UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported) December
10, 2007
Shells
Seafood Restaurants, Inc.
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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0-28258
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65-0427966
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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16313
N. Dale Mabry Hwy, Suite 100, Tampa, FL
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33618
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(813) 961-0944
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2 below):
o
Written
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement.
On
December 10, 2007, Shells Seafood Restaurants, Inc. (“the Company”) entered into
an agreement to sell its marks and system to Food and Entertainment Co.,
LTD.
(“F&E”), an entity owned by the Alhokair Group, a company domiciled in
the Kingdom of Saudi Arabia. Under such terms, F&E has the development
rights to open 10 restaurants over a 10-year period, solely within a territory
to initially consist of the Kingdom of Saudi Arabia, Egypt, Jordan, Qatar,
Oman,
Bahrain, United Arab Emirates, Kuwait, Pakistan, India and based on additional
performance criteria, Tunisia and Morocco. The purchase price is $1,750,000,
payable (a) $700,000 at execution (subject to application of an $80,000
deposit); (b) $350,000 within 90 days of October 5, 2007; (c) $350,000 within
180 days of October 5, 2007; and (d) $350,000 within 270 days of October
5,
2007.
In
conjunction with the sale of its marks and system, the Company also entered
into
an agreement to provide technical consulting and support services to F&E for
a 10-year period, with two additional five-year options at the election of
F&E, subject to the satisfaction of certain pre-conditions. The technical
services include support for restaurant design, operations, training, product
sourcing and menu engineering. Under the terms of this services agreement,
the
Company is to provide, among other things, training to F&E’s management team
in the Company’s restaurants prior to the first opening. The Company will also
provide F&E a training team, at F&E’s expense, to assist in opening
F&E’s first Shells restaurant. F&E and the Company will additionally
agree on the nature and scope of training relative to additional restaurant
openings. The Company will also send a management team to Saudi Arabia annually
to inspect and review the operations of F&E relative to the Shells brand.
The fee for the Company providing its technical consulting and support services
is 1% of F&E’s gross sales of its Shells restaurants in operation, payable
monthly. Additionally, if F&E is delayed in meeting its development schedule
of opening one restaurant per year over 10 years, F&E will pay the Company
monthly the equivalent of $50 per day for each late restaurant.
Under
the
terms of these agreements, F&E has provided the Company with an irrevocable
letter of credit in the amount of $1,050,000, to expire on October 5, 2008.
Thereafter, and continuing for the duration of the technical consulting and
support services agreement, F&E will provide the Company with an irrevocable
letter of credit in the amount of $500,000.
A
copy of
the Press Release, Restaurant System Purchase Agreement with the first and
second amendments, and the Technical Consulting and Support Services Agreement
with the first and second amendments applicable to each are filed herewith
as
Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7,
respectively.
Item
9.01 Financial
Statements and Exhibits.
(d) Exhibits.
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10.1 |
Press
Release: Shells Seafood Restaurants, Inc. and Food and Entertainment
Co.,
LTD sign Agreement for 10 Restaurants in Middle East
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10.2 |
Shells
Seafood Restaurants, Inc. Restaurant System Purchase Agreement
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10.3 |
Amendment
to Shells Seafood Restaurants, Inc. Restaurant System Purchase
Agreement
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10.4 |
Second
Amendment to Shells Seafood Restaurants, Inc. Restaurant System Purchase
Agreement
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10.5 |
Shells
Seafood Restaurants, Inc. Technical Consulting and Support Services
Agreement
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10.6 |
Amendment to Shells Seafood Restaurants,
Inc.
Technical Consulting and Support Services
Agreement |
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10.7 |
Second Amendment to Shells Seafood
Restaurants, Inc. Technical Consulting and Support
Services Agreement |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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SHELLS
SEAFOOD RESTAURANTS, INC.
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Date
: December 10, 2007
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By: |
/s/ Warren
R.
Nelson |
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Name:
Warren R. Nelson
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Title:
Vice
President and Chief Financial
Officer
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