MANAGEMENT
      AND LICENSE AGREEMENT

     

    This
      Management and License Agreement (“Agreement”) is entered into this 26th day of
      June, 2008, by and between Shells Seafood Restaurants, Inc. (the “Manager”), a
      Delaware corporation maintaining its business office at 16313 North Dale Mabry
      Highway, Tampa, Florida 33618, and Rock Beach Grill of Pembroke Pines, LLLP
      (the
“Owner”), a Florida limited liability limited partnership, maintaining its
      business offices at 16313 North Dale Mabry Highway, Tampa, Florida
      33618.

     

    BACKGROUND
      INFORMATION

     

    Pursuant
      to that certain Limited Partnership Agreement of Owner of even date herewith
      by
      and among the Manager, Rock Beach Holdings, LLC, a Florida limited liability
      company, and Philip R. Chapman and Barry Bernstein (each a “Investor Limited
      Partner”) (the “Partnership Agreement”), the Owner owns and operates a former
      Shells restaurant located at 11825 Pines Boulevard, Pembroke Pines, Florida
      (the
“Restaurant”). The Manager currently acts as the exclusive manager for all
      existing Shells restaurants and has agreed to manage the Restaurant and license
      certain proprietary information to the Owner, but only on the terms and
      conditions contained herein. The Owner desires to employ the Manager as its
      agent to operate the Restaurant and to license the proprietary information.
      Accordingly, in consideration of the covenants and agreements contained herein,
      the Owner and the Manager agree as follows:

     

    OPERATIVE
      PROVISIONS

     

    ARTICLE
      1. 

     

    APPOINTMENT
      OF MANAGER; LICENSE: KEY TERMS AND CONDITIONS

     

    Section
      1.1.  Appointment
      of Manager; License of Proprietary Information.
      Owner
      hereby appoints and employs Manager to act as the Owner’s exclusive agent for
      the supervision, direction and control of the operation and management of the
      Restaurant and in connection with such management, the Manager hereby
      acknowledges he is applying to register the service mark “Rock Beach Grill” and
      thereafter, regardless of the success of said registration, will license such
      service mark to the Owner as well as certain other proprietary information
      (the
“Proprietary Information”) necessary to operate the Restaurant, all upon the
      terms and conditions hereinafter set forth. The location of the Restaurant
      may
      not be changed without the prior written consent of the Manager, which consent
      may not be unreasonably withheld.

     

    Section
      1.2.  Key
      Terms.
      The
      following are certain of the key terms of this Agreement, cross-referenced
      to
      the sections of this Agreement in which they are more fully
      discussed:

    

      
        	
                (a)

              	
                Original
                  Term:

              	
                30
                  years.

              
	 	 	 
	
                (b)

              	
                Renewal
                  Terms:

              	
                An
                  indefinite number of five year terms.

              
	 	 	 
	
                (c)

              	
                Management
                  and License Fee:

              	
                Six
                  percent (6.0%) of Gross
                  Sales.

              


      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      2. 

     

    THE
      TERM

     

    Section
      2.1. The
      Term.
      The
      term of this Agreement shall mean the Original Term and any Renewal Terms,
      as
      such terms are defined below.

     

    Section
      2.2. Original
      Term.
      The
      original term of this Agreement (the “Original Term”) shall commence on the day
      following the last day of operation of Shells of Pembroke Pines as a Shells
      restaurant (the “Commencement Date”) and shall continue for 30 years
      thereafter.

     

    Section
      2.3. Renewal
      Terms.
      The
      Original Term of this Agreement shall automatically be extended by an unlimited
      number of five year renewal terms (the “Renewal Terms”), unless the Manager
      gives the Owner written notice at least 90 days prior to the expiration of
      the
      Original or any Renewal Term, as applicable, of the Manager’s intent not to
      extend this Agreement beyond the end of such Original or Renewal Term. The
      terms
      and conditions set forth in this Agreement shall continue to apply during all
      Renewal Terms.

     

    ARTICLE
      3. 

     

    COMPENSATION
      OF MANAGER

     

    Section
      3.1.  Management
      and License Fee.
      In
      consideration for the services rendered by Manager hereunder, as well as the
      Owner’s use of the Proprietary Information in connection with the Restaurant’s
      operations, the Owner agrees to pay Manager a management and license fee (the
      “Management and License Fee”) as follows:

     

    (a) Fee
      Structure.
      The
      amount of the Management and License Fee shall be six percent (6%) of the
      Restaurant’s Gross Sales, as such term is defined below.

     

    (b) Definition
      of Gross Sales.
      The
      term “Gross Sales” as used herein shall mean all sales made (and not refunded or
      returned) at or from the Restaurant and/or revenues derived from or in
      connection with the operation of the Restaurant including, without limitation,
      all sales of food, beverages, merchandise or services at or from the Restaurant.
      Sales made at less than the stated menu price shall be included in Gross Sales
      only in the amount paid by the customer, and the amount of any discount or
      promotional allowance shall not be included in Gross Sales. In computing the
      Management and License Fee, there shall be excluded from Gross Sales (or there
      shall be deducted from Gross Sales to the extent previously included) the
      following:

     

    
      	
            	(i)	
              Any
                gratuities or service charges added to a customer’s bill or statement in
                lieu of gratuities, which are payable to the Restaurants’
                employees;

            


    

     

    
      	
            	(ii)	
              All
                sales taxes, excise taxes, gross receipt taxes, occupational license
                taxes, admission taxes, entertainment taxes, tourist taxes or similar
                charges (but the Management and License Fee shall be computed before
                the
                payment of federal, state or municipal income or franchise
                taxes);

            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
            	(iii)	
              All
                sums and credits received in settlement of claims for loss or damage
                to
                furnishings, equipment of the Restaurant or to the building where
                the
                Restaurant is located;

            


    

     

    
      	
            	(iv)	
              Gain
                or loss from the sale of any capital assets or furniture, fixtures
                and
                equipment used in connection with the
                Restaurant;

            


    

     

    
      	
            	(v)	
              Any
                compensation payments or insurance proceeds for claims against third
                parties arising out of or during the course of the operation of the
                Restaurant;

            


    

     

    
      	
            	(vi)	
              The
                proceeds of any financing or refinancing of the Restaurant or any
                improvements, fixtures or equipment used in connection with the
                Restaurant;

            


    

     

    
      	
            	(vii)	
              Proceeds
                from the condemnation, sale or other disposition of the Restaurant;
                and

            


    

     

    
      	
            	(viii)	
              Proceeds
                from intercompany transactions.

            


    

     

    (c)  Payment
      of the Management and License Fee.
      The
      Management and License Fee shall be paid at the end of every monthly accounting
      period (on a 4-4-5 basis), in arrears, in the amount set forth on the Monthly
      Statement prepared in accordance with Section 7.2 hereof. The monthly Management
      and License Fee payments shall constitute installment payments of the Management
      and License Fee, subject to reconciliation based on the Annual Statement
      prepared in accordance with Section 7.4 hereof. Any overpayment or underpayment
      shall be adjusted by payment or refund, as appropriate, within 30 days after
      the
      preparation of the Annual Statement.

     

    ARTICLE
      4. 

     

    DUTIES
      OF
      THE MANAGER

     

    Section
      4.1.  Standard
      of Operations.
      The
      Manager shall manage and operate the Restaurant in a manner consistent with
      the
      standards of quality that are characteristic of the other Shells restaurants
      managed by Manager. There shall apply to the Restaurant the same policies,
      practices and procedures as apply generally such other Shells restaurants with
      respect to restaurant management, operations, accounting, purchasing, control
      of
      operating expenses and general administration; provided that (a) the Manager
      shall otherwise have sole discretion to establish all policies for the
      Restaurant, including, without limitation, menu items, prices, purchasing,
      design and decor, maintenance, employment, standards of operation, quality
      of
      service, marketing and promotional activities, and other matters affecting
      customer opinion of the Restaurant and its operation, and (b) exceptions to
      general policies, practices and procedures may be made by the Manager at the
      Restaurant or other Shells restaurants managed by Manager to deal with
      exceptional circumstances affecting a particular store if, in the Manager’s
      reasonable judgment, there is an adequate business justification for doing
      so
      and if the Restaurant is not treated in an arbitrary or discriminatory manner.
      Subject to such justified exceptions, the Manager shall make the same efforts
      at
      the Restaurant as it does at other Shells restaurants to achieve, and to
      balance, the objectives of increasing sales, optimizing profits, maintaining
      standards, maintaining and/or improving the level of customer service and
      quality of product, and other objectives that apply to the Shells chain of
      restaurants generally. The Manager shall periodically review the Restaurant’s
      operations and performance with the Owner at a mutually convenient time and
      place. At such times, the Manager shall review with the Owner the results of
      any
      pertinent financial planning, forecasting, sales budgeting or other reports
      or
      analyses that may be prepared by the Manager for the Restaurant (which shall
      be
      done for the Restaurant on the same general basis as for all other Shells
      restaurants). It is understood that as part of such a review the Owner may
      make
      suggestions or recommendations relating to the operation of the Restaurant.
      The
      Manager shall give such suggestions or recommendations its reasonable
      consideration, but the Manager shall not be obligated to adopt or implement
      them.

     

    
      
         

      

      
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    Section
      4.2.  Personnel.
      The
      Manager shall be responsible for hiring, supervising, directing the work of,
      promoting, discharging and determining the compensation and other benefits
      of
      all personnel working in the Restaurant. With the exception of the Restaurant’s
      general manager and assistant manager(s), all personnel of the Restaurant shall
      be considered the employees of the Owner, provided that the compensation and
      benefits of all Restaurant personnel, including the Restaurant’s general manager
      and assistant manager(s), shall be considered a Restaurant expense and an
      obligation of the Owner. The salaries, other compensation and benefits of such
      personnel shall be consistent with those that apply at other Shells restaurants
      (with appropriate allowance for factors that may affect the labor market serving
      the Restaurant). The Manager may incur, at the Owner’s expense, reasonable and
      customary employment agency fees and employee relocation expenses for employees
      of the Restaurant. The Owner shall also bear the financial burden of the wages
      and other compensation of any management personnel, such as area directors,
      who
      are employed to oversee the Restaurant, on a pro rata basis1  For
      example, if a area director supervised eight restaurants in a geographical
      area,
      one of which was the Restaurant, the Owner would bear 12.5% of the expenses
      associated with the employment and expenses incurred by such area
      director..
      The
      Owner shall not hire or solicit any of Manager’s on-site managers or assistant
      managers for a period of two years after the termination of this Agreement,
      unless this Agreement is terminated due to a breach by the Manager.

     

    Section
      4.3.  Permits
      and Licenses.
      The
      Manager, at the Owner’s expense, shall be responsible for obtaining, maintaining
      and renewing all licenses and permits that may be required for the renovation
      and operation of the Restaurant, including liquor, bar, restaurant, and sign
      licenses and permits. The Manager shall pursue such responsibility with due
      diligence and in good faith, and the Owner shall in good faith cooperate with
      the Manager as may reasonably be required to obtain such licenses and
      approvals.

     

    Section
      4.4.  Contracts.
      The
      Manager, as agent of the Owner, shall have authority to enter into such
      concessionaire, service and other contracts or agreements, which are in the
      ordinary course of business, as are in the Manager’s reasonable professional
      judgment necessary for the operation, supply and maintenance of the Restaurant
      as required by this Agreement.

     

    Section
      4.5.  Maintenance.
      Subject
      to the limitations set forth in Section 4.4, the Manager, at the Owner’s
      expense, shall be responsible for maintaining the Restaurant in good condition
      and repair consistent with the standards applicable to the other Shells
      restaurants managed by Manager, including without limitation, all necessary
      repairs and replacements of the furniture, fixtures and equipment used in
      connection with the Restaurant. The Manager will, at Owner’s expense, insure
      that the Owner will comply with the Owner’s leasehold maintenance
      obligations.

     

    ________________

      
        	1	
                For
                  example, if a area director supervised eight restaurants in a geographical
                  area, one of which was the Restaurant, the Owner would bear 12.5%
                  of the
                  expenses associated with the employment and expenses incurred by
                  such area
                  director.

              


      

    

    
       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

    

    Section
      4.6.  Alterations
      to the Restaurant.
      The
      Manager shall have the right to make such alterations, additions or improvements
      in or to the Restaurant as it deems necessary, including without limitation
      (a)
      alterations, additions or improvements to the Restaurant’s buildings and (b)
      additions to the fixed asset list of furniture, fixtures and equipment used
      at
      the Restaurant; provided that such alterations, additions or improvements are
      consistent with what the Manager is doing in other Shells restaurants managed
      by
      the Manager. The cost of such alterations, additions or improvements shall
      be
      charged directly to current expenses or capitalized on the books of account
      of
      the Restaurant in accordance with the Manager’s standard accounting practices.
      The Manager will furnish the Owner substantiating documentation for capitalized
      expenditures.

     

    In
      the
      event that, at any time during the Term of this Agreement, repairs or
      alterations to the Restaurant shall be required by reason of any laws,
      ordinances, rules or regulations now or hereafter in force, or by order of
      any
      governmental or municipal power, department, agency, authority or officer,
      such
      repairs or changes may be made by Manager on, Owner’s behalf and at Owner’s
      expense.

     

    Section
      4.7.  Professional
      Services.
      The
      Manager may, at the Owner’s expense, hire independent contractors to provide
      such legal, accounting, and other professional or technical service as the
      Manager reasonably deems advisable for the management, operation and maintenance
      of the Restaurant. During the Term of this Agreement, the professional and
      technical services of the Manager’s corporate staff shall be provided to the
      Restaurant to the same extent as they are provided to other Shells restaurants
      managed be the Manager. The Management and License Fee shall cover such
      services, except that any out-of-pocket expenses incurred in performing such
      services shall be reimbursed to the Manager as an operating expense of the
      Restaurant. It is understood and agreed that the basic functions performed
      by
      the Manager in consideration of the Management and License Fee shall remain
      substantially the same as they are as of the date of this Agreement, but it
      is
      acknowledged and agreed that there may be changes in the allocation of certain
      tasks as between corporate overhead (covered by the Management and License
      Fee)
      and the Restaurant (paid out of Working Capital, as such term is defined
      herein); provided that (a) there is a reasonable business justification for
      the
      change, (b) the change is not being made solely for the benefit of the Manager
      and is not detrimental to the Owner, and (c) the Restaurant is treated the
      same
      as the other Shells restaurants managed by the Manager. The Manager may use
      outside contractors to provide services that are covered by the Management
      and
      License Fee; provided that the quality of the services rendered to the
      Restaurant is not reduced and the cost to the Owner is not
      increased.

     

    Section
      4.8.  Compliance
      With Laws.
      The
      Manager shall make good faith and reasonable efforts to comply with all
      applicable statutes, ordinances, rules and regulations of federal, state and
      local governmental bodies having jurisdiction over the Restaurant or its
      operation including, without limitation, laws governing the sale of alcoholic
      beverages (“Governing Laws”). Notwithstanding anything herein to the contrary,
      the Manager may contest the application of any Governing Laws to the Restaurant
      in the event the Manager deems it prudent to do so. The cost of any such contest
      shall be included in the operating expenses of the Restaurant. The Manager,
      at
      Owner’s expense, may institute, defend and settle litigation and claims
      affecting the Restaurant. No settlement involving injunctive relief against,
      or
      prohibiting any act on the part of, the Owner shall be entered into by the
      Manager, without the prior written approval of the Owner.

     

    Section
      4.9.  Arms-Length
      Transactions.
      The
      Manager shall not enter into any contracts with any entity that is affiliated
      with the Manager unless the same are at market rates and on competitive terms.
      Except as expressly permitted in this Agreement, the Manager shall not add
      any
      markup, profit or other add-on charge to the cost of any items purchased by
      the
      Manager for the Restaurant. The Restaurant shall receive the benefit of any
      discounts or rebates that are netted out by the vendor against the price of
      items that are purchased for the Restaurant. The Restaurant shall be treated
      the
      same as the other Shells restaurants managed by the Manager with respect to
      the
      allocation or other disposition of any savings resulting from the Manager’s
      buying power in the marketplace, quantity discounts, rebates and promotional
      allowances or other cost reductions or advantages that are not netted out
      against the price of the item purchased.

     

    
      
         

      

      
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    Section
      4.10. Compliance
      with Leases.
      The
      Manager shall, subject to the availability of funds therefor, cause the Owner
      to
      remain in compliance with its leasehold obligations.

     

    ARTICLE
      5. 

     

    OWNER’S
      FINANCIAL OBLIGATIONS

     

    Section
      5.1.  Obligations
      of Owner and Manager.
      All
      cost and expense of operating the Restaurant, including without limitation
      the
      funding of operating deficits and working capital and other obligations and
      liabilities hereunder (“Owner’s Financial Obligations”) shall be the sole and
      exclusive responsibility and obligation of Owner, except where it is expressly
      and specifically stated in this Agreement that such item shall be at the
      Manager’s expense. It is understood that statements herein indicating that
      Manager shall “furnish,” “provide” or otherwise supply items or perform services
      hereunder shall not be interpreted or construed to mean that the Manager shall
      be obligated to pay for such items or services unless it is expressly and
      specifically so provided. Owner’s Financial Obligations shall include, without
      limitation, the following:

     

    
      	
            	(a)	
              The
                Working Capital (as defined in Section 6.1
                hereof);

            


    

     

    
      	
            	(b)	
              Capital
                Expenditures (as defined in Section 6.2
                hereof);

            


    

     

    
      	
            	(c)	
              The
                operating expenses of the Restaurant including, without limitation,
                Restaurant employee payroll and benefits, food and beverage inventory,
                supplies, repair and maintenance, contract services, professional
                services, training, advertising, marketing, and
                insurance;

            


    

     

    
      	
            	(d)	
              The
                cost of all licenses and permits required for the occupancy or operation
                of the Restaurant including, without limitation, any certificate
                of
                occupancy, health permit, food service license, liquor license or
                the
                like;

            


    

     

    
      	
            	(e)	
              Bank
                charges and processing fees charged by the local depository bank
                for the
                Restaurant or by credit card companies for the processing of credit
                card
                sales made at the Restaurant;

            


    

     

    
      	
            	(f)	
              All
                taxes applicable to the Restaurant, including, without limitation,
                real
                estate taxes, franchise taxes, gross receipts taxes, rent taxes or
                income
                taxes (other than any income taxes payable by the Manager on the
                Management and License Fee);

            


    

     

    
      	
            	(g)	
              Occupancy
                costs of the Restaurant, including, without limitation, depreciation,
                amortization, interest, rent, common area charges, impact fees, user
                fees,
                parking charges, dues or assessments and the like;
                and

            


    

     

    
      	
            	(h)	
              The
                Management and License Fee.

            


    

     

    
      
         

      

      
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      The
        Manager
        shall have complete and absolute control of the receipts from the Restaurant
        and
        the bank accounts into which such receipts are to be deposited. The above
        mentioned obligations of the Owner shall be paid by the Manager on behalf
        of the
        Owner out of the Working Capital and/or from the current distributions payable
        to Owner pursuant to Section 6.3 hereof, to the extent
        available.

    

     

    The
      following services shall be provided by the Manager during the Term of this
      Agreement in consideration of the Management and License Fee and shall not
      be
      charged as operating expenses of the Restaurant: (i) supervisory operations
      management, above the store level, exclusive of the Restaurant’s pro rata
      expense of the district and regional manager, which is borne, in part, by the
      Owner as set forth above; (ii) accounting performed out of the Manager’s
      corporate accounting department, including accounts payable, accounts
      receivable, fixed assets, financial reporting, record keeping, revenue/cost
      variance analysis, financial analysis and forecasting; (iii) payroll and
      corporate-level personnel and benefits administration; (iv) corporate-level
      data
      processing services; (v) tax administration; (vi) corporate legal services;
      (vii) corporate support, including real estate, architectural and
      construction-related support services; (viii) corporate facilities department
      support services regarding maintenance, repair and capital alterations and
      additions; (ix) corporate marketing administration; (x) multi-unit procurement
      services; and (xi) research and development.

     

    Section
      5.2.  Manager
      Not Obligated to Advance Funds.
      Except
      as otherwise provided in the Partnership Agreement, the Manager shall have
      no
      obligation to pay for any of the Owner’s Financial Obligations. Except as
      otherwise provided in the Partnership Agreement, subject to the consolidation
      of
      certain payables and receivables of the Restaurant with those of other Shells
      restaurants managed by the Manager, the Manager shall not be obligated to
      advance any of its own funds to or for the account of the Owner or to incur
      on
      its own account any liability with respect to the Restaurant.

     

    Section
      5.3.  Consolidated
      Payables and Receivables.
      The
      cash flow and accounting functions for the Restaurant will be handled by
      Manager, to the extent reasonably practicable, in the same manner that they
      are
      handled for other Shells restaurants managed by the Manager and on a
      consolidated basis with such other stores; provided, however, that separate
      books and records (with appropriate substantiating documentation) showing the
      revenues and expenses of the Restaurant on an unconsolidated basis shall be
      maintained by the Manager as provided in Article 7 hereof; and provided further
      that any discounts or rebates obtained as a result of such consolidation shall
      be subject to the provisions of Section 4.9 hereof. The Manager shall not impose
      any additional fees or add-on charges as a result of any such consolidation.
      As
      a general rule, to the extent reasonably practicable, the following items will
      be handled on a consolidated basis:

     

    (a)  The
      processing of revenues from sales made through the use of credit
      cards;

     

    (b)  The
      payment of vendors who sell to other Shells restaurants in addition to the
      Restaurant.

     

    Payables
      that relate solely to the Restaurant, including without limitation the payroll
      for the Restaurant, shall, to the extent of available funds belonging to the
      Owner, be paid out of the Manager’s corporate office by the Manager’s corporate
      check, subject to the Manager’s right to be reimbursed out of the Working
      Capital of the Restaurant as provided in Article 6 hereof. It is understood
      that
      payment directly by the Restaurant may be required in the case of certain
      vendors or local service contractors. Regardless of whether payment in the
      first
      instance is made directly by the Restaurant or by the Manager’s corporate check,
      the Owner shall bear any loss arising out of any breach of contract, breach
      of
      warranty or other failure to perform any contract with any vendor, supplier
      or
      contractor of the Restaurant.

     

    
      
         

      

      
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    ARTICLE
      6.

     

    WORKING
      CAPITAL AND DISTRIBUTIONS TO OWNER

     

    Section
      6.1.  Working
      Capital
      . The
      Owner shall maintain with the Manager sufficient working capital for the ongoing
      operation of the Restaurant (“Working Capital”). Working Capital shall consist
      of the following: (a) an amount that approximates the average value of the
      food
      and beverage inventory of the Restaurant carried at cost, (b) the cash balance
      in the Restaurant account at the Restaurant local depository bank, (c) the
      cash
      on hand at the Restaurant, and (d) an amount determined by the Manager to be
      adequate for the operation of the Restaurant based upon the Manager’s estimate
      of the reasonably foreseeable income and expenses of the Restaurant, including,
      without limitation, capitalized expenditures for the replacement of furniture,
      fixtures and equipment, which is initially estimated to be $50,000. It is the
      intention of the parties to operate on a “pay as you go” basis to the extent
      possible, without the retention by the Manager of any reserves or contingency
      funds except for immediately foreseeable needs. The Owner shall fund any deficit
      in the Working Capital within 30 days after the Owner’s receipt of written
      notice from the Manager of the need for additional Working Capital; provided
      that the Owner shall use its best efforts to fund such a deficit within three
      days or as soon thereafter as possible. If the Owner fails to do so, then in
      addition to any other right or remedy that the Manager may otherwise have,
      the
      Manager shall have the right to deduct such amount from any amount payable
      to
      the Owner hereunder.

     

    Section
      6.2.  Capital
      Expenditures.
      Capital
      expenditures during the Term for furniture, fixtures and equipment and capital
      improvements at the Restaurant shall, to the extent possible, be paid for out
      of
      the Working Capital.

     

    Section
      6.3.  Distributions
      to Owner.
      Any
      amount in the Restaurant’s account held by the Manager in excess of (a) the
      amount of Working Capital required pursuant to Section 6.1 above, (b) the amount
      of the Management and License Fee payable to Manager and (c) the operating
      expenses of the Restaurant (including allocations for insurance, marketing
      and
      management training), less the amount of any offsets or deductions provided
      for
      hereunder, shall be distributed to the Owner within 30 days after the end of
      each fiscal month. The monthly distributions to the Owner shall constitute
      prepayments subject to reconciliation based on the Annual Statement for the
      fiscal year in which such monthly distributions are made, with the payment
      for
      the final fiscal month being adjusted as may be necessary.

     

    ARTICLE
      7. 

     

    ACCOUNTING

     

    Section
      7.1.  Standards.
      The
      Manager, at the Manager’s own cost and expense, shall maintain books and records
      of account relating to the Manager’s operation and management of the Restaurant
      and prepare and deliver to Owner the statements required under Sections 7.2,
      7.3
      and 7.4 hereof. The books and records for the Restaurant shall be kept
      substantially in accordance with the systems utilized by the Manager for the
      other Shells restaurants managed by the Manager. The Owner and its designees
      shall have the right, upon 10 days prior written notice to the Manager, to
      examine said books and records at the Manager’s corporate headquarters at any
      reasonable time during regular business hours. Such books and records of account
      shall be in sufficient detail to show compliance with the requirements of Rule
      7A-3.0141(2)(a), Florida Administrative Code, or any successor regulation,
      with
      regard to the percentage of food and non-alcoholic beverage sales.

     

    Section
      7.2.  Monthly
      Statement.
      Within
      30 days of the end of each month, the Manager shall provide the Owner with
      a
      balance sheet and a profit and loss statement showing the Restaurant’s financial
      position as of the date of the balance sheet and the operating results for
      the
      preceding fiscal month and fiscal year to date (collectively the “Monthly
      Statement”).

     

    Section
      7.3.  Quarterly
      Statement.
      Within
      45 days of the end of each fiscal quarter, the Manager shall provide the Owner
      a
      balance sheet, profit and loss statement, and statement of cash flows, and
      supporting schedules, showing the Restaurant’s financial position as of the date
      of the balance sheet and the operating results and statement of cash flows
      for
      the preceding fiscal quarter and fiscal year to date (collectively the
“Quarterly Statement”).

     

    Section
      7.4.  Annual
      Statement.
      Within
      90 days following the end of each fiscal year, the Manager shall provide the
      Owner a statement showing the Restaurant’s operating results for the preceding
      fiscal year (the “Annual Statement”). The Annual Statement shall contain a
      balance sheet, profit and loss statement, statement of cash flows and supporting
      schedules, and shall be certified as true and correct by the Manager’s Chief
      Financial Officer.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    Section
      7.5.  Adjustments.
      Any
      adjustment required to make up an underpayment or to refund an overpayment
      by
      the Owner or the Manager shall be made within 30 days after completion of the
      statement that shows the need for an adjustment. Adjustments based on the Annual
      Statement shall be made during the first month following completion of the
      Annual Statement. Adjustments made upon the expiration or termination of this
      Agreement shall be made through payment or refund, as required, within 30 days
      after the end of the Term of this Agreement.

     

    Section
      7.6.  Right
      to Audit.
      At any
      time during the two year period following the Owner’s receipt of an Annual
      Statement, the Owner shall have the right, upon 10 days’ prior written notice to
      the Manager, at Owner’s expense, to have an accountant selected by the Owner
      audit the Manager’s books and records relating to the Restaurant for the period
      covered by such Annual Report. If there is a discrepancy between such financial
      statements and the findings of Owner’s accountant or any other dispute between
      the parties regarding the financial statements, the Manager’s accountants and
      the Owner’s accountant shall attempt to resolve such discrepancy, and their
      mutual decision shall be binding upon Owner and Manager. If the accountants
      for
      the parties are unable to resolve the discrepancy, the matter shall be referred
      to an arbitration panel composed of the Owner’s independent CPA, the Manager’s
      independent CPA, and a third independent CPA selected by the parties’
independent CPA’s, and the decision of such arbitration panel shall be binding
      upon Owner and Manager. The cost of conducting an independent audit of the
      Restaurant’s financial statements shall be paid by the Owner unless the audit
      shows an underpayment to Owner in excess of three percent of the amount that
      should have been distributed to Owner; in such case Manager shall bear the
      cost
      of the audit. In the event that the actual amount is resolved in favor of the
      Owner, the Manager shall pay the amount due plus interest thereon at the
      Interest Rate specified in Section 16.13.

     

    Section
      7.7.  Fiscal
      Year.
      The
      fiscal year of the Restaurant shall be the fiscal year used by Manager for
      its
      company-owned restaurants. As of the date of this Agreement, the Manager
      proposes using a fifty-two (52) or fifty-three (53) week period ending on the
      Sunday nearest to December 31.

     

    Section
      7.8.  GAAP.
      All
      financial statements to be prepared by the Manager hereunder shall be prepared
      in accordance with generally accepted accounting principles.

     

    ARTICLE
      8. 

     

    INSURANCE
      AND INDEMNITY

     

    Section
      8.1.  Required
      Coverage.
      Except
      for such coverage otherwise maintained by the landlord of the Restaurant under
      the lease agreement with such landlord, the following forms of insurance
      coverage shall be maintained by the Restaurant: 

     

    (a)  Property
      Insurance:
      Property
      insurance covering the interior and exterior improvements made by the Owner.
      Property insurance shall insure against any and all risks of direct physical
      loss to the Restaurant and its furniture, fixtures and equipment, with limits
      of
      not less than the full replacement cost thereof, subject to the same deductible
      that applies to other Shells restaurants managed by the Manager;

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (b)  Business
      Interruption:
      All Risk
      Business Interruption insurance with a limit sufficient to reimburse the Owner
      for loss of income resulting from the Owner’s inability to continue operations
      due to the Restaurant’s sustaining a loss from an insured peril. The limit shall
      also include sufficient insurance to ensure that the Owner will be able to
      meet
      its monetary obligations to the Manager under this Agreement, including Section
      9.1 hereof;

     

    (c)  General
      Liability:
      Comprehensive general liability insurance, including product and liquor
      liability coverage, with a combination of primary and excess limits of not
      less
      than $3,000,000, each occurrence, bodily injury and property damage combined,
      including dram shop insurance or similar coverage if required by applicable
      statute or rule;

     

    (d)  Employers’
      Liability:
      Workers’
Compensation and Employers’ Liability insurance, as well as other insurance as
      may be required by law, in such amounts as may be required by applicable statute
      or rule; provided that the Employer’s Liability insurance shall carry a limit of
      not less than $500,000;

     

    (e)  Fidelity
      Coverage:
      Comprehensive Dishonesty, Disappearance and Destruction (3-d) Coverage, insuring
      employee dishonesty and depositors forgery; and

     

    (f)  Additional
      Coverage:
      Such
      additional coverages and higher policy limits as may reasonably be required
      from
      time to time by the Manager for Shells restaurants managed by the
      Manager.

     

    The
      Manager shall be named as an additional insured and loss payee in all policies
      required hereunder, and all such policies shall be primary to any policies
      which
      either of the parties hereto may carry on its own. The limits set forth above
      in
      this Section 8.1 shall be subject to adjustment periodically (annually if
      reasonably possible) to reflect current costs and availability.

     

    Section
      8.2.  Responsibility
      For Obtaining Coverage.
      Although the Owner shall bear the financial responsibility for the insurance
      coverage required under Section 8.1 hereof, the Manager shall negotiate, obtain
      and be responsible for obtaining such policies on behalf of the Owner. The
      Manager will make an annual presentation of proposed insurance programs to
      the
      Owner and the Owner shall have at least 45 days to obtain alternative
      coverage.

     

    Section
      8.3.  Evidence
      of Coverage.
      Upon a
      request from the Owner, the Manager shall cause to be delivered to the Owner
      a
      certificate of insurance to evidence that the foregoing insurance coverage
      requirements have been complied with by the Manager. Such evidence shall include
      a statement by the insurer that the policy or policies will not be canceled
      or
      materially altered without at least 30 days prior written notice to Owner and
      Manager.

     

    
      
         

      

      
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        Section
          8.4.Indemnity.

      

    

     

    (a)  Owner’s
      Indemnification of Manager.
      The
      Owner agrees to indemnify, defend and hold the Manager free and harmless from
      any liability for injury or death to persons or damage or destruction of
      property, as a result of the Manager’s performance of its duties in accordance
      with this Agreement, as well as the performance by the Manager’s agents,
      officers, directors or employees. Notwithstanding the foregoing, the Owner
      shall
      not be obligated to indemnify and hold the Manager harmless or to reimburse
      the
      Manager or to defend the Manager from any liability which results from the
      negligence, fraud or willful misconduct of the Manager, its agents, employees,
      officers or directors, or any action by the Manager, its agents, employees,
      officers or directors in violation of any provision of this
      Agreement.

     

    (b)  Manager
      Indemnification of Owner.
      The
      Manager agrees to indemnify, defend and hold the Owner free and harmless from
      any liability for injury or death to persons or damage or destruction of
      property arising out of the operation of the Restaurant by the Manager or
      resulting from any act of the Manager, its agents, officers, directors or
      employees in violation of any provision of this Agreement, and from any
      liability resulting from any breach of any law, rule or ordinance, including
      by
      way of example, but not limitation, any “employment” violations, antitrust
      action, any liquor license violations or any other matter within the control
      of
      the Manager. Notwithstanding the foregoing, the Manager shall not be obligated
      to indemnify and hold the Owner harmless or to reimburse the Owner or to defend
      the Owner from any liability that results from the negligence, fraud or willful
      misconduct of the Owner, its agents, employees, officers or directors, or any
      action of the Owner, its agents, employees, officers or directors in violation
      of any provision of this Agreement.

     

    Section
      8.5.  Waiver
      of Subrogation.
      Each
      party hereto (the “Releasing Party”) hereby releases the other (the “Released
      Party”) from any liability which the Released Party would, but for this
      paragraph, have had to the Releasing Party arising out of or in connection
      with
      any accident or occurrence or casualty (a) which is or would be covered by
      a
      property damage policy (with fire, extended coverage, vandalism and malicious
      mischief endorsement included) or by a sprinkler leakage or water damage policy
      regardless of whether or not such coverage is being carried by the Releasing
      Party, and (b) to the extent of recovery under any other casualty or property
      damage insurance being carried by the Releasing Party at the time of such
      accident or occurrence or casualty, which accident or occurrence or casualty
      may
      have resulted in whole or in part from any act or neglect of the Released Party,
      its officers, agents or employees; provided, however, the release hereinabove
      set forth shall become inoperative and null and void if the Releasing Party
      contracts for insurance with an insurance company which (i) takes the position
      that the existence of such release vitiates or would adversely affect any policy
      so insuring the Releasing Party in a substantial manner and notice thereof
      is
      given to the Released Party, or (ii) requires the payment of a higher premium
      by
      reason of the existence of such release, unless in the latter case the Released
      Party within 10 days after notice thereof from the Releasing Party pays such
      increase in premium.

     

    ARTICLE
      9. 

     

    [RESERVED]

     


    
      
         

      

      
        11

        
          

        

      

      
         

      

    


    ARTICLE
      10. 

    


    REPRESENTATIONS
      AND WARRANTIES

     

    Section
      10.1.  Title
      to the Restaurant and/or Leasehold Interests.
      Except
      as otherwise provided in the lease agreement for the lease of the Restaurant
      premises, the Owner covenants that it has, and that throughout the Term of
      this
      Agreement it will maintain, (i) either full ownership of the location where
      the
      Restaurant is located or a valid leasehold estate in the building where the
      Restaurant is located, and (ii) full ownership of or a valid leasehold estate
      in
      the furniture, equipment and operating supplies that are used in the Restaurant.
      The Owner represents and warrants that there is and shall be no material
      conflict between this Agreement and any provision of any lease or deed, mortgage
      or deed of trust, restrictive covenant or other agreement affecting the
      Restaurant. The Owner further agrees that throughout the Term of this Agreement,
      it will keep, observe and perform all terms, covenants, conditions and
      obligations to be kept, observed or performed by the Owner under the Owner’s
      lease or any concession or other agreement or security instrument in respect
      of
      the Restaurant, and the furniture, fixtures and equipment in the Restaurant. The
      Owner agrees that it will not amend or modify any provision of a lease that
      has
      a material effect on this Agreement or the operation of the Restaurant, without
      in each instance obtaining the prior written consent of the Manager, which
      must
      be granted or withheld by the Manager within 30 days after the Manager’s receipt
      of the Owner’s request for consent. The Owner hereby agrees to indemnify the
      Manager and hold the Manager harmless from and against any loss, cost or damage
      incurred by the Manager as a result of the Owner’s breach of any of the
      foregoing representations, warranties or covenants or as a result of any claim
      made against the Manager by any landlord, mortgagee or other party in privity
      with the Owner.

     

    Section
      10.2.  Liquor
      License.
      The
      Owner represents and warrants that the jurisdictions in which the Restaurant
      is
      located permit the sale of alcoholic beverages at tables and a stand-up bar
      seven (7) days per week and that the Restaurant is not located in an area in
      which the issuance of the appropriate licenses or permits would be prohibited.
      The Owner shall use reasonable efforts and all due diligence to maintain the
      liquor license for the Restaurant. The Owner and the Manager shall cooperate
      with each other and with the licensing authority in renewing the liquor license
      for the Restaurant.

     

    Section
      10.3.  Operation
      of the Restaurant.
      The
      Owner represents and warrants that there is no legal impediment to the operation
      of the Restaurant by the Manager as contemplated by this Agreement; that the
      Owner shall not create or suffer to exist any condition that materially
      interferes with the normal use of the Restaurant, including without limitation
      the accessways, parking areas, lighting, service areas and utilities serving
      the
      Restaurant; and that the Owner shall not interfere with the Manager’s operation
      of the Restaurant or give, or attempt to give, orders or instructions to
      personnel employed at the Restaurant.

     

    Section
      10.4.  Authority
      of Owner and Manager.
      The
      Owner represents and warrants that it has full right, power and lawful authority
      to execute and deliver this Agreement and to perform its obligations hereunder
      in the manner and upon the terms contained herein, with no other person needing
      to join in the execution of this Agreement in order for it to be binding upon
      all persons. The person(s) executing this Agreement on behalf of the Owner
      represent and warrant that they are the only person(s) required to execute
      this
      Agreement in order to bind the Owner. The Manager represents and warrants that
      it has full right, power and lawful authority to execute and deliver this
      Agreement and to perform its obligations hereunder in the manner and upon the
      terms contained herein. The person(s) executing this Agreement on behalf of
      the
      Manager represent and warrant that they are the only person(s) required to
      execute this Agreement in order to bind the Manager.

     

    
      
         

      

      
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    Section
      10.5.  Confidentiality.
      The
      Owner represents and warrants that it shall at all times treat as confidential
      any proprietary information, trade secrets, knowledge or know-how relating
      to
      the Restaurant that the Owner may acquire in connection with this Agreement
      or
      otherwise, including, without limitation, any financial information relating
      to
      the revenues, costs or profits of the Restaurant; personnel policies or
      procedures; budgets and compensation figures; operating systems and methods;
      and
      recipes or training materials (referred to collectively as “Confidential
      Information”); and that it shall use its best efforts to keep any Confidential
      Information secret and confidential, both during and after the Term of this
      Agreement. The Owner may disclose pertinent information relating to the
      Restaurant on an as-needed basis to lenders, joint ventures, accountants,
      attorneys, and potential purchasers; provided that the Owner shall use
      reasonable efforts to ensure that such information is disseminated on a “need to
      know” basis only. The Manager represents and warrants that it shall at all times
      treat as confidential any proprietary information, trade secrets, knowledge
      or
      know-how relating to the Owner or the Owner’s business that the Manager may
      acquire in connection with this Agreement or otherwise.

     

    ARTICLE
      11. 

     

    DEFAULT,
      TERMINATION AND REMEDIES

     

    Section
      11.1.  Default,
      Notice and Cure.
      If
      either party hereto shall default in the performance of any of its obligations
      under this Agreement and
      such
      default is a result of that party’s gross negligence, gross abuse of authority,
      fraud or criminal misconduct, and such default is not cured within 40 days
      after
      written notice from the non-defaulting party then the party who delivered the
      notice of such default shall have, in addition to its rights at law or in
      equity, the right to terminate this Agreement.

     

    Section
      11.2.  Limitation
      of Liability.
      Notwithstanding anything to the contrary, the Manager shall in no event have
      any
      liability, directly or indirectly, for:

     

    
      	 	
              (i)

            	 	
              Any
                liability of the Owner under the Owner’s lease or any damages payable to
                the landlord; or

            


    

     

    
      	 	
              (ii)

            	 	
              Any
                liability of the Owner to any mortgagee or lender of the Owner or
                any
                damages payable to any such mortgagee or
                lender;

            


    

     

    provided
      that the limitation of liability set forth in this Section 11.2 shall not limit
      the Manager’s liability with respect to any of the insurance coverage for which
      the Manager is responsible to obtain on the Owner’s behalf under Article 8
      hereof and shall not limit the Manager’s liability for negligence or other
      tortious or unlawful conduct. Each party to this Agreement shall be bound to
      make reasonable efforts to mitigate any damages incurred as the result of any
      breach of this Agreement by the other party.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    ARTICLE
      12.

     

    SUCCESSORS
      AND ASSIGNS

     

    Section
      12.1.  Assignment
      by the Manager.
      The
      Manager may, without the Owner’s consent, assign its interest in this Agreement
      to (i) an affiliate of the Manager, provided that the Restaurant continues
      to be
      operated as a Shells restaurant and the Manager continues to remain fully liable
      under this Agreement; or (ii) a successor of the Manager that may result from
      a
      merger, reorganization, consolidation or acquisition, provided that the
      surviving or acquiring entity acquires all or substantially all of the assets
      of
      the Manager relating to the Shells restaurants owned and/or managed by the
      Manager; otherwise the Manager shall not assign all or any part of its interest
      in this Agreement to any person without the prior written consent of the Owner.
      The Manager shall furnish the Owner with any information regarding the proposed
      assignee that is reasonably requested by the Owner.

     

    Section
      12.2.  Assignment
      by the Owner.
      The
      Owner may, without the Manager’s consent, make a collateral assignment of this
      Agreement to Owner’s lender or assign Owner’s interest in this Agreement to (i)
      an affiliate of the Owner, provided that the Owner continues to be fully liable
      under this Agreement, or (ii) a purchaser of the Owner’s entire interest in the
      Restaurant; otherwise the Owner shall not assign all or any part of its interest
      in this Agreement to any person or entity without the prior written consent
      of
      the Manager. In a case in which the Manager’s consent to an assignment is
      required, the Manager shall not unreasonably withhold its consent to the Owner’s
      transfer of its interest in this Agreement, but the Manager’s consent to such a
      transfer may be conditioned upon the following:

     

    
      	
            	(a)	
              All
                of the Owner’s accrued monetary obligations to the Manager and all other
                outstanding obligations related to the Restaurant shall have been
                satisfied;

            


    

     

    
      	
            	(b)	
              The
                Owner shall have executed a general release, in a form satisfactory
                to the
                Manager, of any and all claims against the Manager and its affiliates
                and
                their shareholders and employees, in their corporate and individual
                capacities;

            


    

     

    
      	
            	(c)	
              The
                transferee shall enter into a written assumption agreement, in a
                form
                satisfactory to the Manager, assuming and agreeing to discharge all
                of the
                Owner’s obligations under this Agreement and reducing to writing any
                custom, usage or course of dealings that has been accepted in practice
                by
                the Owner and the Manager without having been memorialized in a formal
                amendment to this Agreement;

            


    

     

    
      	
            	(d)	
              The
                transferee shall demonstrate to the Manager’s satisfaction that it meets
                the Manager’s managerial and business standards; has a good business
                reputation and credit rating; meets the criteria relating to character,
                reputation and the like that apply in connection with the issuance,
                and/or
                renewal of liquor licenses and other licenses or permits required
                for the
                Restaurant; and has the requisite financial resources and capital
                to fund
                the operation of the Restaurant as required by this
                Agreement;

            


    

     

    
      	
            	(e)	
              The
                Owner shall not be in default under this Agreement, any amendments
                thereto
                or any other agreements with the Manager, its subsidiaries or affiliates;
                or

            


    

     

    
      	
            	(f)	
              The
                assignee must have been approved as a licensee of a liquor license
                suitable for use at the Restaurant before the assignment is binding
                upon
                the Manager.

            


    

     

    
      
         

      

      
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    Section
      12.3.  Transfer
      to Affiliates.
      Transfers of a party’s interest in this Agreement to an affiliate (as defined
      below) shall not require the consent of the other party provided that the
      transferor remains fully liable under this Agreement. The term “affiliate” as
      used herein shall mean any parent, subsidiary, affiliated or related corporation
      or other entity of the Owner or the Manager, respectively, or of any said
      parent, subsidiary, affiliated or related corporation or other
      entity.

     

    Section
      12.4.  Parties
      Bound.
      The
      terms, provisions, covenants, undertakings, agreements, obligations and
      conditions of this Agreement shall be binding upon and shall inure to the
      benefit of the successors-in-interest and assigns of the parties hereto with
      the
      same effect as if mentioned in each instance where the party hereto is named
      or
      referred to, except that no assignment, transfer, pledge, mortgage, lease or
      sublease made by either the Owner or the Manager in violation of this Agreement
      shall vest any rights in the assignee, transferee, mortgagee, pledge, lessee,
      sublessee or occupant.

     

    ARTICLE
      13. 

     

    PROPRIETARY
      ITEMS: TRADEMARKS, TRADE SECRETS AND

    INDICIA
      OF OWNERSHIP

     

    Section
      13.1.  Trademarks.
      The
      Owner understands that the Manager uses certain proprietary names, trademarks,
      service marks and other terms and notations (collectively referred to as the
      “Trademarks”) in its operation of Shells restaurants, including, without
      limitation, the registered marks “Shells” and the “jumping fish
      logo”.

     

    Section
      13.2.  Trade
      Secrets.
      The
      Owner understands that the Manager from time to time creates or develops
      copyright materials and trade secrets in connection with the management and
      operation of Shells restaurants (“Trade Secrets”), including, without
      limitation, the standards and specifications for design, construction,
      furniture, fixtures and equipment, decor, operating procedures, recipes, and
      management, marketing, training and accounting programs and
      materials.

     

    Section
      13.3.  Indicia
      of Ownership.
      The
      Owner recognizes that the Shells restaurants and the system used by the Manager
      in operating them are characterized by certain indicia of ownership (“Indicia of
      Ownership”) including, without limitation, (i) certain unique features of
      concept, design, appearance, and decor, which form the trade dress for Shells
      restaurants; and (ii) certain concepts, presentations and menu
      items.

     

    
      
         

      

      
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    Section
      13.4.  Ownership
      By the Manager.
      The
      Manager covenants that it owns all right, title and interest in and to the
      Trademarks, Trade Secrets and the Indicia of Ownership (referred to collectively
      as the “Proprietary Items”) so as to permit their use in connection with the
      Restaurant. The Owner expressly acknowledges the Manager’s exclusive right,
      title and interest in and to the Proprietary Items, both collectively and
      individually, and agrees not to represent in any manner that the Owner has
      any
      ownership rights therein. The Owner further agrees that use of the Proprietary
      Items at the Restaurant shall not create in Owner’s favor any right, title or
      interest or other attributes of ownership in or to the Proprietary Items. The
      Owner acknowledges and expressly agrees that any and all goodwill associated
      with the Proprietary Items and the Manager’s system for developing and operating
      Shells restaurants shall inure exclusively to the benefit of the Manager. The
      Owner shall have no claim for compensation for any part of the goodwill
      attributable to the use of the Proprietary Items at the Restaurant or to the
      Owner’s performance of its duties under this Agreement.

     

    Section
      13.5.  No
      Infringement By Owner.
      The
      Owner acknowledges that use of the Proprietary Items by the Owner without in
      each instance obtaining the Manager’s prior written consent shall be an
      infringement of the Manager’s exclusive right, title and interest in and to the
      Proprietary Items. The Owner expressly covenants that both during and after
      the
      Term of this Agreement, the Owner shall not, directly or indirectly, (i) commit
      an act of infringement, (ii) contest or aid in contesting the validity or
      ownership of the Proprietary Items, or (iii) take any other action in derogation
      of the Manager’s rights in and to the Proprietary Items. The Owner shall not
      hold out or otherwise employ the Proprietary Items to perform any activity
      or to
      incur any obligation or indebtedness in a manner that might in any way make
      the
      Manager liable therefor. The Owner shall promptly notify the Manager of any
      attempt by any other person, firm or corporation to use the Proprietary Items
      or
      any colorable variation thereof, and of any claim, demand or cause of action
      based upon or arising therefrom. The Owner shall also promptly notify the
      Manager of any litigation instituted against the Owner involving the Manager’s
      Proprietary Items. The Manager shall use its reasonable efforts, including
      prosecution or defense of legal proceedings, to protect the Proprietary Items
      against infringement. In the event the Manager undertakes the defense or
      prosecution of any litigation relating to the Proprietary Items, the Owner
      agrees to execute any and all documents and to do such acts and things as may,
      in the opinion of counsel for the Manager, be necessary to carry out such
      defense or prosecution; provided that the Manager shall reimburse the Owner
      for
      any out-of-pocket expenses that the Owner incurs in doing so and the cost of
      the
      litigation shall be paid by the Manager. If the Owner operates a business other
      than the Restaurant, the Owner shall not use the Proprietary Items or any
      reproduction, copy or colorable imitation thereof in either the operation or
      promotion of such business or otherwise conduct such business in any manner
      that
      infringes any right of the Manager or constitutes unfair competition with the
      Manager.

     

    Section
      13.6.  Subsequent
      Business.
      The
      Owner understands and agrees that discontinuance of use of the Indicia of
      Ownership shall require substantial revision of the decor of the Restaurant
      if
      the Owner intends to continue to conduct any type of business at the Restaurant
      following termination of this Agreement. Within 30 days after termination or
      expiration of this Agreement for any reason, including but not limited to the
      breach of this Agreement by the Manager, the Owner shall cease using the
      Trademarks, Trade Secrets, Indicia of Ownership and any other Proprietary Items
      owned by the Manager; and the Owner shall make such modifications or alterations
      to the Restaurant as may be necessary to prevent the operation of any business
      thereon by Owner or others in derogation of this Article 13; provided that
      structural changes to the Restaurant shall not be required except to the extent
      specified below in this Section 13.6. In the event the Owner fails or refuses
      to
      comply with the requirements of this Article 13, the Manager shall have the
      right, subject to and in accordance with the terms of the Owner’s lease, to
      enter upon the Restaurant premises without being guilty of trespass or any
      other
      tort, for the purpose of making or causing to be made such changes as may be
      required at the expense of the Owner, which expense the Owner agrees to pay
      to
      the Manager upon demand. The Owner shall alter or remove or cause to be removed
      from the Restaurant premises the all Indicia of Ownership, including without
      limitation, all signage and all Proprietary Items, such as menus, recipes or
      any
      other items bearing the Manager’s name or any of the Manager’s
      Trademarks.

     

    
      
         

      

      
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    Section
      13.7.  Purchase
      of Proprietary Items.
      Upon
      termination or expiration of this Agreement, the Manager shall have the option
      to purchase from the Owner any or all items in the Restaurant that bear any
      of
      the Manager’s Trademarks, at Owner’s cost or fair market value, whichever is
      less. If the parties cannot agree on fair market value within 30 days after
      the
      termination of this Agreement, a mutually acceptable independent appraiser
      shall
      be designated by the parties hereto, and the appraiser’s determination shall be
      binding.

     

    ARTICLE
      14. 

     

    ADVERTISING,
      PROMOTION AND TRAINING

     

    Section
      14.1.  Cost
      of Advertising.
      The
      cost of marketing and advertising for the Restaurant shall be an operating
      expense of the Restaurant. The cost of in-store advertising and promotion that
      applies only to the Restaurant shall be one category of such expenses. In
      addition, the cost of marketing and advertising that is applicable to all Shells
      restaurants on a state, regional, or national basis shall be allocated among
      all
      of the Shells restaurants managed by the Manager, based upon the Manager’s
      standard method of allocating such cost. If the Manager provides marketing
      or
      advertising services within a defined market area that includes the Restaurant
      and other Shells restaurants, the cost of such marketing or advertising shall
      be
      allocated among the Restaurant and such other Shells restaurants within such
      market area.

     

    Section
      14.2.  Promotions.
      The
      Manager may offer promotions, discounts and other incentives at the Restaurant
      in a manner similar to those offered at other Shells restaurants managed by
      the
      Manager. Sales made in connection with any such promotion, discount or other
      incentive shall be included in Gross Sales in the amount paid by the customer
      rather than at the menu price. The costs incurred by the Restaurant in
      connection with such items shall be included in the operating expenses of the
      Restaurant.

     

    Section
      14.3.  Training.
      The
      cost of store-level management training for the Restaurant shall be borne by
      the
      Owner. If the Manager moves store level management of the Restaurant to other
      Shells’ restaurants managed by the Manager, other than the initial store level
      management of the Restaurant (to which this Section 14.3 shall not apply),
      the
      recipient store will pay the Owner the sum of $15,000 for a general manager
      or
      $12,000 for an assistant manager, and if the Restaurant receives store level
      management trained at other restaurants managed by the Manager, the Owner shall
      pay the transferor store the sum of $15,000 for a general manager or $12,000
      for
      an assistant manager.

     

    ARTICLE
      15. 

     

    NOTICES

     

    Section
      15.1.  Notice
      Addresses.
      Written
      communications between the Owner and the Manager shall be sent to their
      respective addresses shown on the first page of this Agreement (“Notice
      Address”); provided that the Owner or the Manager may change its Notice Address
      by giving written notice of such change to the other party in accordance with
      this paragraph.

     

    Section
      15.2.  Notices.
      Wherever this Agreement provides for notice, such notice shall be in writing
      and
      shall be delivered to a party at its Notice Address, either by hand delivery
      or
      by United States mail, certified, with return receipt requested. A
      hand-delivered notice shall be effective on the date of receipt by the party
      being served with the notice. A mailed notice shall be effective on the earlier
      of (i) the date of receipt or refusal of receipt, or (ii) five days after the
      date of mailing. Either party may, in a written notice to the other party,
      designate a reasonable number of third parties to receive a copy of notices
      sent
      under this Agreement. Copies of notices may be sent by regular U.S.
      mail.

     

    
      
         

      

      
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    ARTICLE
      16. 

     

    GENERAL
      PROVISIONS

     

    Section
      16.1.  Relationship
      of the Parties.
      The
      provisions of this Agreement relating to the determination and payment of
      management fees hereunder are included solely for the purpose of providing
      a
      method whereby the such fees can be measured and ascertained. The Manager and
      the Owner shall not be construed as joint venturers or partners of each other
      and neither shall have the power to bind or obligate the other except as set
      forth in this Agreement.

     

    Section
      16.2.  Entire
      Agreement.
      This
      Agreement supersedes all prior agreements and understandings, whether written
      or
      oral. The Owner and the Manager have neither made nor relied upon any promises,
      representations or warranties in connection with this Agreement that are not
      expressly set forth in this Agreement. In entering into this Agreement, the
      Owner and the Manager have relied on the representations and warranties
      contained in this Agreement.

     

    Section
      16.3.  Modifications
      and Waiver.
      This
      Agreement may not be modified except by a written agreement signed by the party
      against whom such modification is sought to be enforced. No waiver of any
      condition or covenant in this Agreement by either party shall be effective
      unless made in writing, nor shall any waiver be deemed to imply or constitute
      a
      future waiver of the same or any other condition or covenant of this
      Agreement.

     

    Section
      16.4.  Governing
      Law.
      This
      Agreement shall be construed and enforced in accordance with the laws of the
      State of Florida.

     

    Section
      16.5.  Construction.
      Whenever a word appears herein in its singular form, such word shall include
      the
      plural; and the masculine gender shall include the feminine and neuter genders.
      This Agreement shall be construed without reference to the titles of Articles,
      Sections or Clauses, which are inserted for convenient reference only. This
      Agreement shall be construed without regard to any presumption or other rule
      permitting construction against the party causing this Agreement to be drafted
      and shall not be construed more strictly in favor of or against either of the
      parties hereto.

     

    Section
      16.6.  Severability.
      If any
      term or provision of this Agreement or the application thereof to any person
      or
      circumstances shall to any extent be invalid or unenforceable, the remainder
      of
      this Agreement, or the application of such term or provision to persons or
      circumstances other than those as to which it is held invalid or unenforceable,
      shall not be affected thereby, and each term and provision of this Agreement
      shall be valid and enforceable to the fullest extent permitted by
      law.

     

    Section
      16.7.  Consent
      or Approval
      .
      Whenever it is necessary under the terms of this Agreement for either party
      to
      obtain the consent or approval of the other party, such consent or approval
      shall not be unreasonably withheld or delayed.

     

    Section
      16.8.  Certificate
      of Performance.
      The
      Owner and the Manager shall, within 20 days after receipt of a written request
      from the other, execute, acknowledge and deliver a statement in writing
      certifying whether this Agreement is unmodified and in full force and effect
      (or
      if modified, whether the same is in full force and effect as so modified),
      whether any conditions to the full enforceability of this Agreement remain
      unsatisfied, and such other facts, including the nature of any claim of default
      on the part of the other, as either party may reasonably request.

     

    Section
      16.9.  Excuse
      for Nonperformance.
      If
      either party hereto shall be delayed or prevented, from the performance of
      any
      act required hereunder by reason of acts of God, strikes, lockouts, labor
      troubles, inability to procure materials, restrictive governmental laws or
      regulations, adverse weather, unusual delay in transportation, delay by the
      other party hereto or other cause without fault and beyond the control of the
      party obligated to perform (financial inability excepted), then upon notice
      to
      the other party, the performance of such act shall be excused for the period
      of
      the delay and the period for the performance of such act shall be extended
      for a
      period equal to the period of such delay; provided, however, the party so
      delayed or prevented from performing shall exercise good faith efforts to remedy
      any such cause of delay or cause preventing performance.

     

    
      
         

      

      
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    Section
      16.10.  Disputes.
      If a
      dispute shall arise as to any amount or sum of money to be paid by one party
      to
      the other or any work to be performed by either of them under the provisions
      hereof, a party shall have the right to make payment or perform such work “under
      protest,” without waiver or prejudice to its right to recover from the other
      party. If it shall later be determined (by agreement of the parties, arbitration
      or litigation) that one party has paid or performed an obligation that should
      have been paid or performed by the other party, the party who paid or performed
      “under protest” shall be entitled to recover the amount paid or the cost
      incurred, plus interest thereon at the Interest Rate specified in Section 16.13
      hereof, from the date on which such payment was made until the date on which
      reimbursement is received.

     

    Section
      16.11.  Arbitration.
      All
      claims, disputes and other matters in question between the parties to this
      Agreement arising out of or relating to this Agreement or the breach thereof,
      shall be decided by mandatory and binding arbitration in accordance with the
      Commercial Arbitration Rules of the American Arbitration Association (“AAA”) or
      as otherwise agreed by the parties in such controversy, and judgement on the
      award rendered by the arbitrator(s) may be entered in any court having
      jurisdiction thereof.

     

    Section
      16.12.  Attorney’s
      Fees.
      If the
      Owner or the Manager brings action through arbitration or at law or equity
      against the other in order to enforce the provisions of this Agreement or as
      a
      result of an alleged default under this Agreement, the prevailing party in
      such
      action shall be entitled to recover from the other party reasonable attorney’s
      fees (including paralegals employed by such attorney and costs of litigation
      at
      the trial and appellate level).

     

    Section
      16.13.  Interest.
      All
      monetary obligations under this Agreement shall bear interest from the date
      on
      which they become due and payable until the date on which payment is received
      by
      the party entitled to payment. Except where a different rate of interest is
      expressly provided for elsewhere in this Agreement, such interest shall be
      paid
      at an annual rate (the “Interest Rate”) equal to ten percent (10%) per
      annum.

     

    Section
      16.14.  Date
      of Agreement.
      All
      references to the “date of this Agreement,” the “date hereof,” and the like
      shall be deemed to be the last date on which this Agreement shall be executed
      by
      the Owner and by the Manager.

     

    In
      witness whereof, the Owner and the Manager do hereby execute this Management
      and
      License Agreement on the date first appearing in the preamble to this
      Agreement.

     

    
      	 	
              SHELLS
                SEAFOOD RESTAURANTS, INC.,
                
a Delaware corporation

              


              By:/s/
                Warren R Nelson

              Name:
                Warren
                R Nelson

              Title:
                President
                and CFO

               

              ROCK
                BEACH GRILL OF PEMBROKE PINES, LLLP,

              a
                Florida limited liability limited partnership

              


              By:
                ROCK
                BEACH HOLDINGS, LLC,

              its
                general partner

              


              By:
                /s/
                Warren R. Nelson

              Name:
                Warren
                R Nelson

              Title:
                President

            


    

     

    
      
         

      

      
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