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 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”).
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;
WHEREAS,
this
Agreement supercedes any and all prior employment agreements between Nathan’s
and Xxxxxx (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 Xxxxxx (individually a “Party” and together the
“Parties”) agree as follows:
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1.
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Definitions.
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(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.
(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
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
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(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 Xxxxxx pursuant to Section 13.
(h) “Consulting
Period”
shall
mean the period specified in Section 13 during which Xxxxxx serves as a
consultant to Nathan’s.
(i) “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.
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(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 Xxxxxx’x prior written
consent or his acquiescence:
(i) diminution,
reduction or other adverse change in incentive compensation opportunities
available to Xxxxxx (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 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 Executive Chairman of
the
Board of Directors;
(v) i mposition
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.
(m) “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.
(n) “Salary”
shall
mean the annual Salary provided for in Section 3 below, as adjusted from
time to time.
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(o) “Subsidiary”
shall
mean any corporation of which Nathan’s owns, directly or indirectly, more than
50 percent of its voting stock.
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2.
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Employment
Term, Positions And
Duties.
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(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 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.
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3.
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Titles
And Duties.
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Until
the
date of termination of his employment hereunder, Xxxxxx shall be employed as
Executive Chairman of the Board of Directors, reporting to the full Board.
In
such capacity, Xxxxxx 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.
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4.
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Time
and Effort.
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(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
Executive Officer of and a director of Vector Group Ltd., Chairman of the Board
of Ladenburg Xxxxxxx 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 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.
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5.
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Salary.
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Xxxxxx
shall receive from Nathan’s a Salary, at the rate of $400,000 per
annum.
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6.
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Bonuses.
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Xxxxxx
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.
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7.
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Long-term
Incentive.
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During
the Employment Term, Xxxxxx shall be eligible for awards 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.
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8.
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Equity
Opportunity.
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During
the Employment Term and, to the extent permitted by the terms of any applicable
Nathan’s plan during 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.
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9.
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Expense
Reimbursement; Certain Other
Costs.
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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.
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10.
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Perquisites.
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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 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.
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11.
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Employee
Benefit Plans.
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(a) General.
During
the Employment Term, 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.
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(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.
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12.
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Termination
of Employment.
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(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):
(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.
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(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 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 Xxxxxx may terminate Xxxxxx’x employment. If
Xxxxxx’x 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 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:
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 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:
(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;
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(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.
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13.
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Consulting
Period.
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(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 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.
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(b)
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Duties
and Extent of Services.
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(i) During
the Consulting Period, Xxxxxx shall consult with Nathan’s and its senior
executive officers regarding its business and operations. Xxxxxx 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 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.
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(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 a Consulting Fee of $200,000 per
year.
(d) Disability.
In the
event of Disability during the Consulting Period, Nathan’s or Xxxxxx may
terminate Xxxxxx’x consulting services.
(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.
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14.
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No
Duty to Mitigate; No
Offset.
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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.
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15.
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Parachutes.
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(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, 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”).
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(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 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.
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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 trust solely for Nathan’s
benefit.
12
(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 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:
13
(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.
|
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.
14
|
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.
|
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.
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 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 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, and if Nathan’s shall fail to pay Xxxxxx such
amounts and Xxxxxx is the prevailing party in such proceeding, Nathan’s shall
pay to Xxxxxx 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, Xxxxxx 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
0000
Xxx
Xxxxxxx Xxxx
Xxxxxxxx,
XX 00000
Attention:
Xxxxx Xxxxxxx
FAX:
(516)
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.
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/ Xxxx Xxxxxx | |
|
Xxxx Xxxxxx |
||
| /s/ Xxxxxx X. Xxxxxx | ||
|
Xxxxxx X. Xxxxxx |
||
