Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into as of
January 1, 2005 (the "Effective Date"), by and between Nathan's Famous, Inc., a
Delaware corporation, with its principal office located at 1400 Old Country
Road, Westbury, New York 11590 (together with its successors and assigns
permitted under this Agreement, "Nathan's") and Howard M. Lorber, who resides at
8061 Fisher Island, Miami, Florida 33109 ("Lorber").
WITNESSETH:
WHEREAS, Nathans' has determined that it is in the best interests of
Nathan's and its stockholders to continue to employ Lorber and to set forth in
this Agreement the obligations and duties of both Nathan's and Lorber; and
WHEREAS, Nathan's wishes to assure itself of the services of Lorber for
the period hereinafter provided, and Lorber is willing to be employed by
Nathan's for said period, upon the terms and conditions provided in this
Agreement;
WHEREAS, this Agreement supercedes any and all prior employment agreements
between Nathan's and Lorber (the "Prior Agreements");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, Nathan's and Lorber (individually a "Party" and
together the "Parties") agree as follows:
1. DEFINITIONS.
(a) "BENEFICIARY" shall mean the person or persons named by Lorber
pursuant to Section 19 below or, in the event that no such person is named who
survives Lorber, his estate.
(b) "BOARD" shall mean the Board of Directors of Nathan's.
(c) "CAUSE" shall mean:
(i) Lorber's conviction of a felony involving an act or acts of
dishonesty on his part and resulting or intended to result directly or
indirectly in gain or personal enrichment at the expense of Nathan's;
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(ii) willful and continued failure of Lorber to perform his
obligations under this Agreement, resulting in demonstrable material economic
harm to Nathan's; or
(iii) a material breach by Lorber of the provisions of Sections 16
or 17 below to the demonstrable and material detriment of Nathan's.
Notwithstanding the foregoing, in no event shall Lorber's failure to
perform the duties associated with his position caused by his mental or physical
disability constitute Cause for his termination.
For purposes of this Section 1(c), no act or failure to act on the
part of Lorber shall be considered "willful" unless it is done, or omitted to be
done, by him in bad faith or without reasonable belief that his action or
omission was in the best interests of Nathan's. Any act or failure to act based
upon authority given pursuant to a resolution adopted by the Board or based upon
the advice of counsel for Nathan's shall be conclusively presumed to be done, or
omitted to be done, by Lorber in good faith and in the best interests of
Nathan's.
(d) "CHANGE IN CONTROL" shall mean the occurrence of any of the following
events:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
as amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities
of Nathan's when such acquisition causes such Person to own 15 percent or more
of the combined voting power of the then outstanding voting securities of
Nathan's entitled to vote generally in the election of directors (the
"Outstanding Nathan's Voting Securities"); provided, however, that for purposes
of this subsection (i), the following acquisitions shall not be deemed to result
in a Change in Control: (A) any acquisition directly from Nathan's, (B) any
acquisition by Nathan's, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Nathan's or any corporation controlled
by Nathan's or (D) any acquisition pursuant to a transaction that complies with
clauses (A), (B) and (C) of subsection (iii) below; and provided, further, that
if any Person's beneficial ownership of the Outstanding Nathan's Voting
Securities reaches or exceeds 15 percent as a result of a transaction described
in clause (A) or (B) above, and such Person subsequently acquires beneficial
ownership of additional voting securities of Nathan's, such subsequent
acquisition shall be treated as an acquisition that causes such Person to own 15
percent or more of the Outstanding Nathan's Voting Securities; or
(ii) individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the
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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
(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
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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
Lorber under this Agreement.
(h) "CONSULTING FEE" shall mean the compensation paid to Lorber pursuant
to Section 13.
(i) "CONSULTING PERIOD" shall mean the period specified in Section 13
during which Lorber serves as a consultant to Nathan's.
(j) "DISABILITY" shall mean the illness or other mental or physical
disability of Lorber, as determined by a physician acceptable to Nathan's and
Lorber, resulting in his failure during the Employment Term, (i) to perform
substantially his applicable material duties under this Agreement for a period
of nine consecutive months and (ii) to return to the performance of his duties
within 30 days after receiving written notice of termination.
(k) "EMPLOYMENT TERM" shall mean the period specified in Section 2(b)
below.
(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 Lorber's prior written consent or his acquiescence:
(i) diminution, reduction or other adverse change in the bonus or
incentive compensation opportunities available to Lorber (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 Lorber any amounts otherwise vested and
due him hereunder or under any plan or policy of Nathan's;
(iii) diminution of Lorber's titles, position, authorities or
responsibilities, including not serving on the Board;
(iv) assignment to Lorber of duties incompatible with his position
of Chief Executive Officer;
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(v) imposition of a requirement that Lorber report other than
directly to the full Board;
(vi) a material breach of the Agreement by Nathan's that is not
cured within 10 business days after written notification by Lorber of such
breach; or
(vii) relocation of Nathan's corporate headquarters to a location
more than 35 miles from the location first above described, other than to its
office at 6300 N.W. 31st Avenue, Fort Lauderdale, Florida, or more than 35 miles
from such Florida office.
(n) "RETIREMENT" shall mean termination of Lorber's employment, other than
due to death, with eligibility to receive a benefit under the terms of Nathan's
Supplemental Executive Retirement Plan as then in effect.
(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 Lorber. Nathan's hereby continues to employ Lorber, and
Lorber hereby accepts continued employment with Nathan's, in the positions and
with the duties and responsibilities set forth below and upon such other terms
and conditions as are hereinafter stated. Lorber shall render services to
Nathan's principally at Nathan's'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, 2009.
3. TITLES AND DUTIES.
(a) Until the date of termination of his employment hereunder, Lorber
shall be employed as Chief Executive Officer, reporting to the full Board. In
his capacity as Chief Executive Officer, Lorber 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 Lorber to the Board and to the chairmanship thereof.
During the Employment Term, if the Board forms an executive or similar
committee, Lorber shall serve thereon.
4. TIME AND EFFORT.
(a) Lorber agrees to devote his best efforts and abilities, and such of
his business time and attention as he determines is reasonably necessary, to the
affairs of Nathan's in order to carry out his duties and responsibilities under
this Agreement. The Parties hereby acknowledge that Lorber is President and
Chief Operating Officer of New Valley Corporation, President, Chief Operating
Officer and a director of Vector Group Ltd., Chairman of the Board of Ladenberg
Thalman Financial Services, Inc., and Chairman and Chief Executive Officer of
Hallman & Lorber and that during the Employment Term he will be devoting time
and attention to those and other business activities.
(b) Notwithstanding the foregoing, nothing shall preclude Lorber from (A)
serving on the boards of a reasonable number of trade associations, charitable
organizations and/or businesses not in competition with Nathan's, (B) engaging
in charitable activities and community affairs and (C) managing his personal
investments and affairs; provided, however, that, such activities do not
materially interfere with the proper performance of his duties and
responsibilities specified in Section 3(a) above.
5. SALARY.
Lorber shall receive from Nathan's a Salary, at the rate of $250,000 per
annum.
6. BONUSES.
(a) Annual Bonus. Commencing with Fiscal Year 2005, and for each
succeeding Fiscal Year during the Employment Term, Lorber shall be eligible to
receive an annual bonus equal to 5 percent of Nathan's Consolidated Pretax
Earnings in excess of $5,000,000 for such Fiscal Year. Any such bonus payable
with respect to a portion of a Fiscal Year shall be prorated accordingly.
(b) Special Bonus. Lorber shall be eligible to receive additional 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. LONG-TERM INCENTIVE.
During the Employment Term, Lorber shall be eligible for an award under
any long-term incentive compensation plan established by Nathan's for the
benefit of Lorber or, in the absence thereof, under any such plan established
for the benefit of members of the senior management of Nathan's.
8. EQUITY OPPORTUNITY.
(a) Simultaneously with the execution and delivery of this Agreement,
Nathan's shall issue to Lorber 50,000 shares of restricted stock under the
Nathan's 2002 Stock Incentive Plan. Lorber's rights to such restricted stock
will vest ratably over the term of this Agreement and will otherwise be subject
to the terms of the Nathan's 2002 Stock Incentive Plan. Any dividends on such
shares of restricted stock shall be deferred and paid to Lorber upon the vesting
of the shares on which the dividend was paid.
(b) During the Employment Term and, to the extent permitted by the terms
of any applicable Nathan's plan during any Consulting Period, Lorber shall be
eligible to receive grants of options to purchase shares of Nathans' stock and
awards of shares of Nathans' stock, either or both as determined by the
Committee, under and in accordance with the terms of applicable plans of
Nathan's and related option and award agreements.
9. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.
During the Employment Term and any Consulting Period, Lorber shall be
entitled to prompt reimbursement by Nathan's for all reasonable out-of-pocket
expenses incurred by him in performing services under this Agreement, upon his
submission of such accounts and records as may be reasonably required by
Nathan's. In addition, Lorber shall be entitled to payment by Nathan's of all
reasonable costs and expenses, including attorneys' and consultants' fees and
disbursements, incurred by him in connection with adoption of this Agreement and
any related compensatory arrangements that Nathan's adopts solely for his
benefit.
10. PERQUISITES.
During the Employment Term and, to the extent required in connection with
his performance of consulting services pursuant to Section 13 during any
Consulting Period, Nathan's shall provide Lorber with the use of an automobile
and payment of related expenses on the same terms as are in effect on the
Effective Date or, if more favorable to Lorber, as are made available generally
to other executive officers of Nathan's at any time thereafter.
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11. EMPLOYEE BENEFIT PLANS.
(a) General. During the Employment Term, Lorber shall be entitled to
participate in all employee benefit plans and programs that are made available
to Nathan's senior executives or to its employees generally, as such plans or
programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit-sharing plans, savings and similar
plans, group life insurance, accidental death and dismemberment insurance,
travel accident insurance, hospitalization insurance, surgical insurance, major
and excess major medical insurance, dental insurance, short-term and long-term
disability insurance, sick leave, holidays, vacation (not less than four weeks
in any calendar year) and any other employee benefit plans or programs that may
be sponsored by Nathan's from time to time, including plans that supplement the
above-listed types of plans, whether funded or unfunded.
(b) Disability Benefit. In consideration of the benefit payable to Lorber
in the event of termination of his employment due to Disability, as provided in
Section 12(e) below, Nathan's shall not be obligated to provide Lorber with
long-term disability insurance. Notwithstanding the foregoing, if Nathan's does
provide Lorber with such insurance, he shall be the owner of any individual
policies obtained and shall pay the premiums thereon.
12. TERMINATION OF EMPLOYMENT.
(a) Termination by Mutual Agreement. The Parties may terminate this
Agreement by mutual agreement at any time. If they do so, Lorber's entitlements
shall be as the Parties mutually agree.
(b) General. Notwithstanding anything to the contrary herein, in the event
of termination of Lorber's employment under this Agreement, he or his
Beneficiary, as the case may be, shall be entitled to receive (in addition to
payments and benefits under, and except as specifically provided in, subsections
(c) through (h) below, as applicable):
(i) his Salary through the date of termination;
(ii) any unused vacation from prior years;
(iii) any annual bonus for the current Fiscal Year, prorated to the
date of termination;
(iv) any annual or special bonus previously awarded but not yet paid
to him;
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(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 Lorber's employment
terminates due to Retirement, he shall be entitled to the compensation and
benefits specified in Section 12(b).
(d) Termination due to Death. In the event that Lorber's employment
terminates due to his death, his Beneficiary shall be entitled, in addition to
the compensation and benefits specified in Section 12(b), to his Salary and
annual bonuses payable for a three-year period. For the purposes hereof, such
annual bonus shall be equal to the average of the annual bonuses awarded to him
during the three Fiscal Years preceding the Fiscal Year of termination.
(e) Termination due to Disability. In the event of Disability, Nathan's or
Lorber may terminate Lorber's employment. If Lorber's employment terminates due
to Disability, he shall be entitled, in addition to the compensation and
benefits specified in Section 12(b), to his Salary and annual bonuses payable
for a three-year period, offset by any long-term disability insurance benefit
that Nathan's has provided for him and for which it has paid the applicable
group or individual insurance premiums. For the purposes hereof, such annual
bonus shall be equal to the average of the annual bonuses awarded to him during
the three Fiscal Years preceding the Fiscal Year of termination.
(f) Termination by Nathan's for Cause. Nathan's may terminate Lorber's
employment hereunder for Cause only upon written notice to Lorber not less than
30 days prior to any intended termination, which notice shall specify the
grounds for such termination in reasonable detail. Cause shall in no event be
deemed to exist except upon a finding reflected in a resolution approved by a
majority (excluding Lorber) of the members of the Board (whose findings shall
not be binding upon or entitled to any deference by any court, arbitrator or
other decision-maker ruling on this Agreement) at a meeting of which Lorber
shall have been given proper notice and at which Lorber (and his counsel) shall
have a reasonable opportunity to present his case.
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In the event that Lorber's employment is terminated for Cause, he
shall be entitled only to the compensation and benefits specified in Sections
12(b)(i), (ii) and (iv) .
(g) Termination Without Cause or by Lorber for Good Reason.
(i) Termination without Cause shall mean termination of Lorber's
employment by Nathan's and shall exclude termination (A) due to Retirement,
death, Disability or Cause or (B) by mutual agreement of Lorber and Nathan's.
Nathan's shall provide Lorber 15 days prior written notice of termination by it
without Cause, and Lorber shall provide Nathan's 15 days prior written notice of
his termination for Good Reason.
(ii) In the event of termination by Nathan's of Lorber's employment
without Cause or of termination by Lorber of his employment for Good Reason, he
shall be entitled, in addition to the compensation and benefits specified in
Section 12(b), to:
(A) his Salary, payable for the remainder of the Employment
Term at the rate in effect immediately before such termination;
(B) annual bonuses for the remainder of the Employment Term
(including a prorated bonus for any partial Fiscal Year) equal to the average of
the annual bonuses awarded to him during the three Fiscal Years preceding the
Fiscal Year of termination, such bonuses to be paid at the same time annual
bonuses are regularly paid by Nathan's to Lorber;
(C) continued participation in all employee benefit plans or
programs available to Nathan's employees generally in which Lorber was
participating on the date of termination of his employment until the end of the
Employment Term; provided; however, that (x) if Lorber is precluded from
continuing his participation in any employee benefit plan or program as provided
in this clause (E), he shall be entitled to the after-tax economic equivalent of
the benefits under the plan or program in which he is unable to participate
until the end of the Employment Term, and (y) the economic equivalent of any
benefit foregone shall be deemed to be the lowest cost that Lorber would incur
in obtaining such benefit on an individual basis;
(D) the perquisites provided to Lorber pursuant to Section 10
hereof until the end of the Employment Term;
(E) other benefits in accordance with applicable plans and
programs of the Company until the end of the Employment Term.
Prior written consent by Lorber to any of the events
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described in Section 1(k) above shall be deemed a waiver by him of his right to
terminate for Good Reason under this Section 12(g) solely by reason of the
events set forth in such waiver.
(h) Change in Control. In the event of any termination of Lorber's
employment within a one-year period following a Change in Control for any reason
other than Cause, Retirement, death or Disability, Lorber shall be entitled, in
addition to the compensation and benefits specified in Section 12(b) to:
(i) a lump sum cash payment equal to the greater of:
(A) his Salary and annual bonuses for the remainder of the
Employment Term (including a prorated bonus for any partial fiscal year), which
bonus shall be equal to the average of the annual bonuses awarded to him during
the three Fiscal Years preceding the Fiscal Year of termination; or
(B) 2.99 times his Salary and annual bonus for the Fiscal Year
immediately preceding the Fiscal Year of termination;
(ii) continued participation in all employee benefit plans or
programs available to Nathan's employees generally in which Lorber was
participating on the date of termination of his employment until the end of the
Employment Term; provided; however, that (x) if Lorber is precluded from
continuing his participation in any employee benefit plan or program as provided
in this clause (E), he shall be entitled to the after-tax economic equivalent of
the benefits under the plan or program in which he is unable to participate
until the end of the Employment Term, and (y) the economic equivalent of any
benefit foregone shall be deemed to be the lowest cost that Lorber would incur
in obtaining such benefit on an individual basis;
(iii) the perquisites provided to Lorber pursuant to Section 10
hereof until the end of the Employment Term;
(iv) a lump sum cash payment equal to the difference between the
exercise price of any exercisable options having an exercise price of less than
the then current market price of Nathan's common stock and such then current
market price; and
(v) other benefits in accordance with applicable plans and programs
of the Company for the remainder of the Employment Term.
13. CONSULTING PERIOD.
(a) General. Effective upon the end of the Employment Term (but only if
the Employment Term ends by reason of its expiration or, if earlier, upon
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termination of Lorber's employment (i) by mutual agreement, (ii) by Retirement
or (iii) due to a Change in Control), Lorber shall become a consultant to
Nathan's, in recognition of the continued value to Nathan's of his extensive
knowledge and expertise. Unless earlier terminated, as provided in Section
13(e), the Consulting Period shall continue for three years.
(b) Duties and Extent of Services.
(i) During the Consulting Period, Lorber shall consult with Nathan's
and its senior executive officers regarding its business and operations. Lorber
shall make himself available to perform such consulting services at the request
of Nathan's on reasonable notice; provided, that performance of such consulting
services shall not require more than 50 days in any calendar year, nor more than
one day in any week, it being understood and agreed that during the Consulting
Period Lorber shall have the right, consistent with the prohibitions of Sections
16 and 17 below, to engage in full-time or part-time employment with any
business enterprise that is not a competitor of Nathan's.
(ii) Lorber's service as a consultant shall only be required at such
times and such places as shall not result in unreasonable inconvenience to him,
recognizing his other business commitments that he may have to accord priority
over the performance of services for Nathan's. In order to minimize interference
with Lorber's other commitments, his consulting services may be rendered by
personal consultation at his residence or office wherever maintained, or by
correspondence through mail, telephone, fax or other similar mode of
communication at times, including weekends and evenings, most convenient to him.
(iii) During the Consulting Period, Lorber shall not be obligated to
serve as a member of the Board or to occupy any office on behalf of Nathan's or
any of its Subsidiaries.
(c) Compensation. During the Consulting Period, Lorber shall receive a
Consulting Fee of $225,000 per year.
(d) Disability. In the event of Disability during the Consulting Period,
Nathan's or Lorber may terminate Lorber's consulting services.
(e) Termination. The Consulting Period shall terminate after three years
or, if earlier, upon Lorber's death or upon his failure to perform consulting
services as provided in Section 13(b), pursuant to 30 days' written notice by
Nathan's to Lorber of the grounds constituting such failure and reasonable
opportunity afforded Lorber to cure the alleged failure. Upon any such
termination, payment of consulting fees and benefits shall cease.
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(f) Other. During the Consulting Period, Lorber shall be entitled to
expense reimbursement, perquisites and benefits pursuant to the terms of
Sections 9, 10 and 11, respectively.
14. NO DUTY TO MITIGATE; NO OFFSET.
Lorber shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise, nor will any payment hereunder be subject to offset in the event
Lorber does receive compensation for services from any other source.
15. PARACHUTES.
(a) Application. If all, or any portion, of the payments provided under
this Agreement, and/or any other payments and benefits that Lorber receives or
is entitled to receive from Nathan's or a Subsidiary, whether or not under an
existing plan, arrangement or other agreement, constitutes an "excess parachute
payment" within the meaning of Section 280G(b) of the Code (each such parachute
payment, a "Parachute Payment") and will result in the imposition on Lorber of
an excise tax under Section 4999 of the Code, then, in addition to any other
benefits to which Lorber is entitled under this Agreement, 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 Lorber. If Nathan's or Lorber disputes the
computation rendered by such accounting firm, Nathan's shall select an
alternative certified public accounting firm of national reputation to perform
the applicable computation. If the two accounting firms cannot agree upon the
computations, Lorber and Nathan's shall jointly appoint a third certified public
accounting firm of national reputation within 10 calendar days after the two
conflicting computations have been rendered. Such third accounting firm shall be
asked to determine within 30 calendar days the computation of the Excise Tax
Gross-up to be paid to Lorber, and payments shall be made accordingly.
(c) Payment. In any event, Nathan's shall pay to Lorber or pay on his
behalf the Excise Tax Gross-up as computed by the accounting firm initially
selected by Nathan's by the time any taxes payable by him as a result of the
Parachute Payments become due, with Lorber agreeing to return the excess
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amount of such payment over the final computation rendered from the process
described in Section 15(b). Lorber and Nathan's shall provide the accounting
firms with all information that any of them reasonably deems necessary in order
to compute the Excise Tax Gross-up. The cost and expenses of all the accounting
firms retained to perform the computations described above shall be borne by
Nathan's.
In the event that the Internal Revenue Service ("IRS") or the
accounting firm computing the Excise Tax Gross-up finally determines that the
amount of excise taxes thereon initially paid was insufficient to discharge
Lorber's excise tax liability, Nathan's shall make additional payments to him as
may be necessary to reimburse him for discharging the full liability.
Lorber shall apply to the IRS for a refund of any excise taxes paid
and remit to Nathan's the amount of any such refund that he receives. Nathan's
shall reimburse Lorber for his expenses in seeking a refund of excise taxes and
for any interest and penalties imposed on excise taxes that he is required to
pay.
16. CONFIDENTIAL INFORMATION.
(a) General.
(i) Lorber understands and hereby acknowledges that as a result of
his employment with Nathan's he will necessarily become informed of and have
access to certain valuable and confidential information of Nathan's and any of
its Subsidiaries, joint ventures and affiliates, including, without limitation,
inventions, trade secrets, technical information, computer software and
programs, know-how and plans ("Confidential Information"), and that any such
Confidential Information, even though it may be developed or otherwise acquired
by Lorber, is the exclusive property of Nathan's to be held by him in trust
solely for Nathan's benefit.
(ii) Accordingly, Lorber hereby agrees that, during the Employment
Term and subsequent thereto, he shall not, and shall not cause others to, use,
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity any Confidential Information without prior written
consent of the Board, except to (A) responsible officers and employees of
Nathan's or (B) responsible persons who are in a contractual or fiduciary
relationship with Nathan's or who need such information for purposes in the
interest of Nathan's. Notwithstanding the foregoing, the prohibitions of this
clause (ii) shall not apply to any Confidential Information that becomes of
general public knowledge other than from Lorber or is required to be divulged by
court order or administrative process.
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(b) Return of Documents. Upon termination of his employment with Nathan's
for any reason Lorber shall promptly deliver to Nathan's all plans, drawings,
manuals, letters, notes, notebooks, reports, computer programs and copies
thereof and all other materials, including without limitation those of a secret
or confidential nature, relating to Nathan's business that are then in his
possession or control.
(c) Remedies and Sanctions. In the event that Lorber is found to be in
violation of Section 16(a) or (b) above, Nathan's shall be entitled to relief as
provided in Section 18 below.
17. NONCOMPETITION/NONSOLICITATION.
(a) Prohibitions. During the Employment Term and, if applicable, the
Consulting Period, Lorber shall not, without prior written authorization of the
Board, directly or indirectly, through any other individual or entity:
(i) become on officer or employee of, or render any service to, any
direct competitor of Nathan's;
(ii) solicit or induce any customer of Nathan's to cease purchasing
goods or services from Nathan's or to become a customer of any competitor of
Nathan's; or
(iii) solicit or induce any employee of Nathan's to become employed
by any competitor of Nathan's.
(b) Remedies and Sanctions. In the event that Lorber is found to be in
violation of Section 17(a) above, Nathan's shall be entitled to relief as
provided in Section 18 below.
(c) Exceptions. Notwithstanding anything to the contrary in Section 17(a)
above, its provisions shall not:
(i) apply if Nathan's terminates Lorber's employment without Cause
or Lorber terminates his employment for Good Reason, each as provided in Section
12(g) above; or
(ii) be construed as preventing Lorber from investing his assets in
any business that is not a direct competitor of Nathan's.
18. REMEDIES/SANCTIONS.
Lorber acknowledges that the services he is to render under this Agreement
are of a unique and special nature, the loss of which cannot
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reasonably or adequately be compensated for in monetary damages, and that
irreparable injury and damage may result to Nathan's in the event of any breach
of this Agreement or default by Lorber. Because of the unique nature of the
Confidential Information and the importance of the prohibitions against
competition and solicitation, Lorber further acknowledges and agrees that
Nathan's will suffer irreparable harm if he fails to comply with his obligations
under Section 16(a) or (b) above or Section 17(a) above and that monetary
damages would be inadequate to compensate Nathan's for any such breach.
Accordingly, Lorber agrees that, in addition to any other remedies available to
either Party at law, in equity or otherwise, Nathan's will be entitled to seek
injunctive relief or specific performance to enforce the terms, or prevent or
remedy the violation, of any provisions of this Agreement.
19. BENEFICIARIES/REFERENCES.
Lorber shall be entitled to select (and change, to the extent permitted
under any applicable law) a beneficiary or beneficiaries to receive any
compensation or benefit payable under this Agreement following his death by
giving Nathan's written notice thereof; provided, however, that absent any then
effective contrary notice, his beneficiary shall be the [Lorber Family Trust].
In the event of Lorber's death, or of a judicial determination of his
incompetence, reference in this Agreement to Lorber shall be deemed to refer, as
appropriate, to his beneficiary, estate or other legal representative.
20. WITHHOLDING TAXES.
All payments to Lorber or his Beneficiary under this Agreement shall be
subject to withholding on account of federal, state and local taxes as required
by law.
21. INDEMNIFICATION AND LIABILITY INSURANCE.
Nothing herein is intended to limit Nathan's indemnification of Lorber,
and Nathan's shall indemnify him to the fullest extent permitted by applicable
law consistent with Nathan's Certificate of Incorporation and By-Laws as in
effect on the Effective Date, with respect to any action or failure to act on
his part while he is an officer, director or employee of Nathan's or any
Subsidiary. Nathan's shall cause Lorber to be covered at all times by directors'
and officers' liability insurance on terms no less favorable than the directors'
and officers' liability insurance maintained by Nathan's as in effect on the
Effective Date in terms of coverage and amounts. Nathan's shall continue to
indemnify Lorber as provided above and maintain such liability insurance
coverage for him after the Employment Term for any claims that may be made
against him with respect to his service as a director or officer of Nathan's or
a consultant to Nathan's.
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22. EFFECT OF AGREEMENT ON OTHER BENEFITS.
The existence of this Agreement shall not prohibit or restrict Lorber's
entitlement to participate fully in compensation, employee benefit and other
plans of Nathan's in which senior executives are eligible to participate.
23. ASSIGNABILITY; BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of Lorber) and
assigns. No rights or obligations of Nathan's under this Agreement may be
assigned or transferred by Nathan's except pursuant to (a) a merger or
consolidation in which Nathan's is not the continuing entity or (b) sale or
liquidation of all or substantially all of the assets of Nathan's, provided that
the surviving entity or assignee or transferee is the successor to all or
substantially all of the assets of Nathan's and such surviving entity or
assignee or transferee assumes the liabilities, obligations and duties of
Nathan's under this Agreement, either contractually or as a matter of law.
Nathan's further agrees that, in the event of a sale of assets or liquidation as
described in the preceding sentence, it shall use its best efforts to have such
assignee or transferee expressly agree to assume the liabilities, obligations
and duties of Nathan's hereunder; provided, however, that notwithstanding such
assumption, Nathan's shall remain liable and responsible for fulfillment of the
terms and conditions of this Agreement; and provided, further, that in no event
shall such assignment and assumption of this Agreement adversely affect Lorber's
rights upon a Change in Control, as provided in Section 12(h) above. No rights
or obligations of Lorber under this Agreement may be assigned or transferred by
him.
24. REPRESENTATIONS.
The Parties respectively represent and warrant that each is fully
authorized and empowered to enter into this Agreement and that the performance
of its or his obligations, as the case may be, under this Agreement will not
violate any agreement between such Party and any other person, firm or
organization. Nathan's represents and warrants that this Agreement has been duly
authorized by all necessary corporate action and is valid, binding and
enforceable in accordance with its terms.
25. ENTIRE AGREEMENT.
Except to the extent otherwise provided herein, this Agreement contains
the entire understanding and agreement between the Parties concerning the
subject matter hereof and supersedes any prior agreements, whether written or
oral, between the Parties concerning the subject matter hereof, including
without limitation the Prior Agreement. Payments and benefits provided under
this
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Agreement are in lieu of any payments or other benefits under any severance
program or policy of Nathan's to which Lorber would otherwise be entitled.
26. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by both Lorber and an authorized officer of
Nathan's. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Party to be charged with the waiver. No delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
27. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
28. SURVIVAL.
The respective rights and obligations of the Parties under this Agreement
shall survive any termination of Lorber's employment with Nathan's.
29. GOVERNING LAW/JURISDICTION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York, without reference to principles of
conflict of laws.
30. COSTS OF DISPUTES.
Nathan's shall pay, at least monthly, all costs and expenses, including
reasonable attorneys' fees and disbursements, of Lorber in connection with any
proceeding, whether or not instituted by Nathan's or Lorber, relating to any
provision of this Agreement, including but not limited to the interpretation,
enforcement or reasonableness thereof; provided, however, that, if Lorber
institutes the proceeding and the judge or other decision-maker presiding over
the proceeding affirmatively finds that his claims were frivolous or were made
in bad faith, he shall pay his own costs and expenses and, if applicable, return
any amounts theretofore paid to him or on his behalf under this Section 30.
Pending the outcome of any proceeding, Nathan's shall pay Lorber all amounts due
to
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him without regard to the dispute, and if Nathan's shall fail to pay Lorber such
amounts and Lorber is the prevailing party in such proceeding, Nathan's shall
pay to Lorber such amounts plus interest thereon at the prime rate established
by Citibank NA from the date on which Nathan's ceased making such payments
through the date of payment; provided, however, that if Nathan's shall be the
prevailing party in such a proceeding, Lorber shall promptly repay all amounts
that he received during pendency of the proceeding.
31. NOTICES.
Any notice given to either Party shall be in writing and shall be deemed
to have been given when delivered either personally, by fax, by overnight
delivery service (such as Federal Express) or sent by certified or registered
mail postage prepaid, return receipt requested, duly addressed to the Party
concerned at the address indicated below or to such changed address as the Party
may subsequently give notice of.
If to Nathan's or the Board:
Nathan's Incorporated
1400 Old Country Road
Westbury, NY 11590
Attention: Wayne Norbitz
FAX: (516)
If to Lorber:
Howard M. Lorber
8061 Fisher Island
Miami, Florida 33109
32. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
33. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF THE PARTIES, hereto have executed this Agreement as of
the day and year first written above.
NATHAN'S FAMOUS, INC.
/s/ Wayne Norbitz
--------------------------------------
President and Chief Operating Officer
/s/ Howard M. Lorber
--------------------------------------
Howard M. Lorber
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