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Unassociated Document

    EXHIBIT
      10.1

    

    SETTLEMENT
      AGREEMENT AND RELEASE

     

    This
      SETTLEMENT
      AGREEMENT AND RELEASE
      (this
“Agreement”) is made as of the date set forth below, by and between MIAMI
      SUBS CAPITAL PARTNERS I, INC.,
      a
      Florida corporation with an office at 6300 NW 31st
      Street,
      Fort Lauderdale, Florida (“Miami Subs ”) and NATHAN’S
      FAMOUS, INC.,
      a
      Delaware corporation (“Nathan’s”). Miami Subs and Nathan’s are collectively
      referred to herein as the “Parties.”

    

    WITNESSETH:

     

    WHEREAS,
      on or
      about June 7, 2007, the Parties entered into a Stock Purchase Agreement (“SPA”),
      pursuant to which Nathan’s sold all of the issued and outstanding shares of
      stock of Miami Subs Corporation to Miami Subs for an aggregate purchase price
      of
      Three Million Two Hundred Fifty Thousand Dollars ($3,250,000.00), consisting
      of
      a cash payment of Eight Hundred Fifty Thousand Dollars ($850,000.00) and the
      balance of Two Million Four Hundred Thousand Dollars ($2,400,000.00) to be
      paid
      pursuant to the terms of a Nonnegotiable Promissory Note (the “Note”); and

     

    WHEREAS,
      Bruce
      Galloway (“Galloway”) and Lawrence Austin (“Austin”) each personally guaranteed
      Miami Subs’ performance under the Note, pursuant to separate written guarantees
      dated on or about June 7, 2007 (the “Galloway Personal Guaranty” and the “Austin
      Personal Guaranty”); and

     

    WHEREAS,
      a
      dispute has arisen between the Parties concerning the SPA (the “Dispute”); and

     

    WHEREAS,
      due to
      the significant cost, expense, and uncertainty in connection with potentially
      litigating the Dispute, the Parties desire
      to
      resolve and settle in full all past, present or future claims that Miami Subs
      had, has or may have against Nathan’s arising out of the SPA through the date of
      execution of this Agreement;

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    NOW,
      THEREFORE,
      the
      Parties hereby agree to settle the Dispute upon the following terms and
      conditions:

     

    1. Delivery
      of Amended Note:
      Upon
      the execution of this Agreement by all Parties,
      Miami
      Subs shall deliver to Nathan’s an Amended and Restated Promissory Note in the
      form annexed hereto as Exhibit “A” (the “Amended Note”), pursuant to which the
      term of the Note is extended and the monthly installment amount thereunder
      reduced, as set forth in the Amended Note. 

     

    2. Delivery
      of Reaffirmation of Guaranty:
      Upon
      the execution of this Agreement by all Parties, Galloway and Austin shall
      deliver to Nathan’s a Reaffirmation of Guaranty in the form annexed hereto as
      Exhibit “B” (the “Reaffirmation of Guaranty”), pursuant to which Galloway and
      Austin personally guaranty the performance of Miami Subs under the Amended
      Note,
      as set forth in the Reaffirmation of Guaranty. 

     

    3. General
      Release to Nathan’s:
      For and
      in
      consideration of the good and valuable consideration identified herein, the
      sufficiency of which Miami Subs hereby acknowledges, Miami Subs does hereby
      forever release and discharge Nathan’s, its past, present and future
      shareholders, officers, directors, representatives, agents, employees,
      affiliated companies, related companies, subsidiaries, parents, predecessors,
      successors, assigns (collectively, “RELEASEES”), and any other entities in which
      the RELEASEES have or had any interest, from all claims, demands, causes of
      action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
      specialties, covenants, contracts, controversies, agreements, promises,
      variances, trespasses, damages, judgments, extents, executions, and liabilities
      of any kind whatsoever (upon any legal or equitable theory, whether contractual,
      common law, statutory, federal, state, local or otherwise), that Miami Subs
      and
      each of its past, present and future shareholders, officers, directors,
      representatives, agents, employees, affiliated companies, related companies,
      subsidiaries, parents, predecessors, successors and assigns, (collectively
      “RELEASORS”) ever had, now have or hereafter can, shall or may have against
      RELEASEES, including any and all past, present or future claims arising
      out of the SPA up to and including the date of execution of this
      Agreement;
      provided, however, that this Release is not intended to release the obligations
      set forth in this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    4. Miami
      Subs Acknowledgment of Counsel:
      Miami
      Subs acknowledges
      that for purposes of this settlement it has had the opportunity to be
      represented by legal counsel of its own choice throughout all of the
      negotiations preceding the execution of this Agreement; that it has had the
      opportunity to consult with its attorneys prior to executing this Agreement;
      that it has executed this Agreement only after it has had the opportunity to
      consult with above-described independent legal counsel; that it has carefully
      read this Agreement in its entirety; that it has had the opportunity to have
      the
      provisions of this Agreement explained to it by counsel and has had the
      opportunity to have answered to its satisfaction any questions it has had with
      regard to the meaning of any of the provisions of this Agreement; that it fully
      understands the terms, conditions and significance of this Agreement, and that
      it voluntarily consents to all of the terms and conditions contained in this
      Agreement and is signing this Agreement voluntarily and of its own force and
      will; and that it intends to abide by all the provisions of this
      Agreement.

     

    5. Nathan’s
      Acknowledgment of Counsel:
      Nathan’s acknowledges that for purposes of this settlement it has been
      represented by Farrell Fritz, P.C., legal counsel of its own choice, throughout
      all of the negotiations preceding the execution of this Agreement; that it
      has
      consulted with its attorneys prior to executing this Agreement; that it executed
      this Agreement only after consultation with above-described independent legal
      counsel; that it has carefully read this Agreement in its entirety; that it
      had
      the provisions of this Agreement explained to it by counsel who answered to
      its
      satisfaction any questions asked with regard to the meaning of any of the
      provisions of this Agreement; that it fully understand the terms, conditions
      and
      significance of this Agreement, and that it voluntarily consent to all of the
      terms and conditions contained in this Agreement and is signing this Agreement
      voluntarily and of its own force and will; and that it intends to abide by
      all
      the provisions of this Agreement.

     

    6. No
      Admission of Wrongdoing:
      The
      Parties have entered into this Agreement for the purpose of avoiding the burden,
      expense and inconvenience of litigation, and the making of this Agreement is
      not
      intended, and shall not be construed, as an admission that any of the Parties
      breached any duty or contract, including without limitation the SPA; violated
      any federal, state or local law (statutory or common law), ordinance or
      regulation; has any liability; or committed any wrongdoing
      whatsoever.

     

    7. Non-Disparagement:
      Miami
      Subs shall not make or publish any statement (in verbal, written, electronic
      or
      any other form), or instigate, assist or participate in the making or
      publication of any statement (in verbal, written, electronic or any other form),
      that would libel, slander or disparage (whether or not such disparagement
      constitutes libel or slander), or expose to hatred, contempt or ridicule,
      Nathan’s, its products, services, affairs, or operation, and its past
      or
      present shareholders, officers, directors, representatives, agents or
      employees.

     

    8. Confidentiality:
      Miami
      Subs shall not, except as compelled by law, publicize or disclose to any person
      the facts or circumstances relating to any asserted or potential claims against
      Nathan’s, including those asserted in the Dispute, and any terms of this
      Agreement. This covenant of confidentiality includes, but is not limited to,
      the
      claims Miami Subs has or could have asserted against Nathan’s, any purported
      unlawful or wrongful conduct by Nathan’s, the terms of this Agreement, and Miami
      Subs’ receipt of any consideration pursuant to this Agreement. Other than as
      required by law, governmental agency or taxing authority, disclosure will not
      be
      made to anyone other than to discuss the terms hereof with the attorneys, tax
      advisors and other professionals and senior corporate officers or directors
      of
      Miami Subs (all of whom must agree not to make any disclosure that Miami Subs
      itself could not make). Upon receipt of any inquiry regarding the Dispute,
      the
      parties, or any representative thereof, shall state only that it has been
      resolved to the satisfaction of the Parties. Miami Subs shall be liable for
      all
      damages caused by it or by anyone to whom it made disclosure if a court
      determines that it or such person were to violate this confidentiality covenant
      or any other provision of this Agreement. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    9. No
      Further Action:
      Miami
      Subs represents and warrants that it is the only entity that has any rights,
      claims or lawsuits against Nathan’s as a result of the acts, omissions and
      conduct alleged in the Dispute. Miami Subs and the RELEASORS, further represent
      and warrant that they have not and will not file or cause to be filed any
      lawsuit in any jurisdiction, or make any claim or demand against the RELEASEES
      or any other person or entity for any and all past, present or future claims
      arising out of the SPA up to and including the date of execution of this
      Agreement. 

     

    10. Injuries
      Known through the Date Hereof:
      Miami
      Subs acknowledges that the consideration received under this Agreement is
      intended to and does release and discharge the RELEASEES for any and all past,
      present or future claims arising under the SPA as to which Miami Subs has
      knowledge up to and including the date of execution of this Agreement. Miami
      Subs hereby represents and warrants to Nathan’s that, as of the date hereof, it
      has no knowledge of any existing, pending or threatened matter that could give
      reasonably be expected to give rise to a future claim under the SPA. For the
      purposes hereof, “knowledge of Miami Subs” means the knowledge of Laurence
      Austin, Richie Chwatt, Bob Vogel, Bruce Galloway, Gary Herman, Lawrence Austin,
      Jay Szefel, Steve Nelson and Fraser Austin following due inquiry, including
      all
      reasonable inquiries of any other individuals reasonably expected to have
      knowledge of any claims that may arise, develop or be discovered in the future
      under the SPA. 

     

    11. Change
      in Facts Affecting Settlement:
      It is
      understood that the facts in respect of which this Agreement is made may
      hereafter turn out to be other than or different from the facts in that
      connection now known by the Parties or believed by any of the Parties to be
      true. Each of the Parties expressly accepts and assumes the risks of the facts
      turning out to be so different. Each of the Parties agrees that the foregoing
      Agreement shall be in all respects effective and not subject to termination
      or
      rescission by any such difference in facts.

     

    12. Choice
      of Law/Venue:
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York, without reference to the choice of law or
      conflicts of law principles thereof. The venue for any disputes arising under
      this Agreement shall be in the United States District Court for the Southern
      District of New York located in New York County, New York, or if subject matter
      jurisdiction is lacking in such Court, in the Supreme Court of the State of
      New
      York for the County of New York. 

     

    13. Section
      Headings:
       Section
      headings are used herein for convenience of reference only and do not affect
      the
      meaning of any provision of this Agreement.

     

    14. Severability:
      If at
      any time after the date of the execution of this Agreement, any provision of
      this Agreement shall be held to be illegal, void or unenforceable by a court
      of
      competent jurisdiction, such provision shall be of no force and effect;
      provided, however, that the illegality or unenforceability of such provision
      shall have no effect upon, and shall not impair the enforceability of, any
      other
      provision of this Agreement. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    15. Entire
      Agreement:
      This
      Agreement (which incorporates as covenants the representations and clauses
      in
      the introductory “Whereas” clauses) constitutes the entire agreement and
      understanding between the Parties relating to the Dispute and the settlement
      thereof, and
      it
      supersedes any and all prior representations, understandings and agreements,
      whether written or verbal, except that the Parties’ obligations set forth in
      Article 4 of the SPA shall survive the execution of this Agreement and shall
      remain in full force and effect.

     

    16. Changes
      to Agreement:
      This
      Agreement may not be changed, amended, modified or terminated except by a
      written instrument signed by each of the Parties.

     

    17. Additional
      Obligations:
      Each of
      the Parties agree to execute all such further documents, and to take all
      such further action, as may be deemed necessary or advisable in order to
      effectuate the intent and purpose of the foregoing Agreement.

     

    18. Signatures:
      This
      Agreement may be executed in counterparts and/or by facsimile transmission,
      each
      of which when executed shall be deemed to be an original and all of which
      together shall constitute a single instrument binding upon the Parties;
      provided, however, that original signed documents shall also be provided. All
      fully executed copies shall be considered duplicate originals, equally
      admissible in evidence.

     

    THE
      TERMS OF THIS AGREEMENT, INCLUDING THE WAIVER AND GENERAL RELEASE, ARE THE
      PRODUCT OF MUTUAL NEGOTIATION AND COMPROMISE BETWEEN THE PARTIES. THE PARTIES
      HAVE READ AND FULLY CONSIDERED THIS AGREEMENT AND MUTUALLY DESIRE TO ENTER
      INTO
      THIS AGREEMENT. 

    

    EACH
      PARTY HAS BEEN AFFORDED A REASONABLE TIME TO CONSIDER ITS RIGHTS AND OBLIGATIONS
      UNDER THIS AGREEMENT AND TO CONSULT WITH AN ATTORNEY. 

    

    HAVING
      ELECTED TO EXECUTE THIS AGREEMENT AFTER CONSULTING WITH LEGAL COUNSEL, TO
      FULFILL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE THEREBY THE CONSIDERATION
      SET FORTH IN PARAGRAPHS “1” AND “2” HEREOF, MIAMI SUBS FREELY AND KNOWINGLY, AND
      AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE
      AND RELEASE ALL CLAIMS IT HAS OR MIGHT HAVE AGAINST NATHAN’S.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    WHEREFORE,
      the
      Parties hereto have caused this Settlement Agreement and Release to be signed
      on
      the dates indicated below with the Agreement becoming effective upon the last
      dated signature of the Parties.

     

    
      	 	 	 
	 	 	MIAMI SUBS CAPITAL PARTNERS I,
              INC.
	 
 	 
 	 
 
	 	 	By:/s/
              Gary Herman
	 	
              
Name:
              Gary Herman
	 	Title:   President

    

     

    

    
      	STATE OF NEW YORK 	) 	 
	 	) 	ss.:
	
              COUNTY
                OF New York

            	)	 

    

     

    

    On
      the
28th
      day of
      October 2008, before me, the undersigned, personally appeared Gary Herman,
      the
President
      of Miami
      Subs Capital Partners I, Inc., personally known to me or proved to me on the
      basis of satisfactory evidence to be the individual whose name is subscribed
      to
      the within instrument and acknowledged to me that he executed the same in his
      capacity as the President
      of Miami
      Subs Capital Partners I, Inc., and that by his signature on the instrument,
      the
      individual, or the person upon his behalf of which the individual acted,
      executed the instrument.

    
      	 	 	 
	 	  	/s/ Andrea
              Alessi 
	 	
              
Notary
              Public

     

    

    

    (Signature
      Page 1 of 2)

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    WHEREFORE,
      the
      Parties hereto have caused this Settlement Agreement and Release to be signed
      on
      the dates indicated below with the Agreement becoming effective upon the last
      dated signature of the Parties.

     

    
      	 	 	 
	 	 	NATHAN’S FAMOUS, INC.
	 
 	 
 	 
 
	 	 	By:
              /s/
              Eric Gatoff
	 	
              
Name:
              Eric Gatoff
	 	Title:  
              CEO

    
      
        	STATE OF NEW YORK 	) 	 
	 	) 	ss.:
	
                COUNTY
                  OF NASSAU

              	)	 

      

       

    

    

    On
      the
31st
      day of
      October 2008, before me, the undersigned, personally appeared Eric
      Gatoff,
      the
CEO
      of
      Nathan’s Famous, Inc., personally known to me or proved to me on the basis of
      satisfactory evidence to be the individual whose name is subscribed to the
      within instrument and acknowledged to me that he executed the same in his
      capacity as the CEO
      of
      Nathan’s Famous, Inc., and that by his signature on the instrument, the
      individual, or the person upon his behalf of which the individual acted,
      executed the instrument.

    

    
      	 	 	 
	 	 	/s/ Mary
              Hyland
	 	
              
Notary
              Public

     

    

    

    

    (Signature
      Page 2 of 2)

     

    
      
        
        

      

      
        7EXHIBIT
      10.2

    

    AMENDED
      AND RESATED 

    PROMISSORY
      NOTE

    

    
      	$1,892,210.54	
              Westbury,
                New
                York

            

    October
      28, 2008

    Effective
      as of August 31, 2008

    

    FOR
      VALUE RECEIVED, MIAMI SUBS CAPITAL PARTNERS I, INC.,
      a
      Florida corporation with an office at 6300 NW 31st
      Avenue,
      Fort Lauderdale, Florida (the
      “Maker”), promises to pay to the order of NATHAN’S
      FAMOUS, INC.,
      a
      Delaware corporation (the “Payee”), the principal amount of ONE MILLION
      EIGHT HUNDRED NINETY-TWO THOUSAND TWO
      HUNDRED TEN AND 54/100 DOLLARS
      ($1,892,210.54),
      on or
      before April 30, 2014 (the
      “Maturity Date”), in
      lawful
      money of the United States of America, together with interest on the unpaid
      principal amount hereof, from time to time outstanding, from August 31, 2008
      (the “Effective Date”) through and including the date that this Note is paid in
      full, at a rate of eight percent (8%) per annum.   

    

    The
      Maker
      promises to pay to the Payee an installment
      of $35,000.00 (THIRTY-FIVE THOUSAND DOLLARS) effective as of the Effective
      Date,
      an installment of $6,883.67 (SIX THOUSAND EIGHT HUNDRED EIGHTY-THREE AND 67/100
      DOLLARS) effective as of the date of execution hereof and monthly installments
      of $35,000.00 (THIRTY-FIVE THOUSAND DOLLARS) each for the next sixty-seven
      months, subject to adjustment upon any prepayment made by Maker in accordance
      with the terms hereof. Following the first two installments hereunder, each
      monthly installment shall be paid on the last day of each calendar month
      commencing October 31, 2008, with a final installment to be paid on the Maturity
      Date.
      Interest
      hereunder shall be computed on the actual number of days elapsed over a year
      comprised of 365 days. Nothing herein shall be deemed to require Maker to
      make payments of interest which exceed the maximum permitted by law. In any
      such
      event, this Note shall be deemed automatically amended to require payment of
      interest at the maximum amount permitted by law.

    

    All
      amounts payable hereunder shall be made in lawful money of the United States
      of
      America at such place as may be designated to the Maker in writing by the Payee
      from time to time. If any payment hereunder becomes due and payable on a day
      other than a Business Day (hereafter defined), such payment shall be extended
      to
      the next succeeding Business Day. “Business Day” shall mean a day other than a
      Saturday, Sunday or other day on which commercial banks in New York State
      are authorized or required by law to close. Upon
      the
      occurrence of an Event of Default, as that term is defined below, interest
      payable on this Note shall be at the rate of twelve percent (12%) per annum
      or
      the maximum rate allowed to be charged by law, whichever is lower.

    

    This
      Note
      may be prepaid at the option of the Maker in whole or in part at any time
      without penalty or premium. All prepayments shall be accompanied by accrued
      interest on the principal amount repaid to the date of repayment. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    This
      Note
      shall be subject to mandatory prepayment (i) upon the settlement or the
      adjudication of the litigation entitled Ontario
      Superior Court of Justice-Commercial Litigation, Court File No. 06-00CL6270,
      Lawrence B. Austin, Plaintiff v. Michael Overs, Tesari Holdings, Ltd., &
Pizza Pizza, Ltd., Defendants,
      in an
      amount equal to the amount payable to Lawrence Austin or any affiliate in
      settlement or by award of the court having jurisdiction over such action, after
      deduction of attorneys’ fees paid by Lawrence Austin in connection with such
      action and (ii) in an amount equal to any liability of the Payee in respect
      of
      an indemnification claim made by Maker against Payee pursuant to Article V
      of
      the Stock Purchase Agreement dated as of June 7, 2007 by and among the Maker,
      the Payee and Miami Subs Corporation upon a final determination of liability
      by
      Maker and Payee or by final judicial proceeding. In the event of any partial
      prepayment, whether or not mandatory, the amount of the monthly payment payable
      by Maker hereunder shall be reduced to the amount obtained by fully amortizing
      the unpaid principal balance following such prepayment over the balance of
      the
      term remaining until the Maturity Date. 

    

    Payee
      may
      declare the entire unpaid principal balance of the Note, together with interest
      accrued thereon, to be immediately due and payable upon the occurrence of any
      of
      the following events (each an “Event of Default”): (a) the failure of Maker
      to pay the principal of, or interest on, this Note when due, and such failure
      shall continue unremedied for a period of ten (5) days following delivery of
      written notice of such non-payment; (b) any petition in bankruptcy being filed
      by or against the Maker, or any proceedings in bankruptcy, or under any law
      relating to the relief of debtors, being commenced for the relief or
      readjustment of any indebtedness of the Maker; provided, with respect to any
      such petition filed against Maker, such petition shall continue undismissed
      for
      a period of 30 days from the date of entry thereof; (c) the making by the Maker
      of an assignment for the benefit of creditors; (d) the appointment of a receiver
      of all or substantially all of the property of the Maker; (e) the merger,
      consolidation, or sale of all or substantially all of the assets of the Maker
      to
      any third party; (f) any breach of any representation, warranty or covenant
      of
      the Maker contained in the Security Agreement, of even date herewith, between
      Maker and Payee, which breach, if capable of cure, shall not have been cured
      within twenty (20) days following delivery of written notice to Maker; or (g)
      the guaranty executed by Lawrence Austin or Bruce Galloway (each, a “Guarantor”)
      with respect to Maker’s obligations hereunder shall cease to be in full force
      and effect or any Guarantor shall so assert in writing.

    

    Maker
      agrees that whenever an attorney is used to collect or enforce this Note or
      to
      enforce, declare or adjudicate any rights or obligations under this Note whether
      by suit or any other means whatsoever, the Maker shall pay all of the legal
      fees
      of the attorneys for the Payee, together with all costs and expenses of such
      collection, enforcement or adjudication, which obligation shall constitute
      part
      of the principal obligation hereunder.

    

    Maker
      hereby waives diligence, presentment, protest, demand and notice of every kind
      except as otherwise expressly required herein. This Note may not be modified
      orally.

    

    THIS
      NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
      STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    This
      Note is an amendment and restatement of, and is being issued in replacement
      of
      and substitution for, the Promissory Note, dated June 7, 2007, in the original
      principal amount of $2,400,000 issued by the Maker in favor of Payee (the
“Original Note”). The execution and delivery of this Note shall not be construed
      to have constituted a repayment of any principal of, or interest on, the
      Original Note.

    
      	 	 	 
	 	 	MIAMI SUBS CAPITAL PARTNERS I, INC.,
	 
 	 
 	 
 
	 	 	/s/ Gary
              Herman 
	 	
              
By:
              Gary Herman

     

    
      
         

      

      
        3

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