Exhibit 10.3
AGREEMENT
Agreement, dated as of March 13, 2006 (the "Agreement"), by and between
Shells Seafood Restaurants, Inc., a Delaware corporation with its principal
office at 00000 X. Xxxx Xxxxx Xxxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 (the
"Company"), and Xxxxx Xxxx (the "Executive"), currently residing at 00000 Xxxxxx
Xxxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000.
WHEREAS, the parties desire to enter into this Agreement in order to set
forth the financial obligations of the Company to the Executive upon the
occurrence of certain events.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, representations and covenants contained herein, the parties hereto
agree as follows:
1. Term
This Agreement shall become effective upon its full execution by the
Executive and the Company, and shall remain in effect (the "Term") until June
30, 2007 (the "Termination Date") unless sooner terminated in accordance with
the terms hereof; provided, however, that if the Executive is then still
employed by the Company, the Termination Date (and, consequently, the Term)
shall be extended automatically for successive one year periods unless either
party hereto gives the other such party written notice of its or her intention
not to extend this Agreement, sixty (60) days prior to the Termination Date (or,
if applicable, any anniversary of the Termination Date).
2. Termination Upon a Change in Control.
(a) In the event that, within six months of a Change in Control of the
Company (as later defined), (i) the Executive's employment with the Company is
terminated without cause (as later defined) or (ii) Executive terminates his
employment with the Company due to (w) a significant diminution in the
Executive's job responsibilities or title or (x) the Executive being required to
relocate outside of the Tampa, Florida market (which shall mean to a location
which is more than 50 miles outside of the city borders of Tampa), and, in any
such instance, provided the Executive executes a general release of all claims
against the Company, its officers, directors and affiliates and abides by the
provisions of Sections 3 and 4(a) (iii) and (iv) hereof, then (y) all the
Executive's unvested stock options will vest immediately, and (z) the Executive
shall be entitled to receive (1) a severance payment equal to nine months' then
effective base salary, payable in equal installments commencing from the date of
the Change in Control, in accordance with the Company's then general salary
payment policies, and (2) payment of the Executive's and Executive's eligible
dependents' COBRA continuation health coverage premiums for the nine-month
period following the date of termination or, if earlier, until the Executive and
Executive's dependents cease to be eligible for such coverage or until the
Executive commences employment with another entity or person. Such payments, if
any, shall be in lieu of any amount otherwise provided for by, or owed to the
Executive by the Company under, any contract or policy of the Company or
(b) For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred if (i) there shall be consummated (x) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock, $.01 par
value per share (the "Common Stock"), would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Common Stock immediately prior to the merger have not less than 50.1% of the
ownership of common stock of the surviving corporation immediately after the
merger, or (y) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of the Company, or (ii) the stockholders of the Company shall approve any plan
or proposal for liquidation or dissolution of the Company, or (iii) any person
(as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) who, at the time of the execution
of this Agreement, does not own 5% or more of the Company's outstanding Common
Stock, shall become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of 35% or more of the outstanding Common Stock other than
pursuant to a plan or arrangement entered into by such person and the Company,
or (iv) during any period of two consecutive years commencing on the date
hereof, individuals who at the beginning of such period constitute the entire
Board of Directors shall cease for any reason to constitute a majority thereof,
unless the election, or the nomination for election by the Company's
stockholders, of a majority of the new directors was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period.
Termination by the Company for "cause" shall mean termination because of:
(a) the Executive's breach of any of his obligations hereunder, (b) the
Executive's refusal to perform, or continual neglect of, his duties or
obligations to the Company (other than those provided for herein, which are
governed by subparagraph (a) above), which neglect or failure to act is not
remedied within thirty (30) days after written notice thereof to the Executive
by the Company; (c) the Executive's conviction (which, through lapse of time or
otherwise, is not subject to appeal) of any crime or offense involving money or
other property of the Company or any of its subsidiaries or which constitutes a
felony in the jurisdiction involved, (d) the Executive's performance of any act
or his failure to act, for which if the Executive were prosecuted and convicted,
would constitute a crime or offense involving money or property of the Company
or any of its subsidiaries, or which would constitute a felony in the
jurisdiction involved, or (e) any attempt by the Executive to secure improperly
any personal profit in connection with the business of the Company or any of its
subsidiaries,
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3. Protection of Confidential Information.
a. Confidential Information. The Executive acknowledges that his
employment by the Company has and will, throughout the term of this Agreement,
bring him in contact with many confidential affairs of the Company not readily
available to the public, and plans for future developments. In recognition of
the foregoing, the Executive covenants and agrees that he will not, directly or
indirectly, use or intentionally disclose or permit to be known to anyone
outside of the Company any confidential matters of the Company, except with the
Company's prior written consent or as required by court order, law or subpoena,
or other legal compulsion to disclose, with appropriate confidentiality
obligations, or when reasonably necessary during the Executive's employment by
the Company for the Executive to perform his job duties to the Company. In the
event that the Executive shall be required by legal process to disclose any
confidential matter, the Executive shall give the Company ten days (or, if not
reasonably possible, such lesser number of days as is reasonably possible) prior
written notice prior to such disclosure.
b. Company Property. All information and documents relating to the Company
shall be the exclusive property of the Company and the Executive shall use
commercially reasonable best efforts to prevent any publication or disclosure
thereof. Upon termination of the Executive's employment with the Company, all
documents, records, reports, writings and other similar documents containing
confidential information, including copies thereof, and any other Company
property then in the Executive's possession or control shall be returned and
left with the Company.
c. Company Policy. The Executive will execute the Company's Annual
Questionnaire Relating to Conflicts of Interest, Xxxxxxx Xxxxxxx, Questionable
Payments, Political Contributions, Violations of Law and Confidentiality, all
the terms and provisions of which are incorporated herein as if fully set forth
herein.
4. Covenant Not To Compete; Non-Solicitation.
a. Covenant Not to Compete. The Executive agrees that during his
employment by the Company and, in the case of subparagraphs (iii) and (iv)
below, for the twenty-four months immediately following a Change in Control, the
Executive shall not either directly or indirectly, (i) whether by establishing a
new business or by joining an existing one, and whether as a principal,
employee, stockholder, officer, director, broker, agent, consultant, corporate
officer, licensor or in any other capacity, compete with the Company or any of
its affiliates in the seafood segment of the restaurant business or become
associated with a business enterprise which competes with any business operation
of the Company or its affiliates in the seafood segment of the restaurant
business, or any business operation of the Company or its affiliates in the
seafood segment of the restaurant business planned and known by the Executive
prior to the Executive's termination of employment, in the State of Florida and
any other geographical areas in which the Company then has market presence; (ii)
divert business from the Company or its affiliates or solicit, accept or procure
business from, divert the business of, or attempt to convert to other methods of
using the same or
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similar services or products as are provided by the Company or its affiliates,
any customer of the Company or its affiliates; (iii) interfere, in any manner,
with the Company's or its affiliates' customer and vendor/supplier
relationships; or (iv) solicit for employment, employ or otherwise engage the
services of, any employee or agent of the Company or its affiliates, or any
person who was an employee or agent of the Company or its affiliates within the
six months immediately preceding the cessation of Executive's employment with
the Company. A restaurant shall be deemed to be in the seafood segment of the
restaurant business if it holds itself out as primarily a purveyor of seafood by
means of the use of the term "seafood", "fish" or other term traditionally
associated with a food source which comes from the ocean waters (or any
variation on any of the foregoing) in its name or in its advertising.
b. Divisibility. The Executive and the Company intend that this covenant
not to compete shall be construed as a series of separate covenants, one for
each county and each product line. If, in any judicial proceeding, a court shall
refuse to enforce any one or more of the separate covenants deemed included in
subsection (a) of this Section 4, then such unenforceable covenant shall be
deemed severed from this Agreement for the purposes of such judicial proceeding
to the extent necessary to permit the remaining separate covenants to be
enforced.
c. Reasonableness. The Executive acknowledges that the territorial and
time limitations set forth in this Section 4 are reasonable and properly
required for the adequate protection of the business of the Company and its
subsidiaries and affiliates. In the event any such territorial or time
limitation is deemed to be unreasonable by a court of competent jurisdiction,
the Executive agrees to the reduction of the territorial or time limitation to
the area or period which such court deems reasonable.
d. Independent Obligation. The existence of any claim or cause of action
by the Executive against the Company shall not constitute a defense to the
enforcement by the Company of the foregoing restrictive covenants, but such
claim or cause of action shall be litigated separately.
5. Successors; Binding Agreement. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and shall be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or other designee or, if there be no such designee, to the Executive's estate.
This Agreement shall bind any successors, purchasers, subsidiaries, affiliates
and assigns of the Company.
6. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered against receipt therefore or
three days after being mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If to the Executive: Xxxxx Xxxx
00000 Xxxxxx Xxxxxxx Xxxxx
Xxxxx, XX 00000
If to the Company: Shells Seafood Restaurant, Inc.
00000 X. Xxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
With a copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officers of the Company as may be
specifically designated by its Board of Directors. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
8. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
9. Entire Agreement. With the exception of the terms and conditions of the
benefit and compensation plans applicable to the Executive, this Agreement sets
forth the entire agreement and understanding of the parties hereto in respect of
the subject matter contained herein, and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto or any predecessor of any party hereto.
10. Non-Assignability. This Agreement is entered into in consideration of
the personal qualities of the Executive and may not be, nor may any right or
interest hereunder be, assigned by him without the prior written consent of
Company. It is expressly understood and agreed that this Agreement, and the
rights accruing and obligations owed to the Company hereunder, and the
obligations to be performed by the Company hereunder, may be assigned by the
Company to any of its successors or assigns.
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11. Equitable Relief. The Executive recognizes that the services to be
rendered by him to the Company are of a special, unique, extraordinary and
intellectual character involving skill of the highest order and giving them
peculiar value, the loss of which cannot be adequately compensated for in
damages. In the event of a breach of this Agreement by the Executive, the
Company shall be entitled to injunctive relief or any other legal or equitable
remedies. The remedies provided in this Agreement shall be deemed cumulative and
the exercise of one shall not preclude the exercise of any other remedy at law
or in equity for the same event or any other event.
12. Litigation Expenses.
In the event of litigation in connection with or concerning the
interpretation, breach or enforcement of this Agreement, the prevailing party
shall be entitled to recover all costs and expenses incurred by such party in
connection therewith, including reasonable attorneys fees.
13. Choice of Law. This Agreement is to be governed by and interpreted
under the laws of the State of Florida without regard to its conflict of laws
principles.
14. Survival. The termination of the Executive's employment hereunder
shall not affect the enforceability of Sections 2, 3, 4, 5, 11, 12 and 13
hereof.
15. Section 409A. Notwithstanding anything herein to the contrary, to the
extent that amounts payable pursuant to Section 2(a) of this Agreement would be
subject to the additional 20% tax imposed under Section 409A of the Internal
Revenue Code of 1986, as amended (the "409 Affected Amount"), the Company shall
pay to the Executive that portion of the 409A Affected Amount otherwise due
after the latest date that it could be paid and still qualify for the "short
term deferral" exception under Prop. Treas. Reg. Section 1.409A-1(b)(4) (or any
successor thereto) in a single lump sum no later than the latest possible date
permitted under the "short term deferral" exception that would avoid such
additional 20% tax.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
17. Headings. The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
SHELLS SEAFOOD RESTAURANTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
/s/ Xxxxx Xxxx
Xxxxx Xxxx
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