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): June 22, 2005
Shells
Seafood Restaurants, Inc.
(Exact
name of issuer as specified in its charter)
Delaware
(State
or
other jurisdiction of incorporation)
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0-28258
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65-0427966
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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 33618
(Address
of Principal Executive Offices)
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):
¨ Written
communications pursuant to Rule 425 under the Securities Act
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
Item
1.01. Entry
into a Material Definitive Agreement.
On
April
28, 2005, the Board of Directors of Shells Seafood Restaurants, Inc. (the
“Company”)
adopted, subject to stockholder approval at the annual meeting, an amendment
(the “Amendment”)
to the
Company’s 2002 Equity Incentive Plan (the “Plan”).
The
Company’s stockholders approved the Amendment at the Annual Meeting of
Stockholders held on June 22, 2005. The Amendment to the Plan (i) increases
the
number of shares of Common Stock available for issuance under the Plan
by
3,150,000 shares from 1,850,000 shares to 5,000,000 shares, (ii) prohibits
the
grant of options with an exercise price that is less than the fair market
value
of the Common Stock on the date of grant, (iii) prohibits the repricing
of
options without stockholder approval, (iv) eliminates the Company’s ability to
make loans to award recipients to facilitate the exercise of options or
the
purchase of shares under the Plan and (v) increases the number of options
or
other awards that may be granted under the Plan to any employee during
any
calendar year from 800,000 to 1,000,000. The foregoing description of
the
material terms of the Amendment, is
qualified in its entirety by reference to the Plan, as
so
amended
by the Amendment, a copy of which is filed herewith as Exhibit 10.1.
On
June
22, 2005, the Compensation Committee and the Board of Directors of the
Company
approved the acceleration of vesting of certain unvested and
“out-of-the-money”
stock
options with exercise prices equal to or greater than $0.85
per
share previously awarded to its employees, including its executive officers,
and
its directors under the Plan
that
were originally scheduled to vest during 2006. The
acceleration of vesting is effective for stock options outstanding as of
June
22, 2005. Options
to purchase approximately 295,000 shares of common stock or 18.5% of the
Company’s outstanding unvested options (of which options to purchase
approximately 233,000 shares or 14.6% of the Corporation’s outstanding unvested
options are held by the Corporation’s executive officers and directors) are
subject to the acceleration. The weighted average exercise price of the
options
subject to the acceleration is $1.10.
The
purpose of the acceleration is to enable the Company to avoid recognizing
compensation expense associated with these options in future periods in
its
consolidated statements of income, upon adoption of FASB Statement No.
123 R
(Share-Based Payment) in December, 2005. The pre-tax charge which the Company
expects to avoid in 2006 amounts to approximately $87,000 based on the
original
vesting periods. The
Company also believes that because many of the options to be accelerated
have
exercise prices in excess of the current market value of the Company’s common
stock, these options have limited economic value and are not fully achieving
their original objective of incentive compensation and employee
retention.
On
both
June 13 and June 22, 2005, each of Philip R. Chapman, Robert S. Ellin,
Gary L.
Herman, Michael R. Golding, Christopher D. Illick and Jay A. Wolf, the
non-employee directors of the Company, was awarded an option to purchase
20,000
shares of the Company’s common stock
at
exercise prices of $0.76 and $0.85 per share, respectively. The June 13,
2005
awards were made subject to stockholder approval of the Amendment. In general,
these options will vest on a monthly basis with respect to 1/12th increments
during
each of
the first six months following the date of grant and with respect to
all
remaining shares
on
December 31, 2005. The foregoing description is qualified in its entirety
by
reference to the Company’s form of stock option agreement for non-employee
directors,
a copy
of which is filed herewith as Exhibit 10.2.
On
June
13, 2005, each of Leslie Christon, Warren Nelson and Guy Kathman, executive
officers of the Company, was awarded, subject to stockholder approval
of the
Amendment, an option to purchase 450,000, 125,000 and 125,000 shares
of the
Company’s common stock, respectively, at an exercise price of $0.76 per share.
In general, these options will vest on an annual basis with respect
to 1/3
during each of the three years following the date of grant, except
that those
increments that would have otherwise vested on the first anniversary
in 2006
based on the foregoing schedule will instead vest on December 31, 2005.
In
addition, options to purchase an aggregate of 173,000 shares of the
Company’s
common stock were awarded, subject to stockholder approval of the Amendment,
to
37 non-executive officer employees of the Company on the same terms.
The
foregoing description is qualified in its entirety by reference to
the Company’s
form of stock option agreement for employees, a copy of which is filed
herewith
as Exhibit 10.3.
Item
9.01. Financial
Statements and Exhibits.
(c) Exhibits
10.1 Shells
Seafood Restaurants, Inc. 2002 Equity Incentive Plan, as amended.
10.2 Form
of
Stock Option Agreement for Non-Employee Directors.
10.3 Form
of
Stock Option Agreement for Employees.
(All
other items on this report are inapplicable.)
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 RESTAURANT, INC.
(Registrant)
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| Date: June
28, 2005 |
By: |
/s/
Leslie J. Christon |
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Name:
Leslie J. Christon
Title: President and
Chief Executive
Officer
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