STOCK OPTION AGREEMENT
EXHIBIT
4.1
STOCK
OPTION AGREEMENT, made as of the 14th
day of
November, 2005, by and between Shells Seafood Restaurants, Inc., a Delaware
corporation (the “Company”), and Xxxxxx X. Xxxxxxxx (the
“Executive”).
1. Grant
of Option.
The
Company hereby grants to the Executive an option (the “Option”) to purchase
903,528 shares
of
the Company’s common stock, $.01 par value per share (the “Common Stock”), at a
purchase price per share of $0.85.
2. Term
of Option.
Unless
sooner terminated as provided herein, this Option shall expire on July 1,
2012.
3. Vesting
of Option.
This
Option shall become vested and exercisable with respect to 353,845 shares of
Common Stock on December 31, 2005, with respect to an additional 274,842 shares
of Common Stock on July 1, 2007 and with respect to the remaining 274,841 shares
on July 1, 2008, subject to the Executive remaining in the continuous employment
or other service with the Company through each applicable vesting date.
Notwithstanding the preceding sentence, in the event that, within six (6) months
of a Change in Control of the Company (as defined in the Amended and Restated
Employment Agreement dated as of July 1, 2005 between the Executive and the
Company (the “Employment Agreement”)), (i) the Executive is terminated without
Cause (as defined in the Employment Agreement) or (ii) the Executive terminates
her employment with the Company due to (w) a significant diminution in the
Executive’s job responsibilities or title or (x) the Executive being required to
relocate outside of the Tampa, Florida market (which shall mean to a location
which is more than 50 miles outside of the city borders of Tampa), and, in
any
such instance, provided the Executive executes a general release of all claims
against the Company, its officers, directors and affiliates and abides by the
provisions of Sections 7 and 8(a) (iii) and (iv) of the Employment Agreement,
then this Option shall immediately become vested and exercisable, all in
accordance with Section 5(b) of the Employment Agreement.
4. Termination
of Employment.
(a) Termination
by Reason of Death or Permanent Disability.
If the
Executive’s employment with the Company is terminated due to her death or
permanent disability (as defined in Section 6 of the Employment Agreement),
then: (i) that portion of this Option that is vested and exercisable on the
date
of termination shall remain exercisable by the Executive (or, in the event
of
death, the Executive’s beneficiary) during the one year period following the
date of termination but in no event after expiration of the stated term hereof
and, to the extent not exercised during such period, shall thereupon terminate,
provided that, in the event of a termination due to permanent disability, if
the
Executive dies during such one-year period, then the Executive’s beneficiary may
exercise this Option, to the extent vested and exercisable by the Executive
immediately prior to her death, for a period of one year following the date
of
death but in no event after expiration of the stated term hereof, and (ii)
that
portion of this Option that is not vested and exercisable on the date of
termination shall thereupon terminate.
1
(b) Termination
for Cause.
If the
Executive’s employment is terminated by the Company for Cause, then this Option
(whether or not then vested and exercisable) shall immediately terminate and
cease to be exercisable.
(c) Other
Termination.
If the
Executive’s employment with the Company terminates for any other reason (other
than those described in Section 5(a) or 5(b) above) or no reason, then: (i)
that
portion of this Option that is vested and exercisable on the date of termination
shall remain exercisable by the Executive during the ninety (90) day period
following the date of termination but in no event after expiration of the stated
term hereof and, to the extent not exercised during such period, shall thereupon
terminate, and (ii) that portion of this Option that is not vested and
exercisable on the date of termination shall thereupon terminate.
5. Method
of Exercise.
To the
extent vested and exercisable in accordance herewith, this Option may be
exercised in whole or in part by delivering to the Secretary of the Company
(a)
a written notice specifying the number of shares to be purchased, and (b)
payment in full of the exercise price, together with the amount, if any, deemed
necessary by the Company to enable it to satisfy any tax withholding obligations
with respect to the exercise (unless other arrangements, acceptable to the
Company, are made for the satisfaction of such withholding obligation). The
exercise price shall be payable in cash, bank or certified check or such other
methods permitted by the Compensation Committee of the Company’s Board of
Directors (the “Committee”) from time to time, including, without limitation,
pursuant to a cashless exercise procedure approved by the Committee. The
Committee may (in its sole discretion) permit all or part of the exercise price
to be paid with shares of Common Stock which, if acquired through the Company,
have been owned by the Executive for at least six (6) months (or such lesser
or
greater period deemed necessary by the Company to avoid the imposition of
adverse accounting consequences to the Company) free and clear of any liens
or
encumbrances.
6. Rights
as a Stockholder.
No
shares of Common Stock shall be issued hereunder until full payment for such
shares has been made and any other exercise conditions have been fully
satisfied. The Executive shall have no rights as a stockholder with respect
to
any shares covered by this Option until the date such shares are reflected
as
having been issued to the Executive on the Company’s records. Except as
otherwise specifically provided herein, no adjustment shall be made for
dividends or distributions or the granting of other rights for which the record
date is prior to the date such shares are issued.
7. Nontransferability.
The
Option is not assignable or transferable other than to a beneficiary designated
to receive this Option upon the Executive’s death in a manner acceptable to the
Company or by will or the laws of descent and distribution, and this Option
shall be exercisable during the lifetime of the Executive only by the Executive
(or, in the event of the Executive’s incapacity, the Executive’s legal
representative or guardian). Any attempt by the Executive or any other person
claiming against, through or under the Executive to cause this Option or any
part of it to be transferred or assigned in any manner and for any purpose
shall
be null and void and without effect upon the Company, the Executive or any
other
person.
2
8. Adjustments
Upon Changes in Capitalization.
Upon
any increase, reduction, or change or exchange of the Common Stock for a
different number or kind of shares or other securities, cash or property by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, issuance of warrants or rights, stock dividend, stock split
or
reverse stock split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise, or any other corporate action,
such
as declaration of a special dividend, that affects the capitalization of the
Company (a “Change in Capitalization”), an equitable substitution or adjustment
may be made in the kind, number and/or exercise price of shares or other
property subject to this Option, as may be determined by the Committee, in
its
sole discretion. Such other equitable substitutions or adjustments shall be
made
as may be determined by the Committee, in its sole discretion. Without limiting
the generality of the foregoing, in connection with a Change in Capitalization,
the Committee may provide, in its sole discretion, for the cancellation of
this
Option (i) in exchange for payment in cash or other property equal to the Fair
Market Value of the shares of Common Stock covered by this Option (whether
or
not otherwise vested or exercisable), reduced by the aggregate exercise price
of
this Option, or (ii) for no consideration, in the case (and to the extent)
this
Option is not otherwise then vested or exercisable. In the event of any
adjustment in the number of shares covered by this Option pursuant to the
provisions hereof, any fractional shares resulting from such adjustment shall
be
disregarded, and this Option shall cover only the number of full shares
resulting from the adjustment. All adjustments under this Section 8 shall be
made by the Committee, and its determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. For
purposes hereof, “Fair Market Value” on any date shall be equal to the closing
sale price per share as published by a national securities exchange on which
shares of the Common Stock are traded on such date or, if there is no sale
of
Common Stock on such date, the average of the bid and asked prices on such
exchange at the closing of trading on such date or, if shares of the Common
Stock are not listed on a national securities exchange on such date, the closing
price or, if none, the average of the bid and asked prices in the over the
counter market at the close of trading on such date, or if the Common Stock
is
not traded on a national securities exchange or the over the counter market,
the
fair market value of a share of the Common Stock on such date as determined
in
good faith by the Committee.
9. No
Employment Rights.
Nothing
contained in this Agreement shall confer upon the Executive any right with
respect to the continuation of the Executive’s employment with the Company, or
interfere in any way with the right of the Company at any time to terminate
such
employment or to increase or decrease, or otherwise adjust, the other terms
and
conditions of the Executive’s employment with the Company.
10. Compliance
with Law.
Shares
of Common Stock shall not be issued pursuant to the exercise of this Option
unless such exercise and the issuance and delivery of such shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange
Act
of 1934, as amended, and the requirements of any stock exchange or market upon
which the Common Stock may then be listed, and shall be further subject to
the
approval of counsel for the Company with respect to such compliance. The
Committee may require each person acquiring shares of Common Stock to represent
to and agree with the Company in writing that such person is acquiring the
shares without a view to distribution thereof. All certificates for shares
of
Common Stock delivered hereunder shall be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or market upon which the Common Stock may then be listed,
and
any applicable federal or state securities law. The Committee may cause a legend
or legends to be placed on any such certificates to make appropriate reference
to such restrictions.
3
11. Miscellaneous.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without regard to its principles of conflict of laws. This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter hereof and may not be amended other than by a written
instrument executed by the parties hereto.
IN
WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.
| SHELLS SEAFOOD RESTAURANTS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxx | |
|
Name: Xxxxxx X. Xxxxxxx
|
||
| Title: Chairman of the Board | ||
| /s/ Xxxxxx X. Xxxxxxxx | |
| Xxxxxx X. Xxxxxxxx |
