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EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into as of
January 1, 2000 (the "Effective Date"), by and between Nathan's Famous, Inc., a
Delaware corporation, with its principal office located at 0000 Xxx Xxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (together with its successors and assigns
permitted under this Agreement, "Nathan's") and Xxxxxx X. Xxxxxx, who resides at
0000 Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000 ("Xxxxxx"), amends and restates in its
entirety the original agreement made and entered into as of November 8, 1993
between Nathan's and Xxxxxx, as subsequently amended through the date hereof
(the "Prior Agreement").
WITNESSETH:
WHEREAS, Nathans' has determined that it is in the best interests of
Nathan's and its stockholders to continue to employ Xxxxxx and to set forth in
this Agreement the obligations and duties of both Nathan's and Xxxxxx; and
WHEREAS, Nathan's wishes to assure itself of the services of Xxxxxx for
the period hereinafter provided, and Xxxxxx is willing to be employed by
Nathan's for said period, upon the terms and conditions provided in this
Agreement;
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 Xxxxxx (individually a "Party" and
together the "Parties") agree as follows:
1. DEFINITIONS.
(a) "BENEFICIARY" shall mean the person or persons named by Xxxxxx
pursuant to Section 19 below or, in the event that no such person is named who
survives Xxxxxx, his estate.
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(b) "BOARD" shall mean the Board of Directors of Nathan's.
(c) "CAUSE" shall mean:
(i) Xxxxxx'x 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 Xxxxxx to perform his
obligations under this Agreement, resulting in demonstrable material economic
harm to Nathan's; or
(iii) a material breach by Xxxxxx 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 Xxxxxx'x 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 Xxxxxx 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 Xxxxxx 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
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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
(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
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(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) "CONSOLIDATED PRETAX EARNINGS" of the Company shall mean, with respect
to any fiscal year, the net consolidated income, if any, of Nathan's for such
fiscal year as set forth in the audited, consolidated financial statements of
Nathan's and its subsidiaries included in its Annual Report to Stockholders,
increased by the sum of the following: (w) the provision for income taxes in
respect of such fiscal year as shown on such financial statements; and (x) all
amounts paid or accrued during such fiscal year as incentive compensation to
Xxxxxx under this Agreement.
(h) "CONSULTING FEE" shall mean the compensation paid to Xxxxxx pursuant
to Section 13.
(i) "CONSULTING PERIOD" shall mean the period specified in Section 13
during which Xxxxxx serves as a consultant to Nathan's.
(j) "DISABILITY" shall mean the illness or other mental or physical
disability of Xxxxxx, as determined by a physician acceptable to Nathan's and
Xxxxxx, 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.
(k) "EMPLOYMENT TERM" shall mean the period specified in Section 2(b)
below.
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(l) "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.
(m) "GOOD REASON" shall mean, at any time during the Employment Term,
without Xxxxxx'x prior written consent or his acquiescence:
(I) diminution, reduction or other adverse change in the bonus or
incentive compensation opportunities available to Xxxxxx (with respect to the
level of bonus or incentive compensation opportunities, the applicable
performance criteria and otherwise the manner in which bonuses and incentive
compensation are 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 Xxxxxx any amounts otherwise vested and
due him hereunder or under any plan or policy of Nathan's;
(iii) diminution of Xxxxxx'x titles, position, authorities or
responsibilities, including not serving on the Board;
(iv) assignment to Xxxxxx of duties incompatible with his position of
Chief Executive Officer;
(v) imposition of a requirement that Xxxxxx 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 Xxxxxx 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 0000 X.X. 00xx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx, or more than 35 miles from
such Florida office.
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(n) "RETIREMENT" shall mean termination of Xxxxxx'x 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.
(o) "SALARY" shall mean the annual Salary provided for in Section 3 below,
as adjusted from time to time.
(p) "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 Xxxxxx. Nathan's hereby continues to employ Xxxxxx, and
Xxxxxx 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. Xxxxxx shall render services to
Nathan's principally at Nathan's'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 terminate on December 31,
2004.
3. TITLES AND DUTIES.
(a) Until the date of termination of his employment hereunder,
Xxxxxx shall be employed as Chief Executive Officer, reporting to the full
Board. In his capacity as Chief Executive Officer, Xxxxxx shall have the
customary powers, responsibilities and authorities of chief executive officers
of corporations of the size, type and nature of Nathan's including, without
limitation, authority, in conjunction with the Board as appropriate, to hire and
terminate other employees of Nathan's.
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(b) During the Employment Term, Nathan's shall uses its best efforts to
secure the election of Xxxxxx to the Board and to the chairmanship thereof.
During the Employment Term, if the Board forms an executive or similar
committee, Xxxxxx shall serve thereon.
4. TIME AND EFFORT.
(a) Xxxxxx 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 Xxxxxx is President and
Chief Operating Officer of New Valley Corporation and Chairman and Chief
Executive Officer of Xxxxxxx & Xxxxxx 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 Xxxxxx 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.
Xxxxxx shall receive from Nathan's a Salary, at the rate of $1.00
per annum.
6. BONUSES.
(a) Annual Bonus. Commencing with Fiscal Year 2000, and for each
succeeding Fiscal Year during the Employment Term, Xxxxxx shall be eligible to
receive an annual bonus equal to 5 percent of Nathan's Consolidated Pretax
Earnings for such Fiscal Year; provided, that such bonus shall in no event be
less than $250,000. Any such bonus payable with respect to a portion of a Fiscal
Year shall be prorated accordingly.
(b) Special Bonus. Xxxxxx shall be eligible to receive additional bonuses
during the Employment
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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, Xxxxxx shall be eligible for an award under
any long-term incentive compensation plan established by Nathan's for the
benefit of Xxxxxx 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.
(a) Simultaneously with the execution and delivery of this Agreement,
Nathan's shall issue to Xxxxxx 25,000 shares of Nathan's Common Stock, par value
$.01 per share. Xxxxxx'x rights to such shares will vest immediately.
(b) During the Employment Term and any Consulting Period, Xxxxxx 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. It is the intention of
Nathan's to grant stock options to Xxxxxx during the Employment Term. Also, to
the extent permitted by any such plan, Xxxxxx shall be eligible during any
Consulting Period to receive grants of options and awards of shares of Nathan's
stock in the same manner.
9. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.
During the Employment Term and any Consulting Period, Xxxxxx 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, Xxxxxx 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.
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During the Employment Term and any Consulting Period, Nathan's shall
provide Xxxxxx 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
Xxxxxx, 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 and any Consulting Period, Xxxxxx
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.
(b) Disability Benefit. In consideration of the benefit payable to Xxxxxx
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 Xxxxxx with
long-term disability insurance. Notwithstanding the foregoing, if Nathan's does
provide Xxxxxx 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, Xxxxxx'x entitlements
shall be as the Parties mutually agree.
(b) General. Notwithstanding anything to the contrary herein, in the
event of termination of Xxxxxx'x 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):
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(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.
(C) Termination due to Retirement. In the event that Xxxxxx'x
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 Xxxxxx'x 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 the remainder of the Employment Term. 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 Xxxxxx may terminate Xxxxxx'x employment. If Xxxxxx'x employment
terminates due to Disability, he shall be entitled, in
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addition to the compensation and benefits specified in Section 12(b), to his
Salary and annual bonuses payable for the remainder of the Employment Term,
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 Xxxxxx'x
employment hereunder for Cause only upon written notice to Xxxxxx 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 Xxxxxx) 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 Xxxxxx
shall have been given proper notice and at which Xxxxxx (and his counsel) shall
have a reasonable opportunity to present his case.
In the event that Xxxxxx'x 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 Xxxxxx for Good Reason.
(I) Termination without Cause shall mean termination of Xxxxxx'x
employment by Nathan's and shall exclude termination (A) due to Retirement,
death, Disability or Cause or (B) by mutual agreement of Xxxxxx and Nathan's.
Nathan's shall provide Xxxxxx 15 days prior written notice of termination by it
without Cause, and Xxxxxx 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 Xxxxxx'x employment
without Cause or of termination by Xxxxxx of his employment for Good Reason, he
shall be entitled, in addition to the compensation and benefits specified in
Section 12(b), to:
(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
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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 Xxxxxx;
(C) continued participation in all employee benefit plans or
programs available to Nathan's employees generally in which Xxxxxx was
participating on the date of termination of his employment until the end of the
Employment Term; provided; however, that (x) if Xxxxxx 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 Xxxxxx would incur
in obtaining such benefit on an individual basis;
(D) the perquisites provided to Xxxxxx 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 Xxxxxx 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 Xxxxxx'x
employment within a one-year period following a Change in Control for any reason
other than Cause, Retirement, death or Disability, Xxxxxx 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:
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(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;
(ii) continued participation in all employee benefit plans or programs
available to Nathan's employees generally in which Xxxxxx was participating on
the date of termination of his employment until the end of the Employment Term;
provided; however, that (x) if Xxxxxx 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 Xxxxxx would incur in obtaining such
benefit on an individual basis;
(iii) the perquisites provided to Xxxxxx 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 Xxxxxx'x employment (I) by
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mutual agreement, (ii) by Retirement or (iii) due to a Change in Control),
Xxxxxx 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, Xxxxxx shall consult with Nathan's
and its senior executive officers regarding its business and operations. 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 Xxxxxx 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) Xxxxxx'x 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 Xxxxxx'x 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.
(iii) During the Consulting Period, Xxxxxx 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, Xxxxxx shall receive
from Nathan's each year as a Consulting Fee an amount equivalent to two-thirds
of the average of the annual bonuses awarded to him during the three Fiscal
Years preceding the Fiscal Year of termination.
(d) Disability. In the event of Disability during the Consulting Period,
Nathan's or Xxxxxx may terminate Xxxxxx'x consulting services. If Xxxxxx'x
consulting services are terminated due to Disability, he shall be entitled to
compensation, in accordance with Section 13(c), for the remainder of the
Consulting Period.
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(e) Termination. The Consulting Period shall terminate after three years
or, if earlier, upon Xxxxxx'x 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 Xxxxxx of the grounds constituting such failure and reasonable
opportunity afforded Xxxxxx to cure the alleged failure. Upon any such
termination, payment of consulting fees and benefits shall cease.
(f) Other. During the Consulting Period, Xxxxxx 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.
Xxxxxx 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
Xxxxxx 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 Xxxxxx 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 Xxxxxx of
an excise tax under Section 4999 of the Code, then, in addition to any other
benefits to which Xxxxxx is entitled under this Agreement, Nathan's 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").
(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 Xxxxxx. If Nathan's or Xxxxxx 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, Xxxxxx and Nathan's shall jointly appoint a third certified public
accounting firm of national reputation within 10 calendar days after the two
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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 Xxxxxx, and payments shall be made accordingly.
(C) Payment. In any event, Nathan's shall pay to Xxxxxx 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 Xxxxxx agreeing to return the excess amount
of such payment over the final computation rendered from the process described
in Section 15(b). Xxxxxx 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 Xxxxxx'x
excise tax liability, Nathan's shall make additional payments to him as may be
necessary to reimburse him for discharging the full liability.
Xxxxxx 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 Xxxxxx 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) Xxxxxx 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 Xxxxxx, is the exclusive property of Nathan's to be held by him in
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trust solely for Nathan's benefit.
(ii) Accordingly, Xxxxxx 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 Xxxxxx 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 Xxxxxx 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 Xxxxxx 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, Xxxxxx 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
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of Nathan's.
(b) Remedies and Sanctions. In the event that Xxxxxx 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:
(I) apply if Nathan's terminates Xxxxxx'x employment without Cause or
Xxxxxx terminates his employment for Good Reason, each as provided in Section
12(g) above; or
(ii) be construed as preventing Xxxxxx from investing his assets in any
business that is not a direct competitor of Nathan's.
18. REMEDIES/SANCTIONS.
Xxxxxx 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 Xxxxxx. Because of the unique nature of the
Confidential Information and the importance of the prohibitions against
competition and solicitation, Xxxxxx 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, Xxxxxx 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.
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Xxxxxx 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 [Xxxxxx Family Trust].
In the event of Xxxxxx'x death, or of a judicial determination of his
incompetence, reference in this Agreement to Xxxxxx shall be deemed to refer, as
appropriate, to his beneficiary, estate or other legal representative.
20. WITHHOLDING TAXES.
All payments to Xxxxxx 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 Xxxxxx,
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 Xxxxxx 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 Xxxxxx 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.
22. EFFECT OF AGREEMENT ON OTHER BENEFITS.
The existence of this Agreement shall not prohibit or restrict Xxxxxx'x
entitlement to participate fully in compensation, employee benefit and other
plans of Nathan's in which senior executives are eligible to participate.
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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 Xxxxxx) 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 Xxxxxx'x rights upon a Change in Control, as provided
in Section 12(h) above. No rights or obligations of Xxxxxx 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 Xxxxxx would otherwise be entitled.
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26. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by both Xxxxxx 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 Xxxxxx'x 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
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and disbursements, of Xxxxxx in connection with any proceeding, whether or not
instituted by Nathan's or Xxxxxx, relating to any provision of this Agreement,
including but not limited to the interpretation, enforcement or reasonableness
thereof; provided, however, that, if Xxxxxx 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 Xxxxxx all amounts due to him without regard to
the dispute; provided, however, that if Nathan's shall be the prevailing party
in such a proceeding, Xxxxxx shall promptly repay all amounts that he received
during pendency of the proceeding.
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
0000 Xxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
FAX: (000) 000-0000
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If to Xxxxxx:
Xxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
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.
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/ Xxxxx Xxxxxxx, President
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/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
