Document:

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 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;

    

    (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 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 Lorber pursuant to Section 13.

    

    (h)     “Consulting
      Period”
      shall
      mean the period specified in Section 13 during which Lorber serves as a
      consultant to Nathan’s.

    

    (i)     “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.

     

    
      
        
        

      

      
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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 Lorber’s prior written
      consent or his acquiescence:

    

    (i)     diminution,
      reduction or other adverse change in incentive compensation opportunities
      available to Lorber (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 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 Executive Chairman of
      the
      Board of Directors;

    

    (v) i    mposition
      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.

    

    (m)     “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.

    

    (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.

    

    
      	
              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 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.

    

    
      	
              3.

            	
              Titles
                And Duties.

            

    

    

    Until
      the
      date of termination of his employment hereunder, Lorber shall be employed as
      Executive Chairman of the Board of Directors, reporting to the full Board.
      In
      such capacity, Lorber 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.

    

    
      	
              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
      Executive Officer of and a director of Vector Group Ltd., Chairman of the Board
      of Ladenburg Thalman 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 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 $400,000 per
      annum.

     

    
      
        
        

      

      
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              6.

            	
              Bonuses.

            

    

    

    Lorber
      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.

    

    
      	
              7.

            	
              Long-term
                Incentive.

            

    

    

    During
      the Employment Term, Lorber shall be eligible for awards 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.

            

    

    

    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.

    

    
      	
              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.

     

    
      
        
        

      

      
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    (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;

    

    (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 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.

    

    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:

     

    
      
        
        

      

      
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    (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 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;

     

    
      
        
        

      

      
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    (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 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.

     

    
      
        
        

      

      
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    (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 $200,000 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.

    

    (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, 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”).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    (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 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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    (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.

    

    (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:

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    (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 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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    
      	
              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 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.

     

    
      
        
        

      

      
        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 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 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.

     

    
      
        
        

      

      
        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

    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.

     

    
      
        
        

      

      
        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/ Eric
              Gatoff
	 	
              
Eric
              Gatoff

    

    

    
      
        	 	 	 
	 	    	/s/ Howard
                M.
                Lorber 
	 	
                
Howard
                M. LorberEMPLOYMENT
      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. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    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 of this Agreement by the Company at the end of the
      Initial Agreement Term or any Additional Agreement Term shall not constitute
      Termination without Cause. In the event of any breach by the Executive of the
      covenants contained in Paragraph 12 hereof, the Company shall be released from
      any further obligation to pay the severance compensation specified herein.
      The
      Executive will not be entitled to any other compensation upon termination of
      this Agreement under this Paragraph 10.

    

    11.   Termination
      Following a Change in Control.
      If
      within
      one year following a Change in Control (as defined below) of the Company (if
      this Agreement is then in effect), the employment of the Executive is terminated
      by the Company without Cause or by the Executive for any reason, the Company
      shall immediately pay to the Executive in a lump sum as severance compensation
      an amount equal to the sum of (a) his then annual Base Salary and (b) his annual
      Bonus Compensation paid or payable to him for the most recently completed fiscal
      year of the Company, but in no event shall such severance compensation exceed
      the amount which is deductible by the Company in accordance with Section 280(G)
      of the Internal Revenue Code of 1986, as amended. The Company hereby agrees
      to
      obtain an agreement from any successor to assume and agree to honor and perform
      this Agreement. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    For
      purposes of this Agreement, a "Change in Control" shall have occurred
      if:

    

    (a)  the
      acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 as amended (the
      “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule
      13d 3 promulgated under the Exchange Act) of voting securities of Nathan’s when
      such acquisition causes such Person to own 15 percent or more of the combined
      voting power of the then outstanding voting securities of Nathan’s entitled to
      vote generally in the election of directors (the “Outstanding Nathan’s Voting
      Securities”); provided, however, that for purposes of this subsection (i), the
      following acquisitions shall not be deemed to result in a Change in Control:
      (A)
      any acquisition directly from Nathan’s, (B) any acquisition by Nathan’s, (C) any
      acquisition by any employee benefit plan (or related trust) sponsored or
      maintained by Nathan’s or any corporation controlled by Nathan’s, or (D) any
      acquisition pursuant to a transaction that complies with clauses (A), (B) and
      (C) of subsection (c) below; and provided, further, that if any Person’s
      beneficial ownership of the Outstanding Nathan’s Voting Securities reaches or
      exceeds 15 percent as a result of a transaction described in clause (A) or
      (B)
      above, and such Person subsequently acquires beneficial ownership of additional
      voting securities of Nathan’s, such subsequent acquisition shall be treated as
      an acquisition that causes such Person to own 15 percent or more of the
      Outstanding Nathan’s Voting Securities; or

    

    (b)  individuals
      who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
      cease for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a director subsequent to the Effective
      Date whose election, or nomination for election by Nathan’s stockholders, was
      approved by a vote of at least a majority of the directors then comprising
      the
      Incumbent Board shall be considered as though such individual were a member
      of
      the Incumbent Board, but excluding for this purpose any such individual whose
      initial assumption of office occurs as a result of an actual or threatened
      election contest with respect to the election or removal of directors or other
      actual or threatened solicitation of proxies or consents by or on behalf of
      a
      Person other than the Board; or

    

    (c)  consummation
      of a reorganization, merger or consolidation or sale or other disposition of
      all
      or substantially all of the assets of Nathan’s or the acquisition of assets of
      another entity (“Business Combination”); excluding, however, such a Business
      Combination pursuant to which (A) all or substantially all of the individuals
      and entities who were the beneficial owners of the Outstanding Nathan’s Voting
      Securities immediately prior to such Business Combination beneficially own,
      directly or indirectly, more than 60 percent of, respectively, the then
      outstanding shares of common stock or the combined voting power of the then
      outstanding voting securities entitled to vote generally in the election of
      directors, as the case may be, of the corporation resulting from such Business
      Combination (including, without limitation, a corporation that as a result
      of
      such transaction owns Nathan’s or all or substantially all of Nathan’s assets
      either directly or through one or more subsidiaries) in substantially the same
      proportions as their ownership, immediately prior to such Business Combination
      of the Outstanding Nathan’s Voting Securities, (B) no Person (excluding any
      employee benefit plan (or related trust) of Nathan’s or such corporation
      resulting from such Business Combination) beneficially owns, directly or
      indirectly, 15 percent or more of, respectively, the then outstanding shares
      of
      common stock of the corporation resulting from such Business Combination or
      the
      combined voting power of the then outstanding voting securities of such
      corporation except to the extent that such ownership existed prior to the
      Business Combination, and (C) at least a majority of the members of the board
      of
      directors of the corporation resulting from such Business Combination were
      members of the Incumbent Board at the time of the execution of the initial
      agreement, or of the action of the Board, providing for such Business
      Combination; or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    (d)  approval
      by the stockholders of Nathan’s of a complete liquidation or dissolution of the
      Company.

    

    12.     Disclosure
      of Information and Restrictive Covenant.
      The
      Executive acknowledges that, by his employment, he has been and will be in
      a
      confidential relationship with the Company and will have access to confidential
      information and trade secrets of the Company, its subsidiaries and affiliates.
      Confidential information and trade secrets include, but are not limited to,
      customer, supplier and client lists, price lists, marketing, distribution and
      sales strategies and procedures, operational and equipment techniques, business
      plans and systems, quality control procedures and systems, special projects
      and
      research, or any project, research, report or the like concerning sales or
      manufacturing or new technology, executive compensation plans and any other
      information relating thereto, and any other records, files, drawings,
      inventions, discoveries, applications, processes, data and information
      concerning the business of the Company which are not in the public domain.
      The
      Executive agrees that in consideration of the execution of this Agreement by
      the
      Company:

    

    (a)
      The
      Executive will not, during the Term or at any time thereafter, use, or disclose
      to any third party, trade secrets or confidential information of the Company,
      including, but not limited to, confidential information or trade secrets
      belonging or relating to the Company, its subsidiaries, affiliates, customers
      and clients or proprietary processes or procedures of the Company, its
      subsidiaries, affiliates, customers and clients. Proprietary processes and
      procedures shall include, but shall not be limited to, all information which
      is
      known or intended to be known only to executives of the Company, its respective
      subsidiaries and affiliates or others in a confidential relationship with the
      Company or its respective subsidiaries and affiliates which relates to business
      matters.

    

    (b)
      The
      Executive will not, during the Term, directly or indirectly, under any
      circumstance other than at the direction and for the benefit of the Company,
      engage in or participate in any business activity, including, but not limited
      to, acting as a director, officer, executive, agent, independent contractor,
      partner, consultant, licensor or licensee, franchisor or franchisee, proprietor,
      syndicate member, shareholder or creditor or with a person having any other
      relationship with any other business, company, firm occupation or business
      activity, in any geographic area within the United States that is, directly
      or
      indirectly, competitive with any business conducted by the Company or any of
      its
      subsidiaries or affiliates during
      the Term or thereafter. Should the Executive own 5% or less of the issued and
      outstanding shares of a class of securities of a corporation the securities
      of
      which are traded on a national securities exchange or in the over-the-counter
      market, such ownership shall not cause the Executive to be deemed a shareholder
      under this Paragraph 12(b).

    

    (c)
      The
      Executive will not, during the Term and for a period of two (2) years
      thereafter, on his behalf or on behalf of any other business enterprise,
      directly or indirectly, under any circumstance other than at the direction
      and
      for the benefit of the Company, solicit or induce any creditor, customer,
      supplier, officer, executive or agent of the Company or any of its subsidiaries
      or affiliates to sever its relationship with or leave the employ of any of
      such
      entities.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (d) This
      Paragraph 12 and Paragraphs 13, 14 and 15 hereof shall survive the expiration
      or
      termination of this Agreement for any reason.

    

    (e) It
      is
      expressly agreed by the Executive that the nature and scope of each of the
      provisions set forth above in this Paragraph 12 are reasonable and necessary.
      If, for any reason, any aspect of the above provisions as it applies to
      Executive is determined by a court of competent jurisdiction to be unreasonable
      or unenforceable, the provisions shall only be modified to the minimum extent
      required to make the provisions reasonable and/or enforceable, as the case
      may
      be. The Executive acknowledges and agrees that his services are of a unique
      character and expressly grants to the Company or any subsidiary, successor
      or
      assignee of the Company, the right to enforce the provisions above through
      the
      use of all remedies available at law or in equity, including, but not limited
      to, injunctive relief.

     

    13.     Company
      Property.
       Any
      patents, inventions, discoveries, applications or processes, designs, devised,
      planned, applied, created, discovered or invented by the Executive in the course
      of the Executive's employment under this Agreement and which pertain to any
      aspect of the Company's or its subsidiaries' or affiliates' business shall
      be
      the sole and absolute property of the Company, and the Executive shall make
      prompt report thereof to the Company and promptly execute any and all documents
      reasonably requested to assure the Company the full and complete ownership
      thereof. All records, files, lists, including computer generated lists,
      drawings, documents, equipment and similar items relating to the Company's
      business which the Executive shall prepare or receive from the Company shall
      remain the Company's sole and exclusive property. Upon termination of this
      Agreement, the Executive shall promptly return to the Company all property
      of
      the Company in his possession. 

    

    14.    
Remedy.
      It is
      mutually understood and agreed that the Executive's services are special,
      unique, unusual, extraordinary and of an intellectual character giving them
      a
      peculiar value, the loss of which cannot be reasonably or adequately compensated
      in damages in an action at law. Accordingly, in the event of any breach of
      this
      Agreement by the Executive, including, but not limited to, the breach of the
      non-disclosure, non-solicitation and non-compete clauses under Paragraph 12
      hereof, the Company shall be entitled to equitable relief by way of injunction
      or otherwise in addition to damages the Company may be entitled to recover.
      

     

    15.     Representations
      and Warranties of the Executive.
      (a) In
      order to induce the Company to enter into this Agreement, the Executive hereby
      represents and warrants to the Company as follows: (i) the Executive has the
      legal capacity and unrestricted right to execute and deliver this Agreement
      and
      to perform all of his obligations hereunder; (ii) the execution and delivery
      of
      this Agreement by the Executive and the performance of his obligations hereunder
      will not violate or be in conflict with any fiduciary or other duty, instrument,
      agreement, document, arrangement or other understanding to which the Executive
      is a party or by which he is or may be bound or subject; and (iii) the Executive
      is not a party to any instrument, agreement, document, arrangement or other
      understanding with any person (other than the Company) requiring or restricting
      the use or disclosure of any confidential information or the provision of any
      employment, consulting or other services. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (b) The
      Executive hereby agrees to indemnify and hold harmless the Company from and
      against any and all losses, costs, damages and expenses (including, without
      limitation, its reasonable attorneys' fees) incurred or suffered by the Company
      resulting from any breach by the Executive of any of his representations or
      warranties set forth in Paragraph 15(a) hereof.

    

    16.     Notices.
      All
      notices given hereunder shall be in writing and shall be deemed effectively
      given when mailed, if sent by registered or certified mail, return receipt
      requested, addressed to the Executive at his address set forth on the first
      page
      of this Agreement and to the Company at its address set forth on the first
      page
      of this Agreement, Attention: Executive Chairman of the Board, with a copy
      to
      Farrell Fritz, P.C., 1320 Reckson Plaza, Uniondale, New York, NY 11556,
      Attention: Nancy Lieberman, Esq. 

    

    17.     Entire
      Agreement.
      This
      Agreement constitutes the entire understanding of the parties with respect
      to
      its subject matter and no change, alteration or modification hereof may be
      made
      except in writing signed by the parties hereto. Any prior or other agreements,
      promises, negotiations or representations not expressly set forth in this
      Agreement are of no force or effect. In furtherance and not in limitation of
      the
      foregoing, this Agreement supersedes any prior employment relationship or
      arrangements to which the Executive and the Company are parties.

    

    18.     Severability.
      If any
      provision of this Agreement shall be unenforceable under any applicable law,
      then notwithstanding such unenforceability, the remainder of this Agreement
      shall continue in full force and effect.

    

    19.     Waivers,
      Modifications, Etc.
      No
      amendment, modification or waiver of any provision of this Agreement shall
      be
      effective unless the same shall be in writing and signed by each of the parties
      hereto, and then such waiver or consent shall be effective only in the specific
      instance and for the specific purpose for which given.

     

    20.     Assignment.
      Neither
      this Agreement, nor any of the Executive's rights, powers, duties or obligations
      hereunder, may be assigned by the Executive. This Agreement shall be binding
      upon and inure to the benefit of the Executive and his heirs and legal
      representatives and the Company and its successors and assigns. Successors
      of
      the Company shall include, without limitation, any corporation or corporations
      acquiring, directly or indirectly, all or substantially all of the assets of
      the
      Company, whether by merger, consolidation, purchase, lease or otherwise, and
      such successor shall thereafter be deemed "the Company" for the purpose
      hereof.

    

    21.     Applicable
      Law.
      This
      Agreement shall be deemed to have been made, drafted, negotiated and the
      transactions contemplated hereby consummated and fully performed in the State
      of
      New York and shall be governed by and construed in accordance with the laws
      of
      the State of New York, without regard to the conflicts of law rules thereof.
      Nothing contained in this Agreement shall be construed so as to require the
      commission of any act contrary to law, and whenever there is any conflict
      between any provision of this Agreement and any statute, law, ordinance, order
      or regulation, contrary to which the parties hereto have no legal right to
      contract, the latter shall prevail, but in such event any provision of this
      Agreement so affected shall be curtailed and limited only to the extent
      necessary to bring it within the legal requirements.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    22      Full
      Understanding.
      The
      Executive represents and agrees that he fully understands his right to discuss
      all aspects of this Agreement with his private attorney, that to the extent,
      if
      any that he desired, he availed himself of this right, that he has carefully
      read and fully understands all of the provisions of this Agreement, that he
      is
      competent to execute this Agreement, that his agreement to execute this
      Agreement has not been obtained by any duress and that he freely and voluntarily
      enters into it, and that he has read this document in its entirety and fully
      understands the meaning, intent and consequences of this document which is
      that
      it constitutes an agreement of employment.

    

    24.     Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original and all of which taken together shall constitute one and
      the
      same agreement.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	 	 	 
	 	FOR
              NATHAN’S FAMOUS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Wayne
              Norbitz
	 	
              
Name:
              Wayne Norbitz
	 	Title:
              President and Chief Operating Officer 
	 	DATE: December 15, 2006 

      
        	 	 	 
	 	FOR
                THE
                EXECUTIVE
	 
 	 
 	 
 
	 	 	/s/ Eric
                Gatoff
	 	
                
Eric
                Gatoff
	 	 
	 	
                DATE:
                  December 15, 2006

              

      

    

    

    
      
        
        

      

      
        10

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