Exhibit 10.56
EMPLOYMENT AGREEMENT
Agreement, dated July 1, 2003 (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 (the "Company"), and Xxxxxx Xxxxxxxx (the
"Executive"), currently residing at 0000 Xxxxx Xxxx Xxxxx,
Xxxxxxx Xxxxxxx, XX 00000.
WHEREAS, the parties desire to enter into this Agreement
in order to assure the Company of the services of the Executive
and to set forth the duties and compensation of the Executive,
all upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of
the mutual promises, representations and covenants contained
herein, the parties hereto agree as follows:
1. Duties. The Company shall employ the Executive,
and the Executive shall serve as the Chief Executive Officer and
President of the Company during the Employment Term (as
hereinafter defined). During the Employment Term, the Executive
shall perform such duties and functions as the Company's Board
of Directors shall from time to time determine and the Executive
shall comply in the performance of her duties with the policies,
and be subject to the direction, of the Board of Directors of
the Company. Except as may be expressly otherwise consented to
in writing by the Board of Directors, the Executive covenants
and agrees to and shall devote her full working time, attention
and efforts toward the performance of her duties and
responsibilities hereunder. The Executive shall not, directly
or indirectly, without the prior written consent of the
Company's Board of Directors, as owner, partner, joint venturer,
stockholder, employee, consultant, corporate officer or
director, engage or become financially interested in any other
duties or pursuits which interfere with the performance of her
duties hereunder, or which even if non-interfering, may be
inimical or contrary to the best interests of the Company.
During the Employment Term, the Executive shall reside, on a
full time basis, in either Hillsborough, Pinellas or Pasco
County, Florida.
2. Term; Severance.
a. Term. The term of this Agreement and the term of
employment (the "Employment Term") of the Executive shall
commence on July 1, 2003 and continue until June 30, 2005 (the
"Termination Date") unless sooner terminated in accordance with
the terms hereof; provided, however, that the Termination Date
(and, consequently, the Employment 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).
x. Xxxxxxxxx. In the event the Company terminates the
Executive's employment for any reason other than cause (as
defined in Section 5 hereof), the permanent disability (as
defined in Section 6 hereof) of the Executive, or the death of
the Executive, the parties agree that, provided Executive
executes a general release of all claims against the Company and
abides by all restrictive covenants of this Agreement including,
without limitation, the provisions relating to non-competition,
non-solicitation and confidentiality, Executive shall be
entitled to receive as severance pay the then effective base
salary of the Executive, for a period commencing on any such
date of termination and ending on the earlier of (i) the one-
year anniversary of such date or (ii) the date upon which
Executive commenced to be employed by another entity or person,
in all such instances, payable in equal installments in
accordance with the Company's normal salary payment policies.
Any amounts so paid to the Executive pursuant to the provisions
of this Section 2(b) shall be in lieu of any and all other
payments due and owing to the Executive under the terms of this
Agreement or otherwise. In the event that the Company terminates
Executive's employment for "cause" (as defined in Section 5
hereof), or due to the "permanent disability" of the Executive (
as defined in Section 6 hereof) or the death of the Executive,
or non-renewal of this Agreement, the Executive shall not be
entitled to receive any further payment hereunder other than for
accrued but unpaid compensation and except as may be
specifically otherwise provided in this Section 2(b) or pursuant
to any stock option granted to Executive by the Company.
3. Compensation.
a. Salary. In each of the two years of the Employment
Term, the Executive shall receive a base salary at the rate of
$275,000 per annum ("Base Salary"). The Executive's Base Salary
shall be payable in installments in accordance with the
Company's normal salary payment policies, and shall be subject
to such payroll deductions as are required by law or applicable
employee benefit programs.
b. Bonus. Executive shall be eligible for a bonus
of up to fifty percent (50%) of her Base Salary on an annual
basis, contingent upon the Executive achieving agreed upon
milestones to be determined by the Company's Board of Directors.
As the Company awards bonuses on an annual basis based upon the
Company's calendar year, any Bonus to be paid during the term of
this Agreement, will be reduced to take into account the fact
that the Executive did not work a full twelve month period
during any such bonus period. The milestones to be established
by the Company's Board of Directors for the Executive's 2003
bonus year will only consider the Company's performance after
the commencement of the Employment Term. All Bonuses, if any,
will be paid within fifteen (15) days of the date that the
Company receives its annual audited financial statements from
its independent certified public accountants for the then
applicable year.
c. Expenses. In addition to the Base Salary provided
for in Section 3(a) hereof, the Company shall reimburse the
Executive, upon presentation by the Executive of suitable
documented expense accounts, for any reasonable travel or other
out-of-pocket business expenses incurred by the Executive in
rendering the services hereunder on behalf of the Company and
which are incurred pursuant to the Company's expense
reimbursement policies. The Executive shall comply with
restrictions and shall keep records in compliance with the
Company's policy and procedures related to travel and
entertainment expenses, and as may be otherwise required for tax
or accounting purposes.
d. Stock Option Plan. The Executive shall participate
in the Company's 2002 Employee Stock Option Plan, as amended,
(the "Plan"). Under the Plan, Executive shall receive options
(the "Options") to purchase an aggregate of two percent (2%) of
the fully diluted shares (excluding however, any shares that may
be issued to Xxxxx Xxxx pursuant to stock options that he owns)
of the Company's common stock, $.01 par value per share (the
"Common Stock"), available for issuance under the Plan at an
exercise price (the "Exercise Price") equal to the per share
price of the Common Stock on the date of the grant (or, if
later, the first date that the Executive is employed by the
Company). Except as specifically provided otherwise herein, the
Option will vest over a two year period on an annual basis. Any
shares of Common Stock purchased by Executive through the
exercise of the Option (all such purchased shares being referred
to herein as the "Option Shares") shall be subject to the rights
and transfer restrictions reserved or imposed by Sections
3(d)(i) and 3(d)(ii) of this Agreement.
(i) Repurchase of Option Shares. The Company
shall have the right to repurchase any Option Shares owned by
the Executive at the time of the termination of her employment
with the Company or thereafter acquired, if applicable, in all
instances in the event the Common Stock is not then publicly
traded. The Company may exercise its right to repurchase Option
Shares by giving written notice of same to the Executive (or her
legal representative), with a copy as specified in Section 10
hereof, within one (1) year following the date on which the
Executive's employment with the Company is terminated. If the
Company exercises its repurchase right, the purchase and sale of
the Option Shares will occur at the Company's principal office
at the time and date specified in the Company's notice, which
shall be not less than ten (10) days nor more than sixty (60)
days after such exercise.
(ii) Transfer Restrictions. Except as otherwise
specifically provided herein, no Option Shares may be conveyed,
transferred, encumbered or otherwise disposed of at any time
when the Company's Common Stock is not then publicly traded;
provided, however, that upon the death of the Executive the
Option Shares may be conveyed by will or by the laws of descent
and distribution, subject, however, to the provisions of this
Agreement. Any certificates for shares covered by this
Agreement shall contain a legend which states that such shares
are subject to the transfer and other restrictions imposed by
this Agreement.
(iii) Purchase Price. In the event that the
Company exercises its repurchase rights the price payable by the
Company for the Option Shares will be equal to the product of
the fair market value of the Company in its entirely, and the
percent ownership of the Company represented by the Option
Shares ("Fair Market Value"). For this purpose, the "Fair Market
Value" of Option Shares will be determined as of the date of
exercise by the Company of its repurchase rights hereunder, so
long as such repurchase is consummated within sixty (60) days of
exercise. Fair Market Value shall be determined by a
nationally-recognized, independent accounting firm, which may be
the independent accountants regularly employed by the Company,
appointed by the Board and reasonably acceptable to the
Executive (or the estate or legal representative of the
Executive), in accordance with generally accepted practices and
standards. Notwithstanding the foregoing, (1) if the
Executive's employment is terminated for "cause" (as defined in
Section 5 hereof), then the price payable for the Option Shares
owned by the Executive will be equal to the lesser of (A) the
price the Executive paid therefore, and (B) the aggregate Fair
Market Value of the Option Shares determined in accordance with
the appraisal described above (the "Appraised Fair Market
Value").
(iv) Payment of Purchase Price. The Company may
pay the purchase price for the Option Shares repurchased
hereunder in a single sum or, at its option, in equal annual
installments over a period of not more than three (3) years;
provided, however, that in no event shall the Company be
obligated to repurchase any shares to the extent funds are not
legally available therefore under applicable law; and provided,
further, that any portion of an installment payment which was
not necessitated by such applicable laws (i.e., funds were
otherwise legally available to repurchase Option Shares), shall
bear interest at an annual rate equal to the prime rate charged
by Citibank N.A., with any such accrued interest being paid
together with such annual installment. The Company's purchase
money obligation, if any, will be evidenced by a promissory
note, which note may be prepaid in whole or in part at any time.
If applicable, the Company may credit against the purchase price
the amount, if any, of unpaid principal and interest on the
promissory note given by the Executive in connection with her
exercise of the Option shares.
e. Vacations. The Executive shall be entitled to up to
four weeks of paid vacation in each calendar year. The
Executive shall also be entitled to the same standard paid
holidays given by the Company to senior executives generally,
all as determined from time to time by the Board of Directors of
the Company or an appropriate committee thereof. Vacation time
shall not cumulate from year to year.
f. Automobile. During the Employment Term, the
Executive shall be entitled to an automobile allowance of $500
per month.
g. Life, Health and Disability Insurance. Executive
shall become eligible to participate in the Company's health
benefit program on the first day of her employment with the
Company and shall be entitled to the same health and disability
insurance paid for by the Company to senior executives
generally, all as determined from time to time by the Board of
Directors of the Company or an appropriate committee thereof.
The Company shall use its good faith efforts to obtain and pay
the premiums on a $500,000 term life insurance policy on the
Executive during the term of this Agreement provided that the
Executive can be insured and provided further that the premium
for such policy shall not exceed $1,000 per year. The life
insurance policy shall be owned by the Company and the
beneficiary shall be designated by the Executive.
h. Moving Allowance. The Company shall reimburse the
Executive for up to Thirty Thousand Dollars ($30,000) of the
expenses that she incurs in moving to Hillsborough County,
Florida. Such expenses shall include her moving expenses and
closing costs associated with the sale of the Executive's house
in Fairfax Station, Virginia.
4. Place of Performance. In connection with her
employment by the Company, and except for travel required for
Company business, the Executive shall be based at the principal
executive offices of the Company, presently located in the
Tampa, Florida area or, from time to time, at the discretion of
the Company, at other locations utilized by the Company which
are located within 100 miles of the Company's present executive
offices.
5. Termination by the Company or by Executive.
(a) Termination by the Company. The Company may
terminate Executive's employment at any time, upon notice by the
Company to the Executive, for cause or for any other reason
which would not constitute cause. Termination by the Company
for "cause" shall mean termination because of: (a) Executive's
refusal to perform, or continual neglect of, her duties or
obligations hereunder (other than breaches of the covenants set
forth in Sections 1, 7 and 8 hereof which events are governed by
clause (e) below), in any such instance which is materially and
demonstrably injurious to the Company and which neglect or
failure to act is not remedied within thirty (30) days after
written notice thereof to the Executive by the Company; (b)
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, (c) Executive's performance of any act or her failure
to act, for which if 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, (d) any
attempt by Executive to secure improperly any personal profit in
connection with the business of the Company or any of its
subsidiaries, which individually or in the aggregate is
materially and demonstrably injurious to the Company and which,
to the extent such material and demonstrable injury is capable
of being cured, is not remedied within thirty (30) days after
written notice thereof to the Executive by the Company, (e) any
breach by Executive of any of the terms of Section 1, 7 or 8 of
this Agreement, in any such instance which is materially
and demonstrably injurious to the Company and which breach is
not remedied within thirty (30) days after written notice
thereof to the Executive by the Company.
(b) Termination by the Executive. The Executive may
terminate her employment with the Company at any time, upon
notice by the Executive to the Company.
6. Death; Disability. If the Executive shall die or
become "permanently disabled" during the term of this Agreement,
this Agreement and all benefits hereunder shall terminate,
except that such termination shall not affect any vested rights
which the Executive may have at the time of her death pursuant
to any insurance or other death benefit plans or arrangements of
the Company, which rights shall continue to be governed by the
provisions of such plans and agreements. For the purposes of
this Agreement, the Executive shall be deemed to be "permanently
disabled" if, during the term hereof, because of ill health,
physical or mental disability, or for other causes beyond the
Executive's control, the Executive shall have been unable, or
unwilling, to perform the essential functions of her job
hereunder for ninety (90) consecutive days or for a total period
of one hundred twenty (120) days in any twelve month period
during the term of this Agreement, whether consecutive or not.
Notwithstanding anything to the contrary contained herein,
during any period that the Executive fails to perform the
essential functions of her job hereunder as a result of her
disability (but prior to the termination of this Agreement as a
result of such disability), (i) the Executive shall continue to
receive her full salary at the rate then in effect and all
benefits provided herein, provided that payments made to the
Executive pursuant to this Section 6 shall be reduced by the sum
of the amounts, if any, payable to the Executive at or prior to
the time of any such payment under any disability benefit
insurance, plan or program of, or provided by, the Company and
(ii) the Company shall have the right to hire any other
individual or individuals to perform such duties and functions
as the Company shall desire, including those duties heretofore
performed by the Executive.
7. Protection of Confidential Information.
a. Confidential Information. The Executive acknowledges
that her employment by the Company will, throughout the term of
this Agreement, bring her 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 she 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, when reasonably necessary for the Executive to
perform her job duties. In the event that Executive shall be
required by legal process to disclose any confidential matter,
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, 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.
8. Covenant Not To Compete; Non-Solicitation.
a. Covenant Not to Compete. The Executive agrees that
during her employment by the Company (which shall be deemed to
include the period during which the Executive is receiving any
severance payments, as set forth in Section 2 hereof) and for
the twenty-four months immediately following the Employment Term
(including any extensions thereof, as provided herein), 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; provided, however, that if
the Company terminates Executive's employment without cause (as
defined in Section 5 hereof), Executive shall not be subject to
the provisions of this Section 8; (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 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 8, 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 8 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.
9. 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 her
hereunder if she 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.
10. 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:
If to the Executive: Xxxxxx Xxxxxxxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
With a copy to: Xxxxxx X. XxXxxxx
Xxxx Xxxxxxx P.C.
0000 X Xxxxxx, XX
Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
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.
11. 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.
12. 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.
13. 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.
14. 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 her 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.
15. Equitable Relief. The Executive recognizes that
the services to be rendered by her hereunder 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.
16. Indemnification; Litigation Expenses.
(a) Indemnification. In addition to any
indemnification obligations the Company has or may have toward
the Executive under applicable law, the Company shall indemnify
the Executive for any and all costs, expenses, awards, claims,
judgments, attorneys' fees or any other damage or injury to the
Executive for the Executive's actual or alleged actions or
failure to act during her employment with the Company, in all
instances in a manner consistent with this Agreement and as
permitted by applicable law, including the Executive's
employment or serving at the request of the Company as an
officer or director of a subsidiary or affiliate of the Company.
(b) Litigation Expenses. In the event of litigation in
connection with or concerning the interpretation, breach of
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.
17. 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.
18. Representations And Agreements of the Executive.
The Executive represents and warrants that she is free to enter
into this Agreement and to perform the duties required
hereunder, and that there are no employment contracts or
understandings, restrictive covenants or other restrictions,
whether written or oral, preventing the performance of her
duties hereunder. The Executive agrees to submit to a medical
examination and to cooperate and supply such other information
and documents as may be required by any insurance company in
connection with the Executive's inclusion in any insurance or
fringe benefit plan or program as the Company shall be required
hereunder or shall determine from time to time to obtain, or in
connection with, in the Company's sole discretion, the Company's
obtaining life insurance for its benefit on the life of the
Executive.
19. Survival. The termination of the Executive's
employment hereunder shall not affect the enforceability of
Sections 2, 3, 7, 8, 9, 15, 16, 17 and 18 hereof.
20. 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.
21. 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.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
Shells Seafood Restaurants, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board of Directors
Executive
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
