EXHIBIT 99.2
200,000 Shares
[SHELLS LOGO]
Series A 5% Convertible Preferred Stock
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SUBSCRIPTION AGREEMENT
Shells Seafood Restaurants, Inc.
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Gentlemen:
The undersigned ("Subscriber") has received and reviewed a copy of the
confidential offering memorandum (together with the appendices thereto, the
"Offering Memorandum"), relating to the offering of shares of Series A 5%
Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred
Stock"), of Shells Seafood Restaurants, Inc., a Delaware corporation (the
"Company"). Subscriber understands that the Company is offering the Series A
Preferred Stock on the terms and in the manner described in the Offering
Memorandum. Certain defined terms in this Subscription Agreement have the
respective meanings set forth in the Offering Memorandum.
Subscriber desires to subscribe for and acquire the number of shares
of Series A Preferred Stock indicated below. Upon acceptance by the Company,
Subscriber understands that Subscriber will receive an executed counterpart of
this Subscription Agreement.
1. Subscription.
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Subscriber hereby subscribes to acquire _______________ shares of
Series A Preferred Stock on the terms and subject to the conditions set forth
herein.
2. Payment.
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Subscriber understands that for each share of Series A Preferred Stock
that Subscriber acquires, Subscriber must contribute to the Company its own
indebtedness (or the debt of one or more of its subsidiaries) owed to Subscriber
in the face amount of $10.00, and the total contribution of indebtedness by
Subscriber for the shares of Series A Preferred Stock that Subscriber is
acquiring is $______________________. Subscriber is tendering herewith all
evidence of that indebtedness, if any, and Subscriber acknowledges that upon
issuance to Subscriber of the shares of Series A Preferred Stock for which
Subscriber hereby subscribes, the indebtedness will be fully satisfied, and the
Company, its subsidiaries, and any guarantor will be released from any and all
liability for the indebtedness.
3. Acceptance by the Company.
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Subscriber understands and agrees that the Company shall have the
right to accept or reject this subscription. If this subscription is rejected
after Subscriber has delivered the evidence of indebtedness, all documents shall
be returned to Subscriber, and this Subscription Agreement shall be rendered
null and void, and of no further force or effect. This subscription shall be
deemed to be accepted by the Company only when it is signed by an appropriate
officer of the Company.
4. Representations and Warranties of the Subscriber.
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Subscriber hereby represents and warrants to the Company as follows:
(a) That the address set forth below is Subscriber's true and correct
address, and Subscriber has no present intention of becoming a resident of any
other state or jurisdiction;
(b) That Subscriber understands that the prospect of recovering any
significant portion of the Company's indebtedness to Subscriber is presently
bleak and that Subscriber believes that participating in a creditor workout plan
in this manner, even though risky and speculative, is an acceptable alternative
to any other remedies Subscriber may have to enforce the indebtedness;
(c) Subscriber acknowledges that Subscriber has received and reviewed
the Offering Memorandum, that Subscriber is acquiring Series A Preferred Stock
without being furnished any offering literature or prospectus other than the
Offering Memorandum, that Subscriber has reviewed the Offering Memorandum, that
this transaction has not been scrutinized by the United States Securities and
Exchange Commission (the "SEC") or by any administrative agency charged with the
administration of the securities laws of any state because of the limited number
of persons solicited and the private aspects of the offering, and that all
documents and records pertaining to this investment have been made available to
Subscriber and its representatives, including its attorney and its accountant;
(d) That Subscriber has relied only on the information contained in
the Offering Memorandum, and Subscriber has not relied on the advice of any
officer or other representative of the Company in making its decision to acquire
shares of Series A Preferred Stock;
(e) That Subscriber has such knowledge and experience in financial
and business matters that Subscriber is capable of evaluating the risks and
merits of an acquisition of shares of Series A Preferred Stock;
(f) That Subscriber is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933, as amended (the "Securities Act"), as
certified by Subscriber pursuant to the Investor Questionnaire attached hereto
as ▇▇▇▇▇ ▇.
(g) That Subscriber is acquiring the Series A Preferred Stock for its
own account, for investment purposes only, and not with a view toward the resale
or distribution thereof;
(h) No person has acted as Subscriber's Purchaser Representative in
connection with this Subscription Agreement;
(i) Subscriber understands that the offer and sale of the shares of
Series A Preferred Stock are made solely in connection with Subscriber's status
as a creditor of the Company or its subsidiaries, and that the offer and sale of
Series A Preferred Stock is being made only to a limited
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number of creditors who, like Subscriber, have a relationship of long-standing
duration with the Company and its affiliates;
(j) Subscriber has had opportunities to ask questions of, and receive
answers from the Company or a person or persons acting on its behalf, including
its officers and directors, concerning the terms and conditions of this
Subscription Agreement, the transactions contemplated hereby and described in
the Offering Memorandum, and the business affairs of the Company and related
matters;
(k) Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to in
subparagraph (j) hereof;
(l) Subscriber understands and acknowledges being advised that the
Series A Preferred Stock has not been and will not be registered under the
Securities Act or any applicable state securities law, and that the Series A
Preferred Stock will be issued to Subscriber pursuant to an exemption from
registration, which exemption is based in part on the warranties,
representations and covenants made herein;
(m) Subscriber understands and acknowledges being advised that the
Series A Preferred Stock may not be offered for sale, sold, or transferred by
Subscriber unless they are subsequently registered under the Securities Act and
any other applicable federal or state securities laws, or unless an exemption
from registration is available under those laws;
(n) Subscriber understands and acknowledges being advised that sales
of any of the Series A Preferred Stock (or the shares of Common Stock issuable
upon conversion of the Series A Preferred Stock) made in reliance on Rule 144
promulgated under the Securities Act may be made only if Rule 144 is applicable,
and in limited amounts in accordance with the terms and conditions contained in
Rule 144, and, in the case of securities to which Rule 144 is inapplicable, such
resales may require compliance with some other exemption under the Securities
Act, and further, that in accordance with the opinion of the SEC, persons who
wish to offer to sell "restricted securities" without complying with Rule 144
have a substantial burden of proof in establishing that an exemption from
registration is available for offers or sales;
(o) Subscriber acknowledges the placement on the certificate
representing the shares of Series A Preferred Stock the legend stating that the
shares of Series A Preferred Stock have not been registered under the Securities
Act or any other state securities laws and may not be sold or otherwise
transferred unless registered under all applicable laws or pursuant to an
exemption from registration;
(p) Subscriber is aware that (i) the consideration given for the
Series A Preferred Stock has been determined arbitrarily by the Company,
primarily based on its capital needs and debt structure; (ii) the Company has an
adverse financial and operating history; (iii) the business of the Company will
be managed by or under the direction of the directors, and the stockholders will
have no control or management rights with respect thereto; (iv) the assets of
the Company will not be diversified and will consist solely of its restaurant
business; and (v) there will be no public market for the Series A Preferred
Stock, and Subscriber may have to hold the Series A Preferred Stock until
liquidation of the Company;
(q) Neither the Company nor anyone acting on its behalf has
guaranteed or represented that Subscriber will realize a minimum return on its
investment, and Subscriber understands that Subscriber may lose its entire
investment in the Series A Preferred Stock.
5. Indemnification. Subscriber will indemnify and hold harmless the
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Company, its subsidiaries, its officers and directors, it and their affiliates,
and employees of all of the foregoing from and against all losses, damage,
liability, or expense, including attorneys' fees and costs that they may
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incur by reason of or in connection with any misrepresentation by Subscriber or
any breach of Subscriber's warranties or covenants under this Subscription
Agreement.
6. Governing Law. This Subscription Agreement shall be governed by and
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construed and enforced in accordance with the laws of the State of Florida,
excluding those provisions related to the conflict of laws of different
jurisdictions if the effect of the application of those provisions will be to
require the application of the laws of a jurisdiction other than Florida.
7. Headings. The section headings contained herein are solely for
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convenience of reference, are not a part hereof, and shall not affect the
meaning or interpretation of any terms hereof.
8. Binding Effect; Assignment. This Subscription Agreement shall bind and
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inure to the benefit of the parties hereto and their heirs, legal
representatives, successors, and permitted assignees, but this Subscription
Agreement shall not be assignable by either party without the prior written
consent of the other party.
9. Entire Agreement; Amendment. This Subscription Agreement contains the
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entire understanding of the parties with respect to matters contained herein;
supersedes all prior negotiations, letters, and understandings relating to the
subject matter hereof; and cannot be amended, supplemented, or modified, except
by a written instrument signed by the party against whom enforcement of any
amendment, supplement, or modification is sought.
10. No Waiver. No waiver of any breach of any provision of this
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Subscription Agreement shall be deemed a waiver of any subsequent breach,
whether similar or dissimilar to that waived.
11. Construction. As used herein, the masculine gender shall be deemed to
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include the feminine and the neuter, the singular number shall be deemed to
include the plural, and vice-versa.
12. Title. Subscribers desire to take title to its interest as follows
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(print name exactly as you wish the title to read on the certificate
representing the Series A Preferred Stock):
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13. Transferability. Subscriber agrees not to transfer or assign this
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Subscription Agreement, or any of Subscriber's interest herein.
14. Miscellaneous.
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(a) All notices or other communications given or made hereunder
shall be in writing and shall be delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, to the
respective parties at the addresses set forth in this Subscription
Agreement. Each party may change its address by notice given in
accordance with this paragraph.
(b) Whenever the context so requires, the use of the singular
number shall be deemed to include the plural and vice-versa. Each
gender shall be deemed to include any other gender, and each shall
include a corporation, partnership, trust or other legal entity
whenever the context so requires.
(c) In the event that any provision of this Subscription Agreement
or the application thereof to any person or in any circumstances shall
be determined to be invalid, unlawful, or unenforceable to any extent,
the remainder of this Subscription Agreement, and the application of
such
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provisions other than the ones deemed invalid, unenforceable, or
unlawful, shall not be affected thereby, and each remaining provision
hereof shall continue to be valid and may be enforced to the fullest
extent permitted by law.
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MUST BE ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND,
EXCEPT AS SPECIFICALLY PROVIDED IN THIS SUBSCRIPTION AGREEMENT, MAY NOT BE
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR SOLD WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE REGULATIONS PROMULGATED PURSUANT THERETO AND ANY
APPLICABLE STATE LAW.
THIS SUBSCRIPTION AGREEMENT MAY BE RESCINDED BY THE SUBSCRIBER WITHIN THREE
(3) DAYS OF THE DATE HEREOF.
[Signatures on following page.]
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THEREFORE, subject to acceptance by the Company, the undersigned has
completed this Subscription Agreement to evidence his subscription to Series A
Preferred Shares and agrees to the terms hereof.
Date: ____________________________ ___________________________________________
(Print Name of Subscriber,
e.g., "XYZ Corporation")
__________________________________ By: _______________________________________
(Subscriber's Employer (Signature of Authorized Representative)
Identification No.)
___________________________________________
(Print Name of Authorized Representative)
Address: __________________________________
___________________________________________
___________________________________________
[Each Subscriber must also complete and sign the
Investor Questionnaire attached hereto as ▇▇▇▇▇ ▇.]
ACCEPTANCE OF SUBSCRIPTION AGREEMENT
Shells Seafood Restaurants, Inc., a Delaware corporation, hereby
accepts the foregoing subscription as of ________________, 2001.
ACCEPTED ON BEHALF OF
SHELLS SEAFOOD RESTAURANTS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
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ANNEX I
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INVESTOR QUESTIONNAIRE
The Series A Preferred Shares are being offered exclusively to
"accredited investors" as that term is defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act").
Subscriber certifies that it is an "accredited investor" because it is
(check one or more items below):
[ ] A bank as defined in Section 3(a)(2) of the Securities Act, or a
savings and loan association or other institution specified in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity; a broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934; an insurance company as defined in
Section 2(13) of the Securities Act; an investment company registered under
the Investment Company Act of 1940 (the "1940 Act") or a business
development company as defined in Section 2(a)(48) of the 1940 Act; a small
business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Company Act of 1958; a plan established and maintained by a state, its
political subdivisions, or an agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974,
if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such Act, which is either a bank, a savings and loan
association, insurance company, or registered investment adviser or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that
are accredited investors.
[ ] A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
[ ] An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000
[ ] A director, executive officer, or general partner of the Company.
[ ] A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000.
[ ] A natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current year;
[ ] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person; or
[ ] An entity in which all of the equity owners are accredited investors.
_______________________________________
(Print Name of Subscriber)
By: ___________________________________
(Signature of Authorized Representative)