-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KQzl9xbdrWzrUZieQJiWSnHUzbioJNZq8Fer4k2LdJMx08PKOXW4BgxKXHc95Wjp PhM2Eso3rMo1ERezowlDVw== 0001144204-04-007877.txt : 20040601 0001144204-04-007877.hdr.sgml : 20040601 20040601171522 ACCESSION NUMBER: 0001144204-04-007877 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20040601 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SHELLS SEAFOOD RESTAURANTS INC CENTRAL INDEX KEY: 0000935066 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 650427966 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-46593 FILM NUMBER: 04842134 BUSINESS ADDRESS: STREET 1: 16313 N DALE MABRY HWY STREET 2: STE 100 CITY: TAMPA STATE: FL ZIP: 33618 BUSINESS PHONE: 8139610944 MAIL ADDRESS: STREET 1: 16313 NORTH DALE MABRY STREET 2: SUITE 100 CITY: TAMPA STATE: FL ZIP: 33618 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GALLOWAY BRUCE CENTRAL INDEX KEY: 0000924483 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O BURNHAM SECURITIES STREET 2: 1325 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2126037557 MAIL ADDRESS: STREET 1: C/O BURNHAM SECURITIES STREET 2: 1325 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10018 SC 13D 1 v03805_13d.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. _____)* SHELLS SEAFOOD RESTAURANTS, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK - -------------------------------------------------------------------------------- (Title of Class of Securities) - -------------------------------------------------------------------------------- 822809 109 - -------------------------------------------------------------------------------- (CUSIP Number) - -------------------------------------------------------------------------------- Kenneth Koch, Esq. - -------------------------------------------------------------------------------- Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Chrysler Center 666 Third Avenue New York, New York 10017 (212) 935-3000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) - -------------------------------------------------------------------------------- May 28, 2004 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box.[X] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). ========================================================== 13D CUSIP NO. 822809 109 ========================================================== ================ =============================================================== 1 NAMES OF REPORTING PERSONS Bruce Galloway I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) - ---------------- --------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - ---------------- --------------------------------------------------------------- 3 SEC USE ONLY - ---------------- --------------------------------------------------------------- 4 SOURCE OF FUNDS WC - ---------------- --------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ---------------- --------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America ================ =============================================================== 7 SOLE VOTING POWER 281,000 NUMBER OF --------------- ----------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY --------------- ----------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 281,000 PERSON --------------- ----------------------------------------- WITH 10 SHARED DISPOSITIVE POWER ================ =============================================================== 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 281,000 - ---------------- --------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ---------------- --------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.02% - ---------------- --------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN ================ =============================================================== Page 2 of 10 pages Item 1. Security and Issuer This statement on Schedule 13D relates to the common stock, par value $.01 per share (the "Common Stock"), of Shells Seafood Restaurants, Inc., a Delaware corporation (the "Issuer"). The address of the Issuer's principal executive office is 16313 North Dale Mabry Highway, Suite 100, Tampa, FL 33618. The Reporting Person (as defined below) is filing this Schedule 13D to report a change in his investment intent with respect to his ownership of the shares of Common Stock as previously reported on a Schedule 13G filed by the Reporting Person on March 8, 2004. Item 2. Identity and Background This statement is being filed by Bruce Galloway (the "Reporting Person"). The Reporting Person is a citizen of the United States of America. The address of the principal business office of the Reporting Person is c/o Galloway Capital Management, LLC, 1325 Avenue of the Americas, 26th Floor, New York, NY 10019. During the last five years, the Reporting Person has not (i) been convicted in any criminal proceeding or (ii) been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was subject to any judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration The shares of Common Stock owned directly by the Reporting Person were purchased with working capital. Item 4. Purpose of Transaction All of the shares of Common Stock reported herein were originally acquired for investment purposes. On May 28, 2004, the Reporting Person entered into a non-binding letter of intent with Shells Investment Partners, LLC (the "Letter of Intent"), pursuant to which the Reporting Person agreed to purchase certain securities of the Issuer from Shells Investment Partners, LLC, subject to the negotiation, execution and delivery of mutually acceptable and legally binding definitive documents. A copy of the Letter of Intent is filed herewith as Exhibit 1 and incorporated herein by reference, and the description herein of the Letter of Intent is qualified in its entirety by reference to the Letter of Intent. The terms of this proposed transaction are still the subject of ongoing negotiations, and the Reporting Person cannot give any assurance that any agreement will be reached or, if an agreement is reached, that a transaction will be consummated. Due to the execution of the Letter of Intent, the Reporting Person may no longer be considered to be a passive investor and, therefore, the Reporting Person has determined that it is appropriate to become a Schedule 13D filer. Except as described above, the Reporting Person currently has no plan or proposal which relates to or would result in any of the actions or transactions described in paragraphs (a) through (j) of Item 4 of the instructions to this report. Page 3 of 10 pages Item 5. Interest in Securities of the Issuer (a) and (b) The Reporting Person is deemed to be the direct beneficial owner of 281,000 shares of Common Stock, representing approximately 6.02% of the number of shares of Common Stock outstanding. The Reporting Person has sole power to direct the vote and sole power to direct the disposition of these shares of Common Stock. (c) Except as otherwise stated herein, the Reporting Person has not effected any transaction relating to the Common Stock during the past 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer All of the shares of Common Stock reported herein were originally acquired for investment purposes. On May 28, 2004, the Reporting Person entered into the Letter of Intent, pursuant to which the Reporting Person would purchase certain securities of the Issuer from Shells Investment Partners, LLC, subject to the negotiation, execution and delivery of mutually acceptable and legally binding definitive documents. A copy of the Letter of Intent is filed herewith as Exhibit 1 and incorporated herein by reference, and the description herein of the Letter of Intent is qualified in its entirety by reference to the Letter of Intent. The terms of this proposed transaction are still the subject of ongoing negotiations, and the Reporting Person cannot give any assurance that any agreement will be reached or, if an agreement is reached, that a transaction will be consummated. Due to the execution of the Letter of Intent, the Reporting Person may no longer be considered to be a passive investor and, therefore, the Reporting Person has determined that it is appropriate to become a Schedule 13D filer. Except as described herein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the Reporting Person and any person with respect to any securities of the Issuer, including but not limited to transfer or voting of any other securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits Exhibit 1 Letter of Intent dated May 28, 2004, by and among the Reporting Person and Shells Investment Partners, LLC. Page 4 of 10 pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: June 1, 2004 /s/ Bruce Galloway - --------------------------------- Bruce Galloway Page 5 of 10 pages INDEX TO EXHIBITS Exhibit Description - ------- ----------- Exhibit 1 Letter of Intent dated May 28, 2004, by and among the Reporting Person and Shells Investment Partners, LLC. Page 6 of 10 pages EX-1 2 v03805_ex1.txt EXHIBIT 1 SHELLS INVESTMENT PARTNERS, LLC. 100 S. ASHLEY DRIVE, SUITE 1650 TAMPA, FLORIDA 33602 May 27, 2004 Mr. Bruce Galloway Mr. Gary Herman Galloway Capital Management, LLC 1325 Avenue of the Americas, 26th Floor New York, New York 10019 Re: Shells Seafood Restaurants, Inc. Gentlemen: The following reflects our understanding of the terms by which you will purchase certain assets of Shells Seafood Restaurants, Inc. (the "COMPANY") that we own. Except for item number 9 (relating to confidentiality and the trading in shares of the Company's stock and item number 13, the "no shop" clause), this term sheet represents only our current intention to negotiate and enter into a definitive acquisition agreement. It is not, and is not intended to be, a binding agreement between us (except as to the above mentioned items), and neither of us have any liability to the other if we fail to execute a definitive agreement for any reason. Statements below as to what we, or you, will do, or agree to do, or the like, are so expressed for convenience only, and are understood in all instances (except for the items enumerated above) to be subject to our mutual continued willingness to proceed with any transaction as our negotiations take place. Either party can terminate this term sheet or further negotiations at any time, for any reason. The terms and conditions that we have discussed are set forth below. 1. Purchaser. The purchaser of the Assets will be Galloway Capital Management, LLC. or an affiliate (the "PURCHASER"). 2. Seller. The seller of the Assets will be Shells Investment Partners, LLC.(the "SELLER"). 3. Assets. The assets (the "ASSETS") that are being sold to you are: (a) All of our rights under the Securities Purchase Agreement, dated January 31, 2002 by and among Shells Seafood Restaurants, Inc. (the "COMPANY"); Banyon Investment, LLC ("BANYON"); and us. (b) Except as set forth below, the promissory note issued by the Company, in the original principal amount of $1,000,000, dated January 31, 2002 and designated as Note No. A-1 (the "PROMISSORY NOTE"), and all of our rights thereunder other than accrued interest owed under the Promissory Note. The Promissory Note accrues interest at an annual rate of 15%, payable 8% on a current basis ("CURRENT PAY INTEREST") and 7% on a deferred basis ("DEFERRED INTEREST"). Page 7 of 10 pages (c) Four Million Eight Thousand Six Hundred and Fifteen (4,008,615) Warrants issued by the Company pursuant to the Warrant dated January 31, 2002 and designated as Warrant No. 001; (d) All of our rights under the Investors Rights Agreement. In that regard, all of our nominees to the Board of Directors of the Company will, at your request, resign as members of the Board of Directors at such time as requested. (e) Except as set forth below in item 7(b), all of our rights under the security documents, including the: (1) the Security Agreement dated January 31, 2002 by and among the Company, Banyon and us; (2) the Stock Pledge Agreement dated January 31, 2002 by and among the Company, Banyon and us; (3) the Trademark Security Agreement dated January 31, 2002 by and among the Company, Banyon and us; and (4) the Copyright Security Agreement dated January 31, 2002 by and among the Company, Banyon and us (the "SECURITY DOCUMENTS"). 4. Purchase Price. The purchase price is $1,000,000 (the "PURCHASE PRICE"). 5. Closing. The closing shall occur on or before Wednesday, June 23, 2004 at 10:00 am (the "CLOSING). At the Closing, we shall deliver to you (i) the Warrants, the Promissory Note and such agreements, including customary terms and conditions, as are necessary to transfer the rights and Assets referred to above; (ii) an agreement not to sell or dispose of the common stock underlying the Warrants retained by us for one year from the Closing; (iii) an acknowledgement from the Company and Banyon that you have succeeded to our rights under the Agreements referred to above, and (iv) evidence that the security interests in the collateral for the Promissory Note have been perfected (other than obtaining mortgages on the Company's real estate and assignments of the Company's or its subsidiaries' leasehold interests). 6. Payment of Purchase Price and Delivery of Assets. (a) Purchase Price. The Purchase Price shall be paid by the Purchaser at the Closing, by delivering to the Seller a cashier's check or a wire transfer, of immediately available funds, in an amount equal to the Purchase Price. Additionally, the Seller and the Company shall deliver the additional consideration set forth in Paragraph 7 below. (b) Assets. The Seller shall deliver to the Purchaser at the Closing: (i) the original Promissory Note: (ii) an assignment of Four Million Eight Thousand Six Hundred and Fifteen (4,008,615) Warrants; and (iii) an assignment of all of the Purchaser's rights under the Securities Purchase Agreement, the Investors Rights Agreement and the Security Documents. 7. Retained Assets. The Seller is retaining the following Company assets: (a) All Current Interest through the Closing, which shall be paid at the Closing by the Company, either by cashier's check or a wire transfer, of immediately available funds (approximately $3,500). (b) All Accrued Interest through the Closing, which shall be paid by the Company delivering its promissory note, payable in twenty four (24) equal monthly installments, beginning June 1, 2005 and continuing monthly thereafter (the "ACCRUED INTEREST NOTE"). The Accrued Interest at the Page 8 of 10 pages Closing will be approximately $167,000. The Purchaser will assist the Seller in causing the Accrued Interest Note to be secured by the Company granting a mortgage on real estate owned by the Company and mutually agreeable to you and us. (c) Four Hundred Forty Five Thousand Four Hundred (445,400) Warrants. To the extent that the Warrant Agreement between the Company and the Purchaser is modified to extend the exercise dates or to lower the exercise price of the Warrants that the Purchaser is purchasing, the Purchaser will attempt to cause the Company to modify the Warrants that the Seller is retaining accordingly. 8. Representations and Warranties of the Seller. The Seller will make representations, warranties and covenants customarily made in similar agreements regarding its organization, power and authority, and ability to convey the Assets free and clear of all encumbrances. 9. Confidentiality. The Seller shall use its best efforts to cause the Company to permit the Purchaser to review the Company's books, records, projections, business plans and any other information about the Company. The Purchaser agrees that all information so provided by the Company and identified as "confidential" will be treated by the Purchaser as such, that the Purchaser will not: (a) make any use of such information unless the same shall become available to the Purchaser through non-confidential means or shall otherwise come into the public domain; and (b) the Purchaser will not use any such confidential information in connection with its purchase or sale of the Company's publicly traded shares of common stock until such information becomes public by the actions of someone other than the Purchaser. 10. Expenses. Each party to this term sheet shall bear its own expenses, provided however, the costs associated with the issuance and delivery of the Accrued Interest Note and Mortgage shall be borne by the Company. Neither party shall be responsible for commissions payable to any broker or finder in connection with the transactions contemplated by this term sheet. 11. Press Release. Each party agrees that it will not issue any press release about this term sheet without the prior approval of the other, which shall not be unreasonably withheld, unless, in the good faith opinion of counsel, such disclosure is required by law and time does not permit the obtaining of such consent, or such consent is withheld. 12. Definitive Agreement; Termination. We will attempt to negotiate a definitive acquisition agreement, and we each agree that if a definitive acquisition agreement has not been executed by us by 5:00 p.m on June 16, 2004, this term sheet shall automatically be terminated and be of no further force or effect, except for item 9, relating to confidentiality and trading in the Company's shares, which shall survive any such termination. Page 9 of 10 pages 13. Non-Solicitation or Negotiation With Others. In consideration of the execution of this term sheet, we agree that, from the date hereof until June 16, 2004 at 5:00 pm, we shall discontinue all discussions or negotiations with other prospective purchasers of all or any substantial portion of the Assets and we will not, and will not permit any of our respective affiliates, officers, directors, employees, agents or representatives to, whether directly or indirectly, solicit or encourage (including by way of furnishing information) any inquiries or proposals relating to, or engage in any discussions or negotiations with respect to, the sale of all or any substantial portion of the Assets, except for inquiries or proposals from, or discussions or negotiations with, you and your authorized representatives. Very truly yours, SHELLS INVESTMENT PARTNERS, LLC /s/ John Giordano --------------------------------- John Giordano, Managing Member Agreed and accepted this 28th day of May 2004. GALLOWAY CAPITAL MANAGEMENT, LLC /s/ Gary Herman - ------------------------------ By: Gary Herman -------------------------- Its: Managing Partner ------------------------- Page 10 of 10 pages -----END PRIVACY-ENHANCED MESSAGE-----