Exhibit 10.01
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement (this "Agreement"), dated
as of June 23, 2004, by and among Shells Investment Partners,
LLC, a Florida limited liability company (the "Seller"), GCM
Shells Seafood Partners, LLC, a Delaware limited liability
company ("GCM"), and Xxxxxx Capital, L.P., a Delaware limited
partnership ("Xxxxxx") (each of GCM and Xxxxxx being sometimes
hereinafter referred to individually as a "Purchaser" and
collectively as the "Purchasers"). Each reference herein to the
Company shall be deemed also to include a reference to each
Subsidiary of the Company. All capitalized terms used but not
defined herein shall have the meanings given such terms in the
Securities Purchase Agreement (as hereafter defined).
W I T N E S S E T H:
WHEREAS, Shells Seafood Restaurants, Inc., a Delaware
corporation (the "Company"), the Seller and Banyon Investment,
LLC, a Delaware limited liability company ("Banyon"), are parties
to that certain Securities Purchase Agreement, dated as of
January 31, 2002 (the "Securities Purchase Agreement"), pursuant
to which, among other things, the Company issued and sold to the
Seller and Banyon (i) 15% senior secured promissory notes due
January 31, 2005 in the aggregate principal amount of $2,000,000
(each a "Note" and collectively, the "Notes") and (ii) detachable
warrants exercisable into an aggregate of 8,908,030 shares of the
Company's common stock, par value $0.01 per share (the "Common
Stock"), with an exercise price of $0.16 per share (each a
"Warrant" and collectively, the "Warrants");
WHEREAS, in connection with the transactions
contemplated by the Securities Purchase Agreement, the Company,
the Seller and Banyon entered into: (i) that certain Stock Pledge
Agreement, dated as of January 31, 2002 (the "Stock Pledge
Agreement"), pursuant to which the Company pledged to the Seller
and Banyon a security interest in all of the Company's right,
title and interest in and to the capital stock of its
subsidiaries to secure the obligations of the Company under the
Securities Purchase Agreement; (ii) that certain Security
Agreement, dated as of January 31, 2002 (the "Security
Agreement"), pursuant to which the Company granted to the Seller
and Banyon a security interest in certain assets of the Company
to secure the obligations of the Company under the Securities
Purchase Agreement; (iii) that certain Trademark Security
Agreement, dated as of January 31, 2002 (the "Trademark Security
Agreement"), pursuant to which the Company granted to the Seller
and Banyon a security interest in certain trademarks of the
Company to secure the obligations of the Company under the
Securities Purchase Agreement; and (iv) that certain Copyright
Security Agreement, dated as of January 31, 2002 (the "Copyright
Security Agreement" and together with the Stock Pledge Agreement,
the Security Agreement and the Trademark Security Agreement, the
"Security Documents"), pursuant to which the Company granted to
the Seller and Banyon a security interest in certain copyrights
of the Company to secure the obligations of the Company under the
Securities Purchase Agreement;
WHEREAS, in connection with the transactions
contemplated by the Securities Purchase Agreement, the Company,
the Seller, Banyon and certain stockholders of the Company
entered into that certain Investor Rights Agreement, dated as of
January 31, 2002 (the "Investor Rights Agreement"), pursuant to
which the Company agreed to provide to the Seller and Banyon
certain preemptive rights and certain rights to designate members
of the board of directors of the Company (the "Board");
WHEREAS, on April 12, 2004, Xxxxxxxxx X. Xxxxx
("Xxxxx") (each of Banyon and Xxxxx being sometimes hereinafter
referred to individually as a "Remaining Holder" and collectively
as the "Remaining Holders") purchased from Banyon the Note issued
to Banyon pursuant to the Securities Purchase Agreement in the
principal amount of $1,000,000 and designated as Note No. A-2
(the "Banyon Note");
WHEREAS, in conjunction with the sale of the Banyon
Note to Xxxxx, Banyon's right, pursuant to the Investor Rights
Agreement, to nominate three individuals to serve on the Board
has been transferred to Xxxxx;
WHEREAS, notwithstanding the sale of the Banyon Note to
Xxxxx, Xxxxxx has retained all rights with respect to the Warrant
exercisable into 4,454,015 shares of Common Stock, issued by the
Company to Banyon pursuant to the Securities Purchase Agreement
and designated as Warrant No. 002; and
WHEREAS, the Seller wishes to sell to the Purchasers,
and the Purchasers wish to purchase from the Seller, all of the
Seller's rights under: (i) the Note issued to the Seller pursuant
to the Securities Purchase Agreement in the principal amount of
$1,000,000 and designated as Note No. A-1 (the "Seller Note"),
other than accrued interest owed thereunder; (ii) Warrants
exercisable into 4,008,615 shares of Common Stock (the "Seller
Warrants"); (iii) the Securities Purchase Agreement; (iv) each of
the Security Documents; and (v) the Investor Rights Agreement.
NOW THEREFORE, in consideration of the foregoing and of
the representations, warranties, covenants and agreements set
forth herein, the parties agree as follows:
SECTION 1. SALE OF THE SECURITIES.
1.1. The Purchase. Subject to the terms and conditions set
forth in this Agreement, the Purchasers shall purchase (the
"Purchase") from the Seller and the Seller shall sell, transfer
and assign to the Purchasers: (i) the Seller Note; (ii) the
Seller Warrants; and (iii) all of the Seller's right, title and
interest in, to and under (A) the Securities Purchase Agreement
(as if it were a purchaser of Notes and Warrants thereunder), (B)
each of the Security Documents and (C) the Investor Rights
Agreement, all at a purchase price in the aggregate amount of
$1,000,000 (the "Purchase Price").
1.2. Seller's Retained Rights. Notwithstanding the
provisions of Section 1.1 above, the Seller shall retain the
following rights:
(a) All current interest due to the Seller under the
Seller Note through and including the Closing Date (as hereafter
defined), which shall be paid to the Seller at the Closing (as
hereafter defined) by the Company, either by cashier's check or a
wire transfer of immediately available funds (the "Current
Interest Payment");
(b) All deferred interest due to the Seller under the
Seller Note through and including the Closing Date, which shall
be paid to the Seller by the Company delivering to the Seller its
promissory note in the form attached hereto as Exhibit 1.2(b),
payable in twenty four (24) equal monthly installments, beginning
June 1, 2005 and continuing monthly thereafter (the "Deferred
Interest Note");
(c) The Deferred Interest Note shall be secured by the
Company granting to the Seller a mortgage on real estate owned
and used by the Company to operate a restaurant in Winterhaven,
Florida, in the form attached hereto as Exhibit 1.2(c) (the
"Deferred Interest Mortgage"); and
(d) Warrants exercisable into 445,400 shares of Common
Stock (the "Retained Warrants").
1.3. Consents and Acknowledgements.
(a) The Seller hereby expressly consents to the
transfer to the Purchasers of all of the Seller's right, title
and interest in, to and under the Seller Note, the Seller
Warrants, the Securities Purchase Agreement, the Investor Rights
Agreement and each of the Security Documents.
(b) The Seller hereby expressly acknowledges that,
following the Closing Date, the Purchasers shall have succeeded
to all of the Seller's rights under the Securities Purchase
Agreement (including, without limitation, all rights under the
Seller Note and the Seller Warrants), the Investor Rights
Agreement and each of the Security Documents.
(c) The Seller hereby expressly acknowledges that,
following the Closing Date, each Purchaser shall be deemed for
all purposes to be a "Purchaser" under each of the Securities
Purchase Agreement, the Investor Rights Agreement and each of the
Security Documents and shall have the right to enforce the
provisions of each such agreement as if such Purchaser were an
original party thereto.
(d) The Seller shall use best efforts to obtain from
each of the Remaining Holders, as soon as practicable following
the Closing, an agreement, for the benefit of the Purchasers,
confirming the matters set forth in Sections 1.3(a), 1.3(b) and
1.3(c) above.
1.4. The Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the
offices of Mintz, Levin, Cohen, Ferris, Glovsky and Popeo, P.C.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. on the
first business day following the satisfaction (or waiver) of all
the conditions set forth in Sections 4 and 5 (but no later than
June 23, 2004) or at such other time or place or on such other
date as the Seller and the Purchasers may mutually determine
(such date, the "Closing Date").
1.5. Deliveries at the Closing. The following deliveries
will be made by the parties at the Closing:
(a) the Seller shall deliver to the Company for
cancellation the original Seller Note;
(b) the Company shall issue to the Purchasers two new
promissory notes in the same form as the Seller Note, one to GCM
in the original principal amount of $400,000 and the other to
Xxxxxx in the original principal amount of $600,000;
(c) the Seller shall deliver to the Company for
cancellation the original Warrant exercisable into 4,454,015
shares of Common Stock, issued by the Company to the Seller
pursuant to the Securities Purchase Agreement and designated as
Warrant No. 001;
(d) the Company shall issue to the Purchasers the
Seller Warrants exercisable into an aggregate of 4,008,615 shares
of Common Stock and designated as Warrants No. 003, 004 and 005
as follows: (1) a Warrant exercisable into 668,103 shares of
Common Stock will be issued in the name of Xxxxxxxx Capital
Management, LLC; (2) a Warrant exercisable into 1,068,964 shares
of Common Stock will be issued to GCM; and (3) a Warrant
exercisable into 2,271,548 shares of Common Stock will be issued
to Xxxxxx;
(e) the Company shall issue to the Seller the Retained
Warrants exercisable into 445,400 shares of Common Stock and
designated as Warrant No. 005;
(f) the Seller shall deliver to the Purchasers and the
Company evidence of the resignation of all of the Seller's
nominees to the Board;
(g) the Company shall deliver to the Purchasers
evidence of the appointment of three (3) nominees of the
Purchasers to the Board pursuant to Section 4(b)(ii) of the
Investor Rights Agreement;
(h) the Company shall deliver to the Purchasers
evidence that all of the security interests in the collateral
described in each of the Security Documents have been perfected
(other than mortgages on the Company's real estate and
assignments of the Company's leasehold interests);
(i) the Company shall deliver to the Seller the
Current Interest Payment;
(j) the Company shall deliver to the Seller the
Deferred Interest Note;
(k) the Company shall deliver to the Seller the
Deferred Interest Mortgage; and
(l) the Seller shall deliver to the Purchasers an
assignment of all of the Seller's right, title and interest in,
to and under (i) the Securities Purchase Agreement, (ii) each of
the Security Documents and (iii) the Investor Rights Agreement..
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Purchasers as
follows:
2.1. Authorization of Agreement, etc.
(a) Authorization of Agreement. The execution,
delivery, and performance of this Agreement and the other
documents referenced herein to which the Seller is a party, and
the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary action by the
Seller.
(b) No Conflict. The execution, delivery, and
performance by the Seller of this Agreement or any other
documents referenced herein to which the Seller is a party, and
the consummation of the transactions contemplated hereby and
thereby, will not (i) violate the organizational documents of the
Seller, (ii) violate any order, judgment or decree of any court
or other governmental agency binding on the Seller or any Assets
of the Seller, (iii) violate any provision of law or statute
applicable to the Seller, (iv) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Seller or
pursuant to which any of its Assets are bound or (v) require any
approval or consent of any Person under any Contractual
Obligation of the Seller, except for such approvals or consents
as have been or will be obtained on or before the Closing Date.
(c) Governmental Consents. The execution, delivery,
and performance by the Seller of this Agreement and the other
documents referenced herein to which the Seller is a party, and
the consummation of the transactions contemplated hereby and
thereby, do not and will not require any registration or filing
with, consent or approval of, or notice to, or other action
relating to, with or by, any Governmental Authority.
(d) Due Execution and Delivery; Binding Obligations.
This Agreement and the other documents referenced herein to which
the Seller is a party have been duly executed and delivered by
the Seller. Each of this Agreement and the other documents
referenced herein to which the Seller is a party is the legally
valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights
generally and subject to the availability of equitable remedies,
whether considered in a proceeding at law or in equity.
2.2. Title to Seller Note and Seller Warrants. The Seller
has good legal title to the Seller Note and the Seller Warrants,
and has the full legal right, power and authority to sell, assign
and transfer complete ownership in the Seller Note and the Seller
Warrants to the Purchasers, free and clear of all liens, claims,
restrictions, encumbrances, charges, options or rights of third
parties with respect thereto. Upon the execution of this
Agreement and the consummation of the transactions contemplated
hereby, the Purchasers shall have complete ownership of the
Seller Note and the Seller Warrants, free and clear of all liens,
claims, restrictions, encumbrances, charges, options or rights of
third parties with respect thereto.
2.3. Independent Due Diligence Investigation. The Seller
has relied solely upon the independent investigations made by it
and its representatives in making a decision to sell the Seller
Note and the Seller Warrants and has a full understanding and
appreciation of the risks inherent in such a highly speculative
transaction. In connection with such investigation, the Seller
and its representatives and advisers, if any, (i) have been given
an opportunity to ask, and have to the extent Seller considered
necessary, asked questions of, and have received answers from,
officers of the Company concerning the Seller Note and the Seller
Warrants and the affairs of the Company and (ii) have been given
or afforded access to all documents, records, books and
additional information which Seller has requested regarding such
matters.
2.4. Sophistication. The Seller understands that the
Purchasers and/or their affiliates may possess non-public
information regarding the Company and the Seller Note and the
Seller Warrants not known or available to the Seller which, if
the Seller had known, would be considered by the Seller as
material to its decision to sell the Seller Note and the Seller
Warrants. The Seller further agrees that neither the Purchasers
nor their affiliates shall have any liability to the Seller in
respect of, and the Seller hereby waives and releases the
Purchasers and their affiliates from all claims which the Seller
might otherwise have with respect to, the non-disclosure of such
non-public information before or after the date hereof. The
Seller represents that it is a highly sophisticated investor
which, in securities maters, is able to make determinations with
respect to securities based upon the advice and abilities of its
advisers and employees.
2.5. Brokers. The Seller has not incurred, and the Seller
will not incur or cause the Purchasers to incur, directly or
indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with the
transactions contemplated by this Agreement and the transactions
contemplated hereby.
2.6. Litigation. There is no litigation or order affecting
the Seller which could reasonably be expected to adversely affect
or restrict the Seller's ability to consummate the transactions
contemplated by this Agreement or any of the transactions
contemplated hereby.
2.7. No Defaults. To the best knowledge of the Seller, each
of the Securities Purchase Agreement, the Security Documents and
the Investor Rights Agreement is in full force and effect, the
Seller is not in default under any of the provisions of such
agreements and, to the best knowledge of the Seller, neither the
Company nor either of the Remaining Holders is in default under
any of the provisions of such agreements.
2.8. Disclosure. No representation or warranty of the
Seller contained in this Agreement contains an untrue statement
of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were
made.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser represents and warrants to the Seller as
follows:
3.1. Authorization of Agreement, etc.
(a) Authorization of Agreement. The execution,
delivery, and performance of this Agreement and the other
documents referenced herein to which the Purchaser is a party,
and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary action by
such Purchaser.
(b) No Conflict. The execution, delivery, and
performance by the Purchaser of this Agreement or any other
documents referenced herein to which such Purchaser is a party,
and the consummation of the transactions contemplated hereby and
thereby, will not (i) violate the organizational documents of
such Purchaser, (ii) violate any order, judgment, or decree of
any court or other governmental agency binding on such Purchaser
or any Assets of such Purchaser, (iii) violate any provision of
law or statute applicable to such Purchaser, (iv) conflict with,
result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of such
Purchaser or pursuant to which any of its Assets are bound or (v)
require any approval or consent of any Person under any
Contractual Obligation of such Purchaser, except for such
approvals or consents as have been or will be obtained on or
before the Closing Date.
(c) Governmental Consents. The execution, delivery,
and performance by the Purchaser of this Agreement and the other
documents referenced herein to which such Purchaser is a party,
and the consummation of the transactions contemplated hereby and
thereby, do not and will not require any registration or filing
with, consent or approval of, or notice to, or other action
relating to, with or by, any Governmental Authority.
(d) Due Execution and Delivery; Binding Obligations.
This Agreement and the other documents referenced herein to which
the Purchaser is a party have been duly executed and delivered by
such Purchaser. Each of this Agreement and the other documents
referenced herein to which the Purchaser is a party is the
legally valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its
respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating
to or limiting creditors' rights generally and subject to the
availability of equitable remedies, whether considered in a
proceeding at law or in equity.
3.2. Brokers. The Purchaser has not incurred, and the
Purchaser will not incur or cause the Seller to incur, directly
or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with the
transactions contemplated by this Agreement and the transactions
contemplated hereby.
3.3. Litigation. There is no litigation or order affecting
the Purchaser which could reasonably be expected to adversely
affect or restrict such Purchaser's ability to consummate the
transactions contemplated by this Agreement or any of the
transactions contemplated hereby.
3.4. Investment; Securities Laws. The Purchaser understands
that the Seller Note and the Seller Warrants are characterized as
"restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Seller in a
transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain
limited circumstances. In this connection, the Purchaser is
familiar with SEC Rule 144, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. The Purchaser acknowledges that its investment in
the Seller Note and the Seller Warrants may be an illiquid
investment requiring it to bear the economic risk of the
investment for an indefinite period and that the Company may not
be able to comply with the requirements of Rule 144 in the
future.
3.5. Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Regulation D under the Securities
Act, and it is acquiring the Seller Note and the Seller Warrants
for the purpose of investment and not with a view to the
distribution thereof, and it has no present intention of selling,
negotiating, or otherwise disposing of the Seller Note or the
Seller Warrants; provided that the disposition of such
Purchaser's property shall at all times be and remain within its
control.
SECTION 4. CONDITIONS TO THE PURCHASERS' OBLIGATION TO CLOSE.
The Purchasers' obligation to purchase the Seller Note
and the Seller Warrants at the Closing is subject to the
fulfillment at or prior to the Closing of the following
conditions (any of which may be waived by the Purchasers):
4.1. Representations and Warranties Correct. The
representations and warranties made by the Seller in Section 2 of
this Agreement shall be true and correct in all material respects
(disregarding for these purposes any materiality or corollary
qualifications contained therein) as of the time of the Closing
with the same force and effect as if made at such time.
4.2. Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Seller at or
prior to the Closing shall have been performed or complied with.
4.3. Material Adverse Effect. There shall have been no
Material Adverse Effect during the period from the date of this
Agreement to the Closing.
4.4. No Order or Litigation. (a) No governmental entity
shall have enacted, issued, promulgated, enforced or entered any
law or order which is in effect and has the effect of making any
of the transactions contemplated by this Agreement or any of the
other documents contemplated hereby illegal or otherwise
restraining or prohibiting consummation of the transactions
contemplated hereby or thereby, and (b) there shall be no
litigation pending, that is reasonably expected to be successful,
before any governmental entity of competent jurisdiction, seeking
a remedy that would have the effect of the foregoing.
4.5. Board Membership. The Seller shall have delivered to
the Purchasers evidence of the resignation of all of the Seller's
nominees to the Board and the Company shall have delivered to the
Purchasers evidence of the appointment of three (3) nominees of
the Purchasers to the Board pursuant to Section 4(b)(ii) of the
Investor Rights Agreement.
4.6. Security Interests. The Company shall have delivered
to the Purchasers evidence that all of the security interests in
the collateral described in each of the Security Documents have
been perfected (other than mortgages on the Company's real estate
and assignments of the Company's leasehold interests).
4.7. Deliveries. The Seller shall have delivered to the
Purchasers the original Seller Note (accompanied by such evidence
of the transfer thereof to the Purchasers as the Purchasers shall
reasonably request), the Company shall have issued to the
Purchasers the Seller Warrants, and each of the Company and the
Seller shall have executed this Agreement.
4.8. Opinion of Counsel. The Purchasers shall have received
from Xxxx Xxxx Xxxxxxx Xxxxxx & Xxxx, P.A., counsel to the
Seller, a legal opinion addressed to the Purchasers, dated the
Closing Date, in form and substance satisfactory to the
Purchasers.
4.9. Compliance Certificates. The Seller shall have
delivered to the Purchasers a certificate of the Seller, executed
by the Chief Executive Officer thereof, dated the Closing Date,
and certifying as to (a) the matters set forth in Section 4.1 and
(b) the fulfillment of the conditions specified in Sections 4.2,
4.3, 4.4, 4.5 and 4.6.
SECTION 5. CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE.
The obligations of the Seller hereunder are subject to
the fulfillment at or prior to the Closing of the following
conditions (any of which may be waived by the Seller):
5.1. Representations and Warranties Correct. The
representations and warranties made by the Purchasers in Section
3 of this Agreement shall be true and correct in all material
respects (disregarding for these purposes any materiality or
corollary qualifications contained herein) as of the time of
Closing with the same force and effect as if made as of such
time.
5.2. Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchasers at
or prior to the Closing shall have been performed or complied
with in all material respects.
5.3. Compliance Certificate. The Purchasers shall have
delivered to the Seller a certificate executed by the Purchasers,
dated the Closing Date, and certifying as to the fulfillment of
the conditions specified in Sections 5.1 and 5.2.
5.4. No Order or Litigation. (a) No governmental entity
shall have enacted, issued, promulgated, enforced or entered any
law or order which is in effect and has the effect of making any
of the transactions contemplated by this Agreement or any of the
other documents contemplated hereby illegal or otherwise
restraining or prohibiting consummation of the transactions
contemplated hereby or thereby, and (b) there shall be no
litigation pending, that is reasonably expected to be successful,
before any governmental entity of competent jurisdiction, seeking
a remedy that would have the effect of the foregoing.
5.5. Deliveries. The Company shall have issued to the
Seller the Retained Warrants, the Deferred Interest Note and the
Deferred Interest Mortgage and shall have paid to the Seller the
Current Interest Payment, the Purchasers shall have paid to the
Seller the Purchase Price, and each of the Purchasers and the
Seller shall have executed this Agreement.
SECTION 6. COVENANTS.
6.1. Taking of Necessary Action. Each of the parties hereto
shall use commercially reasonable efforts promptly to take or
cause to be taken all action and promptly to do or cause to be
done all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the other
documents contemplated hereby.
6.2. Transfer Taxes. The Company shall be responsible for
the payment of documentary and intangible taxes payable in
connection with the execution and delivery of the Deferred
Interest Note and Deferred Interest Mortgage.
6.3. Modification of Warrants. To the extent that any of
the Seller Warrants are modified to extend the exercise dates or
to lower the exercise prices thereof at any time prior to the
exercise of the Seller Warrants, the Company will modify the
Retained Warrants accordingly.
6.4. Lock-Up Agreement. The Seller hereby agrees that from
the date hereof and continuing to and including the date that is
365 days after the Closing Date, the Seller will not, without the
prior written consent of the Purchasers, directly or indirectly,
(i) offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, the Retained Warrants (other than by
exercise thereof) or any shares of Common Stock underlying the
Retained Warrants (the "Restricted Securities"), (ii) enter into
any swap, hedge or similar agreement or arrangement that
transfers, in whole or in part, the economic risk of ownership of
the Restricted Securities or (iii) engage in any short selling of
the Restricted Securities.
SECTION 7. TERMINATION.
7.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time
prior to the Closing Date:
(a) by mutual written consent of each of the parties
hereto;
(b) by any of the parties hereto if any governmental
entity with jurisdiction over such matters shall have issued an
order restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order shall
have become final and non-appealable;
(c) by any of the parties hereto, by giving written
notice to the other parties, if the Closing shall not have
occurred on or prior to June 23, 2004, provided that the
terminating party is not in material breach of its obligations
under this Agreement;
(d) by any of the parties hereto, if there shall have
been a breach by any of the other parties of any of its
representations, warranties, covenants or agreements contained
herein and such breach would, if not cured, cause any of the
conditions contained in Section 4 or 5, as applicable, not to be
satisfied and such breach has not been cured to the reasonable
satisfaction of the other party within 15 days after receiving
written notice thereof.
7.2. Effect on Obligations. Termination of this Agreement
pursuant to Section 7.1 shall terminate all obligations of the
parties hereunder, except for the obligations under Sections 9.6,
9.9, 9.11, 9.12 and this Section 7.2; provided, however, that
nothing herein shall relieve the defaulting or breaching party
from any liability to the other parties hereto.
SECTION 8. SURVIVAL; INDEMNITY.
8.1. Survival. All representations and warranties hereunder
shall survive the Closing for a period of 12 months and shall in
no way be affected by any knowledge possessed by, or
investigation of the subject matter thereof made by or on behalf
of, the Purchasers; provided, however, that the representations
and warranties set forth in Section 2.2 shall survive
indefinitely. All statements contained in any Disclosure
Schedule to this Agreement or in any certificate or other
instrument delivered by the Seller pursuant to Section 4 or by
the Purchasers pursuant to Section 5 shall constitute
representations and warranties by such party under this
Agreement. All covenants and agreements contained herein shall
survive indefinitely.
8.2. Indemnification. (a) The Seller shall indemnify,
defend and hold harmless the Purchasers, their affiliates, and
each of their respective officers, directors, partners (and the
partners of such partners), managing directors, employees,
agents, advisors, consultants, representatives, successors and
assigns (including any transferee of the Seller Note and the
Seller Warrants) from and against all Losses incurred or suffered
by any of the foregoing (whether incurred or suffered directly or
indirectly through ownership of the Seller Note or the Seller
Warrants) arising out of, relating to or resulting from (i) any
breach of any of the representations or warranties made by the
Seller in this Agreement or in any certificate or other
instrument delivered pursuant hereto, and (ii) any breach of any
of the covenants or agreements made by the Seller in this
Agreement or in any certificate or other instrument delivered
pursuant hereto.
(b) For purposes hereof, "Losses" shall mean each and
all of the following items: claims, losses, liabilities,
obligations, payments, actual and punitive damages, charges,
judgments, fines, penalties, amounts paid in settlement, costs
and expenses (including, without limitation, interest which may
be imposed in connection therewith, costs and expenses of
investigation and fees, expenses and disbursements of counsel,
consultants and other experts).
(c) The Purchasers shall indemnify, defend and hold
harmless the Seller from and against all Losses incurred or
suffered by any of the foregoing arising out of, relating to or
resulting from any breach of any of the representations,
warranties, covenants or agreements made by the Purchasers in
this Agreement.
(d) Any claim for indemnification pursuant to this
Section 8.2 must be made before the expiration of the applicable
survival periods set forth in Section 8.1. No party shall be
entitled to indemnification against a Loss arising from the
breach of any representations or warranties of any other party
unless the party seeking indemnification (the "indemnified
party") shall have given to the party from whom indemnification
is sought (the "indemnifying party") a claim notice relating to
such Loss (a "Claim Notice") prior to expiration of the
representation or warranty upon which the claim is based. The
written Claim Notice shall be given reasonably promptly after the
indemnified party becomes aware that a claim for indemnification
may be warranted, and shall state in reasonable detail (to the
extent known) the nature of the claim. The failure of any
indemnified party to give a Claim Notice shall not relieve the
indemnifying party of its obligations under this Section 8.2,
except to the extent that the indemnifying party is actually
materially prejudiced by failure to give such Claim Notice. The
indemnifying party may, through counsel of its own choosing and
reasonably satisfactory to the indemnified party, assume the
defense thereof or other indemnification obligation with respect
thereto; provided, however, that any indemnified party shall be
(a) entitled to participate in any such claim with counsel of its
own choice but at its own expense and (b) shall be entitled to
participate in any such claim with counsel of its own choice at
the expense of the indemnifying party if (i) the indemnifying
party fails to notify the indemnified party in writing, within 15
days after delivery of the Claim Notice, that the indemnifying
party will indemnify the indemnified party from and against all
Losses the indemnified party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the claim,
(ii) the indemnifying party fails to provide the indemnified
party with evidence acceptable to the indemnified party that the
indemnifying party will have the financial resources to defend
against the claim or proceeding and fulfill its indemnification
obligations hereunder, (iii) the indemnifying party fails to
defend diligently the action or proceeding within 10 days after
receiving notice of such failure from such indemnified party;
(iv) such indemnified party reasonably shall have concluded (upon
advice of its counsel) that there may be one or more legal
defenses available to such indemnified party or other indemnified
parties which are not available to the indemnifying party; or (v)
if such indemnified party reasonably shall have concluded (upon
advice of its counsel) that, with respect to such claims, the
indemnified party and the indemnifying party may have different,
conflicting, or adverse legal positions or interests. The
indemnifying party shall not, without the written consent of the
indemnified party, which shall not be unreasonably withheld or
delayed, settle or compromise any pending or threatened
Litigation or claim in respect of which indemnification may be
sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) or consent to
the entry of any judgment (i) which does not, to the extent that
an indemnified party may have any liability with respect to such
action or claim, include as an unconditional term thereof the
delivery by the claimant or plaintiff to the indemnified party of
a written release from all liability in respect of such action or
claim, (ii) which includes any statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of any
indemnified party, or (iii) in any manner that involves any
injunctive relief against the indemnified party or may materially
and adversely affect the indemnified party. The indemnified
party may not compromise or settle any claim without the prior
written consent of the indemnifying party (which consent shall
not be unreasonably withheld or delayed), unless the sole relief
granted is equitable relief for which the indemnifying party
would have no liability or to which the indemnifying party would
not be subject.
(e) Except in the case of fraud, if the Closing
occurs, the indemnification provided in this Section 8.2 shall be
the sole and exclusive remedy for any inaccuracy or breach of any
representation or warranty made by any of the parties herein and
the parties shall pursue applicable remedies only against the
other parties hereto.
SECTION 9. MISCELLANEOUS.
9.1. Amendments and Waivers; Remedies.
(a) This Agreement and any of the provisions hereof
may be amended, waived (either generally or in a particular
instance and either retroactively or prospectively), modified or
supplemented, in whole or in part, only by written agreement
signed by each of the parties hereto; provided, further, that,
the observance of any provision of this Agreement may be waived
in writing by the party that will lose the benefit of such
provision as a result of such waiver. The waiver on the part of
the Purchasers of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent
breach, except as otherwise explicitly provided for in such
waiver and shall be effective only to the extent specifically set
forth in such waiver. Except as otherwise expressly provided
herein, no failure on the part of the Purchasers to exercise, and
no delay in exercising, any right, power or remedy hereunder, or
otherwise available in respect hereof at law or in equity, shall
operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or remedy by such party preclude
any other or further exercise thereof or the exercise of any
other right, power or remedy.
(b) Any waiver, permit, consent or approval of any
kind or character on the part of any party with respect to any
breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement,
must be in writing signed by such party and shall be effective
only to the extent specifically set forth in such writing.
(c) Subject to the provisions of Section 8.2(f), all
remedies, either under this Agreement or by law or otherwise
afforded to the Purchasers, shall be cumulative and not
alternative, and any Person having any rights under any provision
of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of this
Agreement and to exercise all other rights granted by law, equity
or otherwise.
9.2. Defaults. A default by any party to this Agreement in
such party's compliance with any of the conditions or covenants
hereof or performance of any of the obligations of such party
hereunder shall not constitute a default by any other party.
9.3. Further Assurances. At any time or from time to time
after the Closing, each of the parties hereto shall do and
perform, or cause to be done and performed, all further acts and
things, and shall execute and deliver all other agreements,
certificates, instruments, and documents, as any other party
hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and to evidence or
effectuate the consummation of the transactions contemplated
hereby.
9.4. Binding Effect; Assignment; No Third Party
Beneficiaries. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by each of the parties hereto
and their respective successors, heirs, personal representatives
and permitted assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned
without the prior written consent of all of the other parties to
this Agreement. After the Closing, subject to compliance with
applicable securities laws, each Purchaser may transfer all or
part of the securities acquired by it hereunder and may, in its
discretion, assign all or part of its rights and obligations
under this Agreement.
9.5. Entire Agreement. This Agreement and the other
agreements, certificates and documents referred to herein, or
delivered pursuant hereto which form a part hereof, constitute
the entire agreement and supersede all prior agreements and
understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
9.6. Notices. Unless otherwise provided herein, all
notices, requests, demands, claims and other communications
provided for under the terms of this Agreement shall be in
writing. Any notice, request, demand, claim or other
communication hereunder shall be sent by (i) personal delivery
(including receipted courier service) or overnight delivery
service, (ii) facsimile during normal business hours, with
confirmation of receipt and with a confirmatory copy sent by a
different means within three business days of such notice, to the
number indicated, (iii) reputable commercial overnight delivery
service courier or (iv) registered or certified mail, return
receipt requested, postage prepaid and addressed to the intended
recipient as set forth below:
(i) If to the Purchasers:
Xxxxxxxx Capital Management, LLC
1325 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Telecopier No.: (000) 000-0000
Xxxxxx Capital, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxx
Telecopier No.: (000) 000-0000
with copies to:
Mintz, Levin, Cohn, Ferris, Glovsky And Popeo, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx, Esq.
Telecopier No.: (000) 000-0000
(ii) If to the Seller:
Shells Investment Partners, LLC
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
with copies to:
Xxxx Xxxx Xxxxxxx Xxxxxx & Xxxx, P.A.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
All notices, requests, consents and other
communication, pursuant to this Section 9.6 shall be deemed to
have been given when received. Any party may change its
facsimile number or its address to which notices, requests,
demands, claims and other communications hereunder are to be
delivered by giving the other parties hereto notice in the manner
then set forth.
9.7. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original instrument, but all such counterparts together shall
constitute one and the same instrument.
9.8. General Interpretive Principles; Certain Definitions.
(a) Whenever used in this Agreement, except as
otherwise expressly provided or unless the context otherwise
requires, any noun or pronoun shall be deemed to include the
plural as well as the singular and to cover all genders. The
headings of the sections, paragraphs, subparagraphs, clauses and
subclauses of this Agreement are for convenience of reference
only and shall not in any way affect the meaning or
interpretation of any of the provisions hereof. Unless otherwise
specified, the terms "hereof," "herein" and similar terms refer
to this Agreement as a whole (including the exhibits, schedules
and disclosure statements hereto), and references herein to
Sections refer to Sections of this Agreement. Words of inclusion
shall not be construed as terms of limitation herein, so that
references to "include," "includes" and "including" shall not be
limiting and shall be regarded as references to non-exclusive and
non-characterizing illustrations.
(b) The term "Material Adverse Effect" shall mean a
material adverse effect on the Company and its Subsidiaries,
taken as a whole, and the term "material" shall mean material to
the business, assets, liabilities, prospects, condition
(financial or otherwise) or results of operation of the Company
and its Subsidiaries taken as a whole. The term "Person" shall
mean any individual, corporation, partnership, limited liability
company, association, trust or other entity or organization,
including a governmental entity. The term "Subsidiary" shall
mean each corporation, partnership, limited liability company or
other Person of which shares of capital stock or other equity
interests having ordinary voting power to elect a majority of the
board of directors or other managers of such corporation or other
Person are at the time owned, directly or indirectly, or the
management of which is otherwise controlled, directly or
indirectly, or both, by the Company. The term "Company" shall
mean Shells Seafood Restaurants, Inc., a Delaware corporation,
and each Subsidiary thereof.
9.9. Governing Law; Venue; Service of Process; Waiver of
Jury Trials.
(a) Governing Law. This Agreement shall be construed
and enforced in accordance with, and the rights and obligations
of the parties hereto shall be governed by, the laws of the State
of New York, without giving effect to the conflicts of law
principles thereof.
(b) Venue and Service of Process. By execution and
delivery of this Agreement, each of the parties hereto hereby
irrevocably and unconditionally (i) consents to submit to the
exclusive jurisdiction of the courts of the State of New York in
New York county and the United States District Court for the
Southern District of New York (collectively, the "Selected
Courts") for any action or proceeding arising out of or relating
to this Agreement and the transactions contemplated hereby, and
agrees not to commence any action or proceeding relating thereto
except in the Selected Courts, provided, that, a party may
commence any action or proceeding in a court other than a
Selected Court solely for the purpose of enforcing an order or
judgment issued by one of the Selected Courts; (ii) consents to
service of any process, summons, notice or document in any action
or proceeding by registered first-class mail, postage prepaid,
return receipt requested or by nationally recognized courier
guaranteeing overnight delivery in accordance with Section 9.6
hereof and agrees that such service of process shall be effective
service of process for any action or proceeding brought against
it in any such court, provided, that, nothing herein shall affect
the right of any party hereto to serve process in any other
manner permitted by law; (iii) waives any objection to the laying
of venue of any action or proceeding arising out of this
Agreement or the transactions contemplated hereby in the Selected
Courts; and (iv) waives and agrees not to plead or claim in any
court that any such action or proceeding brought in any such
Selected Court has been brought in an inconvenient forum.
(c) Waiver of Jury Trial. With respect to any action
or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, each of the parties hereby
irrevocably, to the extent not prohibited by applicable law that
cannot be waived, waives, and covenants that it will not assert
(whether as plaintiff, defendant or otherwise), any right to
trial by jury in any action arising in whole or in part under or
in connection with this Agreement or the transactions
contemplated hereby, whether now existing or hereafter arising,
and whether sounding in contract, tort or otherwise, and agrees
that any of them may file a copy of this paragraph with any court
as written evidence of the knowing, voluntary and bargained-for
agreement among the parties irrevocably to waive its right to
trial by jury in any action or proceeding whatsoever between them
relating to this Agreement or the transactions contemplated
hereby. Such action or proceeding shall instead be tried in a
Selected Court by a judge sitting without a jury.
9.10. Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law but
the invalidity or unenforceability of any provision or portion of
any provision of this Agreement in any jurisdiction shall not
affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability
of this Agreement, including that provision or portion of any
provision, in any other jurisdiction. In addition, should a
court or arbitrator determine that any provision or portion of
any provision of this Agreement is not reasonable or valid,
either in period of time, geographical area, or otherwise, the
parties hereto agree that such provision should be interpreted
and enforced to the maximum extent which such court or arbitrator
deems reasonable or valid.
9.11. Publicity. No public release or announcement or other
disclosure concerning the transactions contemplated hereby shall
be made by any party, whether prior to or after the Closing,
without the prior consent of each other party hereto (which
consent shall not be unreasonably withheld), except as such
release or announcement may be required by law, in which case the
party required to make the release or announcement shall give
notice to and consult with the other party in advance of such
issuance.
9.12. Transaction Expenses. All fees, costs and expenses
incurred by the parties hereto in connection with the
transactions contemplated hereby, including, without limitation,
fees and disbursements of counsel, financial advisors,
accountants and consultants (the "Transaction Expenses") shall be
paid by the party incurring such Transaction Expenses.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
The Seller:
SHELLS INVESTMENT PARTNERS, LLC,
a Florida limited liability company
By: /s/ Xxxx Xxxxxxxx
Title: Managing Member
The Purchasers:
GCM SHELLS SEAFOOD PARTNERS, LLC,
a Delaware limited liability company
By: /s/ Xxxx Xxxxxx
Title: Managing Member
XXXXXX CAPITAL, L.P.,
a Delaware limited partnership
By: /s/ Xxx Xxxx
Title: Managing Director
