible officers and employees of Nathan’s or (B) responsible
persons who are in a contractual or fiduciary relationship with Nathan’s or who
need such information for purposes in the interest of Nathan’s. Notwithstanding
the foregoing, the prohibitions of this clause (ii) shall not apply to any
Confidential Information that becomes of general public knowledge other than
from Lorber or is required to be divulged by court order or administrative
process.
(b) Return
of Documents.
Upon
termination of his employment with Nathan’s for any reason Lorber shall promptly
deliver to Nathan’s all plans, drawings, manuals, letters, notes, notebooks,
reports, computer programs and copies thereof and all other materials,
including, without limitation, those of a secret or confidential nature,
relating to Nathan’s business that are then in his possession or
control.
(c) Remedies
and Sanctions.
In the
event that Lorber is found to be in violation of Section 16(a) or (b)
above, Nathan’s shall be entitled to relief as provided in Section 18
below.
|
17.
|
Noncompetition/Nonsolicitation.
|
(a) Prohibitions.
During
the Employment Term and, if applicable, the Consulting Period, Lorber shall
not,
without prior written authorization of the Board, directly or indirectly,
through any other individual or entity:
(i) become
on
officer or employee of, or render any service to, any direct competitor of
Nathan’s;
(ii) solicit
or induce any customer of Nathan’s to cease purchasing goods or services from
Nathan’s or to become a customer of any competitor of Nathan’s; or
(iii) solicit
or induce any employee of Nathan’s to become employed by any competitor of
Nathan’s.
(b) Remedies
and Sanctions.
In the
event that Lorber is found to be in violation of Section 17(a) above,
Nathan’s shall be entitled to relief as provided in Section 18
below.
(c) Exceptions.
Notwithstanding anything to the contrary in Section 17(a) above, its
provisions shall not:
13
(i) apply
if
Nathan’s terminates Lorber’s employment without Cause or Lorber terminates his
employment for Good Reason, each as provided in Section 12(g) above;
or
(ii) be
construed as preventing Lorber from investing his assets in any business that
is
not a direct competitor of Nathan’s.
|
18.
|
Remedies/Sanctions.
|
Lorber
acknowledges that the services he is to render under this Agreement are of
a
unique and special nature, the loss of which cannot reasonably or adequately
be
compensated for in monetary damages, and that irreparable injury and damage
may
result to Nathan’s in the event of any breach of this Agreement or default by
Lorber. Because of the unique nature of the Confidential Information and the
importance of the prohibitions against competition and solicitation, Lorber
further acknowledges and agrees that Nathan’s will suffer irreparable harm if he
fails to comply with his obligations under Section 16(a) or (b) above
or Section 17(a) above and that monetary damages would be inadequate to
compensate Nathan’s for any such breach. Accordingly, Lorber agrees that, in
addition to any other remedies available to either Party at law, in equity
or
otherwise, Nathan’s will be entitled to seek injunctive relief or specific
performance to enforce the terms, or prevent or remedy the violation, of any
provisions of this Agreement.
|
19.
|
Beneficiaries/References.
|
Lorber
shall be entitled to select (and change, to the extent permitted under any
applicable law) a beneficiary or beneficiaries to receive any compensation
or
benefit payable under this Agreement following his death by giving Nathan’s
written notice thereof; provided, however, that absent any then effective
contrary notice, his beneficiary shall be the Lorber Family Trust. In the event
of Lorber’s death, or of a judicial determination of his incompetence, reference
in this Agreement to Lorber shall be deemed to refer, as appropriate, to his
beneficiary, estate or other legal representative.
|
20.
|
Withholding
Taxes.
|
All
payments to Lorber or his Beneficiary under this Agreement shall be subject
to
withholding on account of federal, state and local taxes as required by
law.
|
21.
|
Indemnification
and Liability Insurance.
|
Nothing
herein is intended to limit Nathan’s indemnification of Lorber, and Nathan’s
shall indemnify him to the fullest extent permitted by applicable law consistent
with Nathan’s Certificate of Incorporation and By-Laws as in effect on the
Effective Date, with respect to any action or failure to act on his part while
he is an officer, director or employee of Nathan’s or any Subsidiary. Nathan’s
shall cause Lorber to be covered at all times by directors, and officers,
liability insurance on terms no less favorable than the directors, and officers,
liability insurance maintained by Nathan’s as in effect on the Effective Date in
terms of coverage and amounts. Nathan’s shall continue to indemnify Lorber as
provided above and maintain such liability insurance coverage for him after
the
Employment Term for any claims that may be made against him with respect to
his
service as a director or officer of Nathan’s or a consultant to
Nathan’s.
14
|
22.
|
Effect
of Agreement on Other
Benefits.
|
The
existence of this Agreement shall not prohibit or restrict Lorber’s entitlement
to participate fully in compensation, employee benefit and other plans of
Nathan’s in which senior executives are eligible to participate.
|
23.
|
Assignability;
Binding Nature.
|
This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs (in the case of Lorber) and assigns. No
rights or obligations of Nathan’s under this Agreement may be assigned or
transferred by Nathan’s except pursuant to (a) a merger or consolidation in
which Nathan’s is not the continuing entity or (b) sale or liquidation of
all or substantially all of the assets of Nathan’s, provided that the surviving
entity or assignee or transferee is the successor to all or substantially all
of
the assets of Nathan’s and such surviving entity or assignee or transferee
assumes the liabilities, obligations and duties of Nathan’s under this
Agreement, either contractually or as a matter of law. Nathan’s further agrees
that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall use its best efforts to have such assignee or
transferee expressly agree to assume the liabilities, obligations and duties
of
Nathan’s hereunder; provided, however, that notwithstanding such assumption,
Nathan’s shall remain liable and responsible for fulfillment of the terms and
conditions of this Agreement; and provided, further, that in no event shall
such
assignment and assumption of this Agreement adversely affect Lorber’s rights
upon a Change in Control, as provided in Section 12(h) above. No rights or
obligations of Lorber under this Agreement may be assigned or transferred by
him.
|
24.
|
Representations.
|
The
Parties respectively represent and warrant that each is fully authorized and
empowered to enter into this Agreement and that the performance of its or his
obligations, as the case may be, under this Agreement will not violate any
agreement between such Party and any other person, firm or organization.
Nathan’s represents and warrants that this Agreement has been duly authorized by
all necessary corporate action and is valid, binding and enforceable in
accordance with its terms.
|
25.
|
Entire
Agreement.
|
Except
to
the extent otherwise provided herein, this Agreement contains the entire
understanding and agreement between the Parties concerning the subject matter
hereof and supersedes any prior agreements, whether written or oral, between
the
Parties concerning the subject matter hereof, including, without limitation,
the
Prior Agreement. Payments and benefits provided under this Agreement are in
lieu
of any payments or other benefits under any severance program or policy of
Nathan’s to which Lorber would otherwise be entitled.
15
|
26.
|
Amendment
or Waiver.
|
No
provision in this Agreement may be amended unless such amendment is agreed
to in
writing and signed by both Lorber and an authorized officer of Nathan’s. No
waiver by either Party of any breach by the other Party of any condition or
provision contained in this Agreement to be performed by such other Party shall
be deemed a waiver of a similar or dissimilar condition or provision at the
same
or any prior or subsequent time. Any waiver must be in writing and signed by
the
Party to be charged with the waiver. No delay by either Party in exercising
any
right, power or privilege hereunder shall operate as a waiver
thereof.
|
27.
|
Severability.
|
In
the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
|
28.
|
Survival.
|
The
respective rights and obligations of the Parties under this Agreement shall
survive any termination of Lorber’s employment with Nathan’s.
|
29.
|
Governing
Law/jurisdiction.
|
This
Agreement shall be governed by and construed and interpreted in accordance
with
the laws of New York, without reference to principles of conflict of
laws.
|
30.
|
Costs
of Disputes.
|
Nathan’s
shall pay, at least monthly, all costs and expenses, including reasonable
attorneys’ fees and disbursements, of Lorber in connection with any proceeding,
whether or not instituted by Nathan’s or Lorber, relating to any provision of
this Agreement, including, but not limited to, the interpretation, enforcement
or reasonableness thereof; provided, however, that, if Lorber institutes the
proceeding and the judge or other decision-maker presiding over the proceeding
affirmatively finds that his claims were frivolous or were made in bad faith,
he
shall pay his own costs and expenses and, if applicable, return any amounts
theretofore paid to him or on his behalf under this Section 30. Pending the
outcome of any proceeding, Nathan’s shall pay Lorber all amounts due to him
without regard to the dispute, and if Nathan’s shall fail to pay Lorber such
amounts and Lorber is the prevailing party in such proceeding, Nathan’s shall
pay to Lorber such amounts plus interest thereon at the prime rate established
by Citibank NA from the date on which Nathan’s ceased making such payments
through the date of payment; provided, however, that if Nathan’s shall be the
prevailing party in such a proceeding, Lorber shall promptly repay all amounts
that he received during pendency of the proceeding.
16
|
31.
|
Notices.
|
Any
notice given to either Party shall be in writing and shall be deemed to have
been given when delivered either personally, by fax, by overnight delivery
service (such as Federal Express) or sent by certified or registered mail
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as the Party may
subsequently give notice of.
If
to
Nathan’s or the Board:
Nathan’s
Incorporated
1400
Old
Country Road
Westbury,
NY 11590
Attention:
Wayne Norbitz
FAX:
(516)
If
to
Lorber:
Howard
M.
Lorber
8061
Fisher Island
Miami,
Florida 33109
|
32.
|
Headings.
|
The
headings of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of
any
provision of this Agreement.
|
33.
|
Counterparts.
|
This
Agreement may be executed in counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts together shall
constitute one and the same instrument.
17
IN
WITNESS WHEREOF THE PARTIES,
hereto
have executed this Agreement as of the day and year first written
above.
| NATHAN’S FAMOUS, INC. | ||
| |
|
|
| By: | /s/ Eric Gatoff | |
|
Eric Gatoff |
||
| /s/ Howard M. Lorber | ||
|
Howard M. Lorber |
||
EMPLOYMENT
AGREEMENT
This
Employment Agreement dated as of December 15,
2006
(the “Agreement Date”) and effective as of January 1, 2007 (the “Effective
Date”) between
Nathan’s Famous, Inc., a Delaware corporation having an address at 1400 Old
Country Road, Westbury, New York 11590 (the "Company"), and Eric Gatoff, an
individual having an address at 254 East 68th Street, Apt 24B, New York, NY
10021 (the "Executive").
WITNESSETH:
WHEREAS,
the Company desires to employ the Executive and to receive certain services
from
him, and the Executive is willing to continue to be employed and to render
such
services to the Company, all upon the terms and subject to the conditions
contained herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Employment.
Subject
to and upon the terms and conditions contained in this Agreement, the Company
hereby agrees to employ Executive and Executive agrees to be employed by the
Company, for the period set forth in Paragraph 2 hereof, to render the services
to the Company, its affiliates and/or subsidiaries described in Paragraph 3
hereof.
2. Effective
Date and Term.
The
Effective Date of this Agreement shall be January 1, 2007. The Executive's
term
of employment under this Agreement shall commence on the Effective Date hereof
and shall continue for a period through and including the second anniversary
of
the Effective Date hereof (the "Initial Agreement Term"). At the end of the
Initial Agreement Term, this Agreement shall be automatically extended for
additional, successive periods of one year (each of which successive periods
shall be considered an Additional Agreement Term and, together with the Initial
Agreement Term, the “Term”) unless terminated in writing by either party no less
than 180 days prior to the end of either the Initial Agreement Term or any
Additional Agreement Term pursuant to the terms and conditions set forth
herein.
3. Duties.
(a) The
Executive shall be employed as Chief Executive Officer of the Company as of
the
Effective Date hereof. The Executive shall report to the Executive Chairman
and
Board of Directors (the “Board”) of the Company. It is agreed that Executive
shall perform his services in the Company's Westbury, New York offices, or
at
any other facilities mutually agreeable to the parties.
(b)
The
Executive agrees to abide by all By-laws and applicable policies of the Company
promulgated from time to time by the Board of Directors of the Company,
including without limitation the normal business policies of the
Company.
4. Exclusive
Services and Best Efforts.
The
Executive shall devote all of his working time, attention, best efforts and
ability during regular business hours exclusively to the service of the Company,
its affiliates and subsidiaries during the term of this Agreement.
5. Compensation.
As
compensation for his services and covenants hereunder, the Company shall pay
the
Executive the following:
(a) Base
Salary.
The
Company shall pay the Executive a base salary ("Base Salary") of $225,000 per
year commencing on the Effective Date of this Agreement. The Base Salary shall
be subject to review and adjustment on an annual basis beginning January 1,
2008, (if this Agreement is then in effect) or, at the Company's discretion,
on
such earlier date as the Company may determine; provided, however, that in
no
event shall the Executive's Base Salary be reduced below the Base Salary
specified herein.
(b) Bonus
Compensation.
(i) For
each
fiscal year within the Term commencing with the fiscal year ending March 30,
2008, the Company shall pay to the Executive annual bonus compensation ("Bonus
Compensation") within the range of 0% to 100% of his (then) current Base Salary
based on the Company’s achievement of certain financial and operational
performance objectives as are mutually agreed-upon by the Board and the
Executive during the last quarter of the immediately prior fiscal year (such
objectives being the “Performance Targets”); provided, however, that for each
year within the Initial Agreement Term, such Bonus Compensation shall not be
less than 50% of the Executive’s (then) current Base Salary (the “Minimum
Bonus”). The Executive shall be eligible to receive Bonus Compensation of 75% of
his (then) current Base Salary should the Company attain the Performance Targets
established for the applicable fiscal year. Should the Company significantly
exceed the Performance Targets for a fiscal year, the Executive shall be
eligible to receive Bonus Compensation in an amount determined by the
Compensation Committee and Board in their sole discretion, not to exceed 100%
of
his (then) current Base Salary. The foregoing Bonus Compensation shall be paid
by the Company within thirty (30) days after completion of the audited financial
results of the Company for the applicable fiscal year.
(ii) For
the
fiscal year ending March 25, 2007, the Company shall pay to Executive a bonus
in
an amount determined by the Compensation Committee and Board in their sole
discretion, based in part on his performance as Vice President and General
Counsel during the period prior to the Effective Date.
(c) Stock
Compensation.
From
time
to time during the Term, the Company may also grant to the Executive certain
other stock compensation including additional stock options and/or other form(s)
of stock awards, pursuant to the terms of any of the Company's stock incentive
plans and any related stock option or stock award agreement(s) required to
be
executed in connection therewith. The amount and terms of any such stock options
and/or other stock awards shall, in every case, be determined by the
Compensation Committee and Board in their sole discretion, subject to the terms
of the stock incentive plan under which the award is granted.
6. Business
Expenses.
During
the Term, the Executive shall be entitled to prompt reimbursement by the Company
for all reasonable out-of-pocket expenses incurred by him in the performance
of
his duties under this Agreement, upon his submission of such accounts and
records as may be reasonably required by the Company, in accordance with the
related policies established from time to time by the Company.
2
7. Executive
Benefits.
The
Company may withhold from any benefits payable to the Executive all federal,
state, local and other taxes and amounts as shall be permitted or required
pursuant to law, rule or regulation.
(a)
During the Term, the Executive shall be entitled to such insurance, disability
and health and medical benefits and be entitled to participate in such
retirement plans or programs as are generally made available to executive
officers of the Company pursuant to the policies of the Company in effect from
time to time during the Term; provided that the Executive shall be required
to
comply with the conditions attendant to coverage by such plans and shall comply
with and be entitled to benefits only in accordance with the terms and
conditions of such plans.
(b)
Executive shall be entitled to four weeks paid vacation each year during the
Term at such times as does not, in the reasonable opinion of the Board of
Directors, interfere with Executive's performance of his duties hereunder.
(c)
The
Executive shall be entitled to receive the sum of $1,250 per month during the
Term as an automobile allowance for payment of automotive and related expenses
(e.g., insurance, repairs and maintenance for any such automobile). Executive
acknowledges that some or all of the foregoing may be deemed compensation to
him.
8. Death
and Disability.
(a) The
Term
shall terminate on the date of the Executive's death, in which event the
Executive's estate shall be entitled to receive a lump sum equal to his (then)
current Base Salary, Bonus Compensation (as determined pursuant to Paragraph
8(c)) and reimbursable expenses and benefits owing to the Executive through
the
end of the Term then in effect. The Executive's estate will not be entitled
to
any other compensation upon termination of this Agreement pursuant to this
Paragraph 8(a).
(b) If,
during the Term, in the opinion of a duly licensed physician selected by the
Executive and reasonably acceptable to the Company, the Executive, because
of
physical or mental illness or incapacity, shall become substantially unable
to
perform the duties and services required of him under this Agreement for a
period of six consecutive months [or a period of an aggregate six months in
any
twelve-month period] the Company may, upon at least twenty (20) days' prior
written notice to the Executive of its intention to do so (given at any time
after the expiration of such six-month period), terminate this Agreement as
of
the date set forth in the notice. In case of such termination, the Executive
shall be entitled to receive a lump sum equal to his (then) current Base Salary
and Bonus Compensation (as determined pursuant to Paragraph 8(c)). The Executive
will not be entitled to any other compensation upon termination of this
Agreement pursuant to this Paragraph 8(b).
(c) For
the
purposes of this Paragraph 8, the amount of the Executive’s Bonus Compensation
shall be (i) in the event of termination during the Initial Agreement Term,
the
Minimum Bonus and (ii) in the event of termination during any Additional
Agreement Term, the Bonus Compensation paid or payable to the Executive for
the
preceding fiscal year.
3
9. Termination
for Cause.
(a)
The
Company may terminate the employment of the Executive for Cause (as hereinafter
defined) immediately upon the delivery of written notice. Upon such termination,
the Company shall be released from any and all further obligations under this
Agreement, except that the Company shall be obligated to pay the Executive
his
Base Salary, reimbursable expenses and benefits owing to the Executive through
the date of termination. Executive will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph
9(a).
(b) As
used
herein, the term "Cause" shall mean: (i) the willful failure of the Executive
to
perform his duties pursuant to Paragraph 3 hereof, which failure is not cured
by
the Executive within thirty days following written notice thereof from the
Company; (ii) any other material breach of this Agreement by the Executive,
including any of the material representations or warranties made by the
Executive; (iii) any act, or failure to act, by the Executive in bad faith
or
intentionally to the detriment of the Company; (iv) the commission by the
Executive of an act involving moral turpitude, dishonesty, theft, unethical
business conduct, or any other conduct which significantly impairs the
reputation of, or harms, the Company, its subsidiaries or affiliates; or (v)
any
misrepresentation, concealment or omission by the Executive of any material
fact
in seeking employment hereunder.
10. Termination
without Cause.
Notwithstanding anything to the contrary herein, the Company may terminate
the
employment of the Executive without Cause. Upon any termination without cause,
the Company shall be released from any and all further obligations under this
Agreement, except that in case of such termination without Cause, subject to
the
penultimate sentence of this Paragraph 10(a), the Company shall pay to the
Executive, as severance compensation, his Base Salary through the end of the
Term then in effect, which amount shall be paid in the form of salary
continuation on a monthly installment basis. It is explicitly understood and
agreed that non-renewal of this Agreement by the Company at the end of the
Initial Agreement Term or any Additional Agreement Term shall not constitute
Termination without Cause. In the event of any breach by the Executive of the
covenants contained in Paragraph 12 hereof, the Company shall be released from
any further obligation to pay the severance compensation specified herein.
The
Executive will not be entitled to any other compensation upon termination of
this Agreement under this Paragraph 10.
11. Termination
Following a Change in Control.
If
within
one year following a Change in Control (as defined below) of the Company (if
this Agreement is then in effect), the employment of the Executive is terminated
by the Company without Cause or by the Executive for any reason, the Company
shall immediately pay to the Executive in a lump sum as severance compensation
an amount equal to the sum of (a) his then annual Base Salary and (b) his annual
Bonus Compensation paid or payable to him for the most recently completed fiscal
year of the Company, but in no event shall such severance compensation exceed
the amount which is deductible by the Company in accordance with Section 280(G)
of the Internal Revenue Code of 1986, as amended. The Company hereby agrees
to
obtain an agreement from any successor to assume and agree to honor and perform
this Agreement.
4
For
purposes of this Agreement, a "Change in Control" shall have occurred
if:
(a) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 as amended (the
“Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule
13d 3 promulgated under the Exchange Act) of voting securities of Nathan’s when
such acquisition causes such Person to own 15 percent or more of the combined
voting power of the then outstanding voting securities of Nathan’s entitled to
vote generally in the election of directors (the “Outstanding Nathan’s Voting
Securities”); provided, however, that for purposes of this subsection (i), the
following acquisitions shall not be deemed to result in a Change in Control:
(A)
any acquisition directly from Nathan’s, (B) any acquisition by Nathan’s, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Nathan’s or any corporation controlled by Nathan’s, or (D) any
acquisition pursuant to a transaction that complies with clauses (A), (B) and
(C) of subsection (c) below; and provided, further, that if any Person’s
beneficial ownership of the Outstanding Nathan’s Voting Securities reaches or
exceeds 15 percent as a result of a transaction described in clause (A) or
(B)
above, and such Person subsequently acquires beneficial ownership of additional
voting securities of Nathan’s, such subsequent acquisition shall be treated as
an acquisition that causes such Person to own 15 percent or more of the
Outstanding Nathan’s Voting Securities; or
(b) individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Effective
Date whose election, or nomination for election by Nathan’s stockholders, was
approved by a vote of at least a majority of the directors then comprising
the
Incumbent Board shall be considered as though such individual were a member
of
the Incumbent Board, but excluding for this purpose any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a
Person other than the Board; or
(c) consummation
of a reorganization, merger or consolidation or sale or other disposition of
all
or substantially all of the assets of Nathan’s or the acquisition of assets of
another entity (“Business Combination”); excluding, however, such a Business
Combination pursuant to which (A) all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding Nathan’s Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60 percent of, respectively, the then
outstanding shares of common stock or the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a result
of
such transaction owns Nathan’s or all or substantially all of Nathan’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Nathan’s Voting Securities, (B) no Person (excluding any
employee benefit plan (or related trust) of Nathan’s or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 15 percent or more of, respectively, the then outstanding shares
of
common stock of the corporation resulting from such Business Combination or
the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the members of the board
of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
5
(d) approval
by the stockholders of Nathan’s of a complete liquidation or dissolution of the
Company.
12. Disclosure
of Information and Restrictive Covenant.
The
Executive acknowledges that, by his employment, he has been and will be in
a
confidential relationship with the Company and will have access to confidential
information and trade secrets of the Company, its subsidiaries and affiliates.
Confidential information and trade secrets include, but are not limited to,
customer, supplier and client lists, price lists, marketing, distribution and
sales strategies and procedures, operational and equipment techniques, business
plans and systems, quality control procedures and systems, special projects
and
research, or any project, research, report or the like concerning sales or
manufacturing or new technology, executive compensation plans and any other
information relating thereto, and any other records, files, drawings,
inventions, discoveries, applications, processes, data and information
concerning the business of the Company which are not in the public domain.
The
Executive agrees that in consideration of the execution of this Agreement by
the
Company:
(a)
The
Executive will not, during the Term or at any time thereafter, use, or disclose
to any third party, trade secrets or confidential information of the Company,
including, but not limited to, confidential information or trade secrets
belonging or relating to the Company, its subsidiaries, affiliates, customers
and clients or proprietary processes or procedures of the Company, its
subsidiaries, affiliates, customers and clients. Proprietary processes and
procedures shall include, but shall not be limited to, all information which
is
known or intended to be known only to executives of the Company, its respective
subsidiaries and affiliates or others in a confidential relationship with the
Company or its respective subsidiaries and affiliates which relates to business
matters.
(b)
The
Executive will not, during the Term, directly or indirectly, under any
circumstance other than at the direction and for the benefit of the Company,
engage in or participate in any business activity, including, but not limited
to, acting as a director, officer, executive, agent, independent contractor,
partner, consultant, licensor or licensee, franchisor or franchisee, proprietor,
syndicate member, shareholder or creditor or with a person having any other
relationship with any other business, company, firm occupation or business
activity, in any geographic area within the United States that is, directly
or
indirectly, competitive with any business conducted by the Company or any of
its
subsidiaries or affiliates during
the Term or thereafter. Should the Executive own 5% or less of the issued and
outstanding shares of a class of securities of a corporation the securities
of
which are traded on a national securities exchange or in the over-the-counter
market, such ownership shall not cause the Executive to be deemed a shareholder
under this Paragraph 12(b).
(c)
The
Executive will not, during the Term and for a period of two (2) years
thereafter, on his behalf or on behalf of any other business enterprise,
directly or indirectly, under any circumstance other than at the direction
and
for the benefit of the Company, solicit or induce any creditor, customer,
supplier, officer, executive or agent of the Company or any of its subsidiaries
or affiliates to sever its relationship with or leave the employ of any of
such
entities.
6
(d) This
Paragraph 12 and Paragraphs 13, 14 and 15 hereof shall survive the expiration
or
termination of this Agreement for any reason.
(e) It
is
expressly agreed by the Executive that the nature and scope of each of the
provisions set forth above in this Paragraph 12 are reasonable and necessary.
If, for any reason, any aspect of the above provisions as it applies to
Executive is determined by a court of competent jurisdiction to be unreasonable
or unenforceable, the provisions shall only be modified to the minimum extent
required to make the provisions reasonable and/or enforceable, as the case
may
be. The Executive acknowledges and agrees that his services are of a unique
character and expressly grants to the Company or any subsidiary, successor
or
assignee of the Company, the right to enforce the provisions above through
the
use of all remedies available at law or in equity, including, but not limited
to, injunctive relief.
13. Company
Property.
Any
patents, inventions, discoveries, applications or processes, designs, devised,
planned, applied, created, discovered or invented by the Executive in the course
of the Executive's employment under this Agreement and which pertain to any
aspect of the Company's or its subsidiaries' or affiliates' business shall
be
the sole and absolute property of the Company, and the Executive shall make
prompt report thereof to the Company and promptly execute any and all documents
reasonably requested to assure the Company the full and complete ownership
thereof. All records, files, lists, including computer generated lists,
drawings, documents, equipment and similar items relating to the Company's
business which the Executive shall prepare or receive from the Company shall
remain the Company's sole and exclusive property. Upon termination of this
Agreement, the Executive shall promptly return to the Company all property
of
the Company in his possession.
14.
Remedy.
It is
mutually understood and agreed that the Executive's services are special,
unique, unusual, extraordinary and of an intellectual character giving them
a
peculiar value, the loss of which cannot be reasonably or adequately compensated
in damages in an action at law. Accordingly, in the event of any breach of
this
Agreement by the Executive, including, but not limited to, the breach of the
non-disclosure, non-solicitation and non-compete clauses under Paragraph 12
hereof, the Company shall be entitled to equitable relief by way of injunction
or otherwise in addition to damages the Company may be entitled to recover.
15. Representations
and Warranties of the Executive.
(a) In
order to induce the Company to enter into this Agreement, the Executive hereby
represents and warrants to the Company as follows: (i) the Executive has the
legal capacity and unrestricted right to execute and deliver this Agreement
and
to perform all of his obligations hereunder; (ii) the execution and delivery
of
this Agreement by the Executive and the performance of his obligations hereunder
will not violate or be in conflict with any fiduciary or other duty, instrument,
agreement, document, arrangement or other understanding to which the Executive
is a party or by which he is or may be bound or subject; and (iii) the Executive
is not a party to any instrument, agreement, document, arrangement or other
understanding with any person (other than the Company) requiring or restricting
the use or disclosure of any confidential information or the provision of any
employment, consulting or other services.
7
(b) The
Executive hereby agrees to indemnify and hold harmless the Company from and
against any and all losses, costs, damages and expenses (including, without
limitation, its reasonable attorneys' fees) incurred or suffered by the Company
resulting from any breach by the Executive of any of his representations or
warranties set forth in Paragraph 15(a) hereof.
16. Notices.
All
notices given hereunder shall be in writing and shall be deemed effectively
given when mailed, if sent by registered or certified mail, return receipt
requested, addressed to the Executive at his address set forth on the first
page
of this Agreement and to the Company at its address set forth on the first
page
of this Agreement, Attention: Executive Chairman of the Board, with a copy
to
Farrell Fritz, P.C., 1320 Reckson Plaza, Uniondale, New York, NY 11556,
Attention: Nancy Lieberman, Esq.
17. Entire
Agreement.
This
Agreement constitutes the entire understanding of the parties with respect
to
its subject matter and no change, alteration or modification hereof may be
made
except in writing signed by the parties hereto. Any prior or other agreements,
promises, negotiations or representations not expressly set forth in this
Agreement are of no force or effect. In furtherance and not in limitation of
the
foregoing, this Agreement supersedes any prior employment relationship or
arrangements to which the Executive and the Company are parties.
18. Severability.
If any
provision of this Agreement shall be unenforceable under any applicable law,
then notwithstanding such unenforceability, the remainder of this Agreement
shall continue in full force and effect.
19. Waivers,
Modifications, Etc.
No
amendment, modification or waiver of any provision of this Agreement shall
be
effective unless the same shall be in writing and signed by each of the parties
hereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
20. Assignment.
Neither
this Agreement, nor any of the Executive's rights, powers, duties or obligations
hereunder, may be assigned by the Executive. This Agreement shall be binding
upon and inure to the benefit of the Executive and his heirs and legal
representatives and the Company and its successors and assigns. Successors
of
the Company shall include, without limitation, any corporation or corporations
acquiring, directly or indirectly, all or substantially all of the assets of
the
Company, whether by merger, consolidation, purchase, lease or otherwise, and
such successor shall thereafter be deemed "the Company" for the purpose
hereof.
21. Applicable
Law.
This
Agreement shall be deemed to have been made, drafted, negotiated and the
transactions contemplated hereby consummated and fully performed in the State
of
New York and shall be governed by and construed in accordance with the laws
of
the State of New York, without regard to the conflicts of law rules thereof.
Nothing contained in this Agreement shall be construed so as to require the
commission of any act contrary to law, and whenever there is any conflict
between any provision of this Agreement and any statute, law, ordinance, order
or regulation, contrary to which the parties hereto have no legal right to
contract, the latter shall prevail, but in such event any provision of this
Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements.
8
22 Full
Understanding.
The
Executive represents and agrees that he fully understands his right to discuss
all aspects of this Agreement with his private attorney, that to the extent,
if
any that he desired, he availed himself of this right, that he has carefully
read and fully understands all of the provisions of this Agreement, that he
is
competent to execute this Agreement, that his agreement to execute this
Agreement has not been obtained by any duress and that he freely and voluntarily
enters into it, and that he has read this document in its entirety and fully
understands the meaning, intent and consequences of this document which is
that
it constitutes an agreement of employment.
24. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original and all of which taken together shall constitute one and
the
same agreement.
9
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
| FOR NATHAN’S FAMOUS, INC. | ||
| |
|
|
| By: | /s/ Wayne Norbitz | |
|
Name: Wayne Norbitz |
||
| Title: President and Chief Operating Officer | ||
| DATE: December 15, 2006 | ||
| FOR THE EXECUTIVE | ||
| |
|
|
| /s/ Eric Gatoff | ||
|
Eric Gatoff |
||
|
DATE:
December 15, 2006
|
||
10