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EMPLOYMENT AGREEMENT
This Employment Agreement dated as of December
15, 2006 (the "Agreement Date") and effective as of January 1, 2007
(the "Effective Date") between Nathan’s Famous, Inc., a
Delaware corporation having an address at 1400 Old Country Road,
Westbury, New York 11590 (the "Company"), and Eric Gatoff, an
individual having an address at 254 East 68th Street, Apt 24B, New
York, NY 10021 (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to employ the
Executive and to receive certain services from him, and the
Executive is willing to continue to be employed and to render such
services to the Company, all upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Employment . Subject to and upon the terms and
conditions contained in this Agreement, the Company hereby agrees
to employ Executive and Executive agrees to be employed by the
Company, for the period set forth in Paragraph 2 hereof, to render
the services to the Company, its affiliates and/or subsidiaries
described in Paragraph 3 hereof.
2. Effective Date and Term . The Effective Date of this
Agreement shall be January 1, 2007. The Executive's term of
employment under this Agreement shall commence on the Effective
Date hereof and shall continue for a period through and including
the second anniversary of the Effective Date hereof (the "Initial
Agreement Term"). At the end of the Initial Agreement Term, this
Agreement shall be automatically extended for additional,
successive periods of one year (each of which successive periods
shall be considered an Additional Agreement Term and, together with
the Initial Agreement Term, the "Term") unless terminated in
writing by either party no less than 180 days prior to the end of
either the Initial Agreement Term or any Additional Agreement Term
pursuant to the terms and conditions set forth herein.
3. Duties . (a) The Executive shall be employed as Chief
Executive Officer of the Company as of the Effective Date hereof.
The Executive shall report to the Executive Chairman and Board of
Directors (the "Board") of the Company. It is agreed that Executive
shall perform his services in the Company's Westbury, New York
offices, or at any other facilities mutually agreeable to the
parties.
(b) The Executive agrees to abide by all By-laws
and applicable policies of the Company promulgated from time to
time by the Board of Directors of the Company, including without
limitation the normal business policies of the Company.
4. Exclusive Services and Best Efforts . The Executive
shall devote all of his working time, attention, best efforts and
ability during regular business hours exclusively to the service of
the Company, its affiliates and subsidiaries during the term of
this Agreement.
5. Compensation . As compensation for his services and
covenants hereunder, the Company shall pay the Executive the
following:
(a) Base
Salary . The Company shall pay the Executive a base salary
("Base Salary") of $225,000 per year commencing on the Effective
Date of this Agreement. The Base Salary shall be subject to review
and adjustment on an annual basis beginning January 1, 2008, (if
this Agreement is then in effect) or, at the Company's discretion,
on such earlier date as the Company may determine; provided,
however, that in no event shall the Executive's Base Salary be
reduced below the Base Salary specified herein.
(b) Bonus
Compensation .
(i) For each
fiscal year within the Term commencing with the fiscal year ending
March 30, 2008, the Company shall pay to the Executive annual bonus
compensation ("Bonus Compensation") within the range of 0% to 100%
of his (then) current Base Salary based on the Company’s
achievement of certain financial and operational performance
objectives as are mutually agreed-upon by the Board and the
Executive during the last quarter of the immediately prior fiscal
year (such objectives being the "Performance Targets"); provided,
however, that for each year within the Initial Agreement Term, such
Bonus Compensation shall not be less than 50% of the
Executive’s (then) current Base Salary (the "Minimum Bonus").
The Executive shall be eligible to receive Bonus Compensation of
75% of his (then) current Base Salary should the Company attain the
Performance Targets established for the applicable fiscal year.
Should the Company significantly exceed the Performance Targets for
a fiscal year, the Executive shall be eligible to receive Bonus
Compensation in an amount determined by the Compensation Committee
and Board in their sole discretion, not to exceed 100% of his
(then) current Base Salary. The foregoing Bonus Compensation shall
be paid by the Company within thirty (30) days after completion of
the audited financial results of the Company for the applicable
fiscal year.
(ii) For the
fiscal year ending March 25, 2007, the Company shall pay to
Executive a bonus in an amount determined by the Compensation
Committee and Board in their sole discretion, based in part on his
performance as Vice President and General Counsel during the period
prior to the Effective Date.
(c) Stock
Compensation . From time to time during the Term, the
Company may also grant to the Executive certain other stock
compensation including additional stock options and/or other
form(s) of stock awards, pursuant to the terms of any of the
Company's stock incentive plans and any related stock option or
stock award agreement(s) required to be executed in connection
therewith. The amount and terms of any such stock options and/or
other stock awards shall, in every case, be determined by the
Compensation Committee and Board in their sole discretion, subject
to the terms of the stock incentive plan under which the award is
granted.
6. Business
Expenses . During the Term, the Executive shall be entitled
to prompt reimbursement by the Company for all reasonable
out-of-pocket expenses incurred by him in the performance of his
duties under this Agreement, upon his submission of such accounts
and records as may be reasonably required by the Company, in
accordance with the related policies established from time to time
by the Company.
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7. Executive Benefits . The Company may withhold from any
benefits payable to the Executive all federal, state, local and
other taxes and amounts as shall be permitted or required pursuant
to law, rule or regulation.
(a) During the Term, the Executive shall be
entitled to such insurance, disability and health and medical
benefits and be entitled to participate in such retirement plans or
programs as are generally made available to executive officers of
the Company pursuant to the policies of the Company in effect from
time to time during the Term; provided that the Executive shall be
required to comply with the conditions attendant to coverage by
such plans and shall comply with and be entitled to benefits only
in accordance with the terms and conditions of such
plans.
(b) Executive shall be entitled to four weeks
paid vacation each year during the Term at such times as does not,
in the reasonable opinion of the Board of Directors, interfere with
Executive's performance of his duties hereunder.
(c) The Executive shall be entitled to receive
the sum of $1,250 per month during the Term as an automobile
allowance for payment of automotive and related expenses (e.g.,
insurance, repairs and maintenance for any such automobile).
Executive acknowledges that some or all of the foregoing may be
deemed compensation to him.
8. Death
and Disability .
(a) The Term
shall terminate on the date of the Executive's death, in which
event the Executive's estate shall be entitled to receive a lump
sum equal to his (then) current Base Salary, Bonus Compensation (as
determined pursuant to Paragraph 8(c)) and reimbursable expenses
and benefits owing to the Executive through the end of the Term
then in effect. The Executive's estate will not be entitled to any
other compensation upon termination of this Agreement pursuant to
this Paragraph 8(a).
(b) If, during
the Term, in the opinion of a duly licensed physician selected by
the Executive and reasonably acceptable to the Company, the
Executive, because of physical or mental illness or incapacity,
shall become substantially unable to perform the duties and
services required of him under this Agreement for a period of six
consecutive months [or a period of an aggregate six months in any
twelve-month period] the Company may, upon at least twenty (20)
days' prior written notice to the Executive of its intention to do
so (given at any time after the expiration of such six-month
period), terminate this Agreement as of the date set forth in the
notice. In case of such termination, the Executive shall be
entitled to receive a lump sum equal to his (then) current Base
Salary and Bonus Compensation (as determined pursuant to Paragraph
8(c)). The Executive will not be entitled to any other compensation
upon termination of this Agreement pursuant to this Paragraph
8(b).
(c) For the
purposes of this Paragraph 8, the amount of the Executive’s
Bonus Compensation shall be (i) in the event of termination during
the Initial Agreement Term, the Minimum Bonus and (ii) in the event
of termination during any Additional Agreement Term, the Bonus
Compensation paid or payable to the Executive for the preceding
fiscal year.
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9. Termination for Cause . (a) The Company may terminate
the employment of the Executive for Cause (as hereinafter defined)
immediately upon the delivery of written notice. Upon such
termination, the Company shall be released from any and all further
obligations under this Agreement, except that the Company shall be
obligated to pay the Executive his Base Salary, reimbursable
expenses and benefits owing to the Executive through the date of
termination. Executive will not be entitled to any other
compensation upon termination of this Agreement pursuant to this
Paragraph 9(a).
(b) As used
herein, the term "Cause" shall mean: (i) the willful failure of the
Executive to perform his duties pursuant to Paragraph 3 hereof,
which failure is not cured by the Executive within thirty days
following written notice thereof from the Company; (ii) any other
material breach of this Agreement by the Executive, including any
of the material representations or warranties made by the
Executive; (iii) any act, or failure to act, by the Executive in
bad faith or intentionally to the detriment of the Company; (iv)
the commission by the Executive of an act involving moral
turpitude, dishonesty, theft, unethical business conduct, or any
other conduct which significantly impairs the reputation of, or
harms, the Company, its subsidiaries or affiliates; or (v) any
misrepresentation, concealment or omission by the Executive of any
material fact in seeking employment hereunder.
10. Termination without Cause . Notwithstanding anything to
the contrary herein, the Company may terminate the employment of
the Executive without Cause. Upon any termination without cause,
the Company shall be released from any and all further obligations
under this Agreement, except that in case of such termination
without Cause, subject to the penultimate sentence of this
Paragraph 10(a), the Company shall pay to the Executive, as
severance compensation, his Base Salary through the end of the Term
then in effect, which amount shall be paid in the form of salary
continuation on a monthly installment basis. It is explicitly
understood and agreed that non-renewal
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