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 0000 Xxx
Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"), and Xxxx Xxxxxx, an
individual having an address at 000 Xxxx 00xx Xxxxxx, Xxx 00X, Xxx Xxxx, XX
00000 (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.
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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.
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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 xxxxx, 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.
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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
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(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.
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(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.
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(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
Xxxxxxx Xxxxx, P.C., 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxx Xxxxxxxxx, 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.
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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.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
| FOR NATHAN’S FAMOUS, INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxxx | |
|
Name: Xxxxx Xxxxxxx |
||
| Title: President and Chief Operating Officer | ||
| DATE: December 15, 2006 | ||
| FOR THE EXECUTIVE | ||
| |
|
|
| /s/ Xxxx Xxxxxx | ||
|
Xxxx Xxxxxx |
||
|
DATE:
December 15, 2006
|
||
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