Document:

Exhibit
      10.1

    

    PROMISSORY
      NOTE

    

    Borrower:
      Shells
      Seafood Restaurants, Inc.

    16313
      North Dale Mabry Hwy, Suite 100

    Tampa,
      FL 33618

    

    Lender:
      COLONIAL
      BANK, N.A.

    Corporate
      Lending

    400
      N. Tampa Street

    Tampa,
      FL 33602

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    Principal
      Amount: $500,000.00 Initial Rate: 8.250% Date of Note: December 28,
      2005

    PROMISE
      TO PAY. Shells Seafood Restaurants, Inc. ("Bor rower") promises to pay to
      COLONIAL BANK, N.A. ( "Lender"), or order, in lawful

    money
      of the United States of Amer ica, the pr incipal amount of Five Hundred Thousand
      & 00/100 Dollars ($500,000.00) or so much as may be outstanding, together
      with interest on the unpaid outstanding pr incipal balance of each advance.
      Interest shall be calculated from the date of each advance until repayment
      of
      each advance.

    

    PAYMENT.
      Bor rower will pay this loan in one payment of all outstanding principal plus
      all accrued unpaid interest on June 28, 2006. In

    addition,
      Borrower will pay regular monthly payments of all accrued unpaid interest due
      as
      of each payment date, beginning January 28, 2006, with all subsequent interest
      payments to be due on the same day of each month after that. Unless otherwise
      agreed or required by applicable law, payments will be applied first to any
      accrued unpaid interest; then to principal; then to any unpaid collection costs;
      and then to any late charges. The annual interest rate for this Note is computed
      on a 365/360 basis; that is, by applying the ratio of the annual interest rate
      over a year of 360 days, multiplied by the outstanding principal balance,
      multiplied by the actual number of days the pr incipal balance is outstanding.
      Bor rower will pay Lender at Lender ’s address shown above or at such other
      place as Lender may designate inwriting.

    

    VARIABLE
      INTEREST RATE. The
      interest rate on this Note is subject to change from time to time based on
      changes in an index which is the

    Colonial
      Bank, N.A.’ s Base Rate (the "Index"). Base Rate. Lender will tell Bor rower the
      cur rent Index rate upon Borrower ’s request. The

    interest
      rate change will not occur more often than each day. Borrower understands that
      Lender may make loans based on other rates as well.

    The
      Index cur rently is 7.250% per annum. The
      interest rate to be applied to the unpaid pr incipal balance during this Note
      will be at a rate of

    1.000
      percentage point over the Index, resulting in an initial rate of 8.250% per
      annum. NOTICE: Under no circumstances will the effective

    rate
      of
      interest on this Note be more than the maximum rate allowed by applicable
      law.

    

    PREPAYMENT.
      Borrower
      agrees that all loan fees and other prepaid finance charges are earned fully
      as
      of the date of the loan and will not be

    subject
      to
      refund upon ear ly payment (whether voluntary or as a result of default), except
      as otherwise required by law. Except for the

    foregoing,
      Bor rower may pay without penalty all or a portion of the amount owed earlier
      than it is due. Early payments will not, unless agreed

    to
      by
      Lender in writing, relieve Borrower of Borrower’s obligation to continue to make
      payments of accrued unpaid interest. Rather , early

    payments
      will reduce the principal balance due. Borrower agrees not to send Lender
      payments marked "paid in full", "without recourse", or

    similar
      language. If Borrower sends such a payment, Lender may accept it without losing
      any of Lender ’s rights under this Note, and Borrower

    will
      remain obligated to pay any further amount owed to Lender . All wr itten
      communications concerning disputed amounts, including any check

    or
      other
      payment instrument that indicates that the payment constitutes "payment in
      full"
      of the amount owed or that is tendered with other

    conditions
      or limitations or as full satisfaction of a disputed amount must be mailed
      or
      delivered to: COLONIAL BANK, N.A.; Corporate Lending;

    400
      N.
      Tampa Street; Tampa, FL 33602.

    

    LATE
      CHARGE. If
      a
      payment is 9 days or more late, Borrower will be charged 5.000%
      of the unpaid portion of the regularly scheduled

    payment.
      

    

    INTEREST
      AFTER DEFAULT. Upon
      default, including failure to pay upon final maturity, the interest rate on
      this
      Note shall be increased to

    18.000%
      per annum. However, in no event will the interest rate exceed the maximum
      interest rate limitations under applicable law.

    

    DEFAULT.
      Each
      of
      the following shall constitute an event of default ("Event of Default") under
      this Note:

    Payment
      Default. Bor
      rower
      fails to make any payment when due under this Note.

    Other
      Defaults. Borrower
      fails to comply with or to perform any other term, obligation, covenant or
      condition contained in this Note or in

    any
      of the
      related documents or to comply with or to perform any term, obligation, covenant
      or condition contained in any other agreement

    between
      Lender and Borrower .

    Default
      in Favor of Third Par ties. Borrower
      or any Grantor defaults under any loan, extension of credit, secur ity
      agreement, purchase or

    sales
      agreement, or any other agreement, in favor of any other creditor or person
      that
      may mater ially affect any of Bor rower’s proper ty or

    Borrower
      ’s ability to repay this Note or per form Borrower ’s obligations under this
      Note or any of the related documents.

    False
      Statements. Any
      warranty, representation or statement made or furnished to Lender by Borrower
      or
      on Borrower ’s behalf under this

    Note
      or
      the related documents is false or misleading in any material respect, either
      now
      or at the time made or furnished or becomes false

    or
      misleading at any time thereafter.

    Insolvency.
      The
      dissolution or termination of Bor rower’s existence as a going business, the
      insolvency of Borrower , the appointment of a

    receiver
      for any part of Bor rower’s property, any assignment for the benefit of
      creditors, any type of creditor workout, or the

    commencement
      of any proceeding under any bankruptcy or insolvency laws by or against
      Borrower.

    Creditor
      or For feiture Proceedings. Commencement
      of foreclosure or for feiture proceedings, whether by judicial proceeding,
      self-help,

    repossession
      or any other method, by any creditor of Borrower or by any governmental agency
      against any collateral securing the loan.

    This
      includes a garnishment of any of Borrower’s accounts, including deposit
      accounts, with Lender. However, this Event of Default shall

    not
      apply
      if there is a good faith dispute by Bor rower as to the validity or
      reasonableness of the claim which is the basis of the creditor or

    for
      feiture proceeding and if Borrower gives Lender wr itten notice of the creditor
      or forfeiture proceeding and deposits with Lender monies or

    a
      surety
      bond for the creditor or forfeiture proceeding, in an amount determined by
      Lender, in its sole discretion, as being an adequate

    reserve
      or
      bond for the dispute.

    Events
      Affecting Guarantor. Any
      of the
      preceding events occurs with respect to any guarantor, endorser, surety, or
      accommodation party

    of
      any of
      the indebtedness or any guarantor, endorser, surety, or accommodation par ty
      dies or becomes incompetent, or revokes or

    disputes
      the validity of, or liability under, any guaranty of the indebtedness evidenced
      by this Note. In the event of a death, Lender , at its

    option,
      may, but shall not be required to, permit the guarantor ’s estate to assume
      unconditionally the obligations ar ising under the guaranty

    in
      a
      manner satisfactory to Lender, and, in doing so, cure any Event of
      Default.

    Change
      In Ownership. Any
      change
      in ownership of twenty-five percent (25%) or more of the common stock of Bor
      rower.

    Adverse
      Change. A
      material
      adverse change occurs in Borrower’s financial condition, or Lender believes the
      prospect of payment or

    per
      formance of this Note is impaired.

    Insecurity.
      Lender
      in
      good faith believes itself insecure.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Cure
        Provisions. If
        any
        default, other than a default in payment is curable and if Borrower has not
        been
        given a notice of a breach of the

      same
        provision of this Note within the preceding twelve (12) months, it may be
        cured
        if Bor rower, after receiving wr itten notice from

      Lender
        demanding cure of such default: (1) cures the default within fifteen (15)
        days;
        or (2) if the cure requires more than fifteen (15)

      days,
        immediately initiates steps which Lender deems in Lender’s sole discretion to be
        sufficient to cure the default and thereafter

      continues
        and completes all reasonable and necessary steps sufficient to produce
        compliance as soon as reasonably practical.

    

     

    LENDER’S
      RIGHTS. Upon
      default, Lender may declare the entire unpaid principal balance under this
      Note
      and all accrued unpaid interest

    immediately
      due, and then Bor rower will pay that amount.

    

    ATTORNEYS’
      FEES; EXPENSES. Lender
      may
      hire or pay someone else to help collect this Note if Bor rower does not pay.
      Borrower will pay

    Lender
      the
      amount of these costs and expenses, which includes, subject to any limits under
      applicable law, Lender ’s reasonable attorneys’ fees

    and
      Lender
’s legal expenses whether or not there is a lawsuit, including reasonable
      attorneys’ fees and legal expenses for bankruptcy

    proceedings
      ( including efforts to modify or vacate any automatic stay or injunction),
      and
      appeals. If not prohibited by applicable law, Borrower

    also
      will
      pay any court costs, in addition to all other sums provided by law.

    

    JURYWAIVER.
      Lender and Borrower hereby waive the right to any jury trial in any action,
      proceeding, or counterclaim brought by either Lender or Bor rower against the
      other .

    

    GOVERNING
      LAW. This Note will be governed by federal law applicable to Lender and, to
      the
      extent not preempted by federal law, the laws of the State of Florida without
      regard to its conflicts of lawprovisions. This Note has been accepted by Lender
      in the State of Flor ida.

    

    DISHONORED
      ITEM FEE. Bor
      rower
      will pay a fee to Lender of $30.00 if Borrower makes a payment on Bor rower’s
      loan and the check or

    preauthorized
      charge withwhich Bor rower pays is later dishonored.

    

    RIGHT
      OF SETOFF. To
      the
      extent permitted by applicable law, Lender reserves a r ight of setoff in all
      Bor rower’s accounts with Lender (whether

    checking,
      savings, or some other account). This includes all accounts Borrower holds
      jointly with someone else and all accounts Borrower may

    open
      in
      the future. However , this does not include any IRA or Keogh accounts, or any
      trust accounts for which setoff would be prohibited by

    law.
      Borrower authorizes Lender, to the extent permitted by applicable law, to charge
      or setoff all sums owing on the indebtedness against any

    and
      all
      such accounts.

    

    COLLATERAL.
      Borrower
      acknowledges this Note is secured by collateral as more fully described in
      a
      Commercial Security Agreement of even

    date.

    

    LINE
      OF CREDIT. This
      Note
      evidences a revolving line of credit. Advances under this Note may be requested
      orally by Bor rower or as provided

    in
      this
      paragraph. All oral requests shall be confirmed in wr iting on the day of the
      request. All communications, instructions, or directions by

    telephone
      or otherwise to Lender are to be directed to Lender’s office shown above. The
      following person currently is authorized to request

    advances
      and author ize payments under the line of credit until Lender receives from
      Borrower , at Lender ’s address shown above, written notice

    of
      revocation of his or her author ity: Warren
      R. Nelson, Vice President/CFO of Shells Seafood Restaurants, Inc.
Borrower
      agrees to be liable for

    all
      sums
      either: (A) advanced in accordance with the instructions of an authorized person
      or (B) credited to any of Bor rower’s accounts with

    Lender
      .
      The unpaid pr incipal balance owing on this Note at any time may be evidenced
      by
      endorsements on this Note or by Lender’s internal

    records,
      including daily computer print-outs.

    

    LETTERS
      OF CREDIT. Borrower
      may request that Lender , from time to time, issue letters of credit for the
      benefit of Bor rower (each a "Letter of

    Credit").
      Bor rower acknowledges that, when a Letter of Credit is issued by Lender for
      the
      benefit of Bor rower while the line of credit evidenced

    hereby
      (the "Line of Credit") remains outstanding, the amount available under the
      Line
      of Credit shall immediately be reduced by an amount

    equal
      to
      the face amount of the Letter of Credit and Bor rower shall have no right to
      borrow such amount while the Letter of Credit remains

    outstanding.
      Therefore, as an example which is included for the purpose of demonstration
      only, if Lender were to issue a Letter of Credit for the

    benefit
      of
      Borrower in the amount of $50,000.00, the amount available to be borrowed by
      Bor
      rower under the Line of Credit evidenced by this

    Note
      shall
      immediately be reduced by $50,000.00 (as if such amount had been drawn down
      by
      Bor rower under the Line of Credit) and Bor rower

    shall
      have
      no right to borrowthe said funds while the Letter of Credit remains outstanding.
      Lender shall have no obligation to issue a Letter of

    Credit
      if
      the amount which remains unborrowed under the Line of Credit, at the point
      in
      time at which Bor rower requests the Letter of Credit, is

    less
      than
      the face amount of the Letter of Credit. Borrower acknowledges that, in addition
      to complying with the terms and conditions hereof,

    Bor
      rower
      shall also be required to satisfy all of the other conditions of Lender with
      respect to the issuance of any Letter of Credit, specifically

    including,
      but not limited to, the execution of any and all documents whichmay be required
      by Lender with regard thereto.

    

    SUCCESSOR
      INTERESTS. The
      terms
      of this Note shall be binding upon Borrower , and upon Borrower ’s heirs,
      personal representatives,

    successors
      and assigns, and shall inure to the benefit of Lender and its successors and
      assigns.

    

    NOTIFY
      US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please
      notify us if we report any inaccurate information about your account(s) to
      a
      consumer reporting agency. Your written notice describing the specific
      inaccuracy(ies) should be sent to us at the following address: COLONIAL BANK,
      N.A., Corporate Lending, 400 N. Tampa Street, Tampa, FL 33602.

    

    GENERAL
      PROVISIONS. If
      any par
      t of this Note cannot be enforced, this fact will not affect the rest of the
      Note. Borrower does not agree or

    intend
      to
      pay, and Lender does not agree or intend to contract for , charge, collect,
      take, reserve or receive (collectively referred to herein as

    "charge
      or
      collect"), any amount in the nature of interest or in the nature of a fee for
      this loan, which would in any way or event (including

    demand,
      prepayment, or acceleration) cause Lender to charge or collect more for this
      loan than the maximum Lender would be permitted to

    charge
      or
      collect by federal law or the law of the State of Florida (as applicable).
      Any
      such excess interest or unauthor ized fee shall, instead of

    anything
      stated to the contrary, be applied first to reduce the pr incipal balance of
      this loan, and when the principal has been paid in full, be

    refunded
      to Bor rower. Lender may delay or forgo enforcing any of its rights or remedies
      under this Note without losing them. Borrower and any

    other
      person who signs, guarantees or endorses this Note, to the extent allowed by
      law, waive presentment, demand for payment, and notice of

    dishonor.
      Upon any change in the terms of this Note, and unless otherwise expressly stated
      in writing, no party who signs this Note, whether

    as
      maker,
      guarantor, accommodation maker or endorser , shall be released from liability.
      All such parties agree that Lender may renew or extend

    (repeatedly
      and for any length of time) this loan or release any party or guarantor or
      collateral; or impair, fail to realize upon or perfect Lender ’s

    security
      interest in the collateral; and take any other action deemed necessary by Lender
      without the consent of or notice to anyone. All such

    parties
      also agree that Lender may modify this loan without the consent of or notice
      to
      anyone other than the party with whom the modification

    is
      made.
      The obligations under this Note are joint and several.

    

    PRIOR
      TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
      NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE
      TERMS OF THE NOTE. 

    BORROWER
      ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY
      NOTE.

    BORROWER:

    SHELLS
      SEAFOOD RESTAURANTS, INC.

    By:,/s/
      War
      ren R. Nelson, Vice President/CFO 

    Shells
      Seafood Restaurants, Inc.

    Florida
      Documentary Stamp Tax

    Florida
      documentary stamp tax required by law in the amount of $1,750.00 has been paid
      or will be paid directly to the Department of Revenue.Exhibit
      10.2

    

    BUSINESS
      LOAN AGREEMENT

    

    Borrower:
      Shells
      Seafood Restaurants, Inc.

    16313
      North Dale Mabry Hwy, Suite 100

    Tampa,
      FL 33618

    

    Lender:
      COLONIAL
      BANK, N.A.

    Corporate
      Lending

    400
      N. Tampa Street

    Tampa,
      FL 33602

    

    THIS
      BUSINESS LOAN AGREEMENT dated December 28, 2005, is made and executed between
      Shells Seafood Restaurants, Inc. ("Bor rower") and COLONIAL BANK, N.A. (
      "Lender") on the following terms and conditions. Borrower has received pr ior
      commercial loans from Lender or has applied to Lender for a commercial loan
      or
      loans or other financial accommodations, including those which may be described
      on any exhibit or schedule attached to this Agreement ("Loan"). Borrower
      understands and agrees that: (A) in granting, renewing, or extending any Loan,
      Lender is relying upon Borrower ’s representations, warranties, and agreements
      as set for th in this Agreement; (B) the granting, renewing, or extending of
      any
      Loan by Lender at all times shall be subject to Lender ’s sole judgment and
      discretion; and (C) all such Loans shall be and remain subject to the terms
      and
      conditions of this Agreement. 

    

    TERM.
      This
      Agreement shall be effective as of December 28, 2005, and shall continue in
      full
      force and effect until such time as all of

    Bor
      rower’s Loans in favor of Lender have been paid in full, including pr incipal,
      interest, costs, expenses, attorneys’ fees, and other fees and

    charges,
      or until such time as the par ties may agree in wr iting to terminate this
      Agreement.

    

    ADVANCE
      AUTHORITY. The
      following person currently is authorized to request advances and authorize
      payments under the line of credit until

    Lender
      receives from Borrower, at Lender’s address shown above, written notice of
      revocation of his or her author ity: Warren
      R. Nelson, Vice

    President/CFO
      of Shells Seafood Restaurants, Inc.

    

    CONDITIONS
      PRECEDENT TO EACH ADVANCE. Lender’s
      obligation to make the initial Advance and each subsequent Advance under
      this

    Agreement
      shall be subject to the fulfillment to Lender’s satisfaction of all of the
      conditions set for th in this Agreement and in the Related

    Documents.

    Loan
      Documents. Borrower
      shall provide to Lender the following documents for the Loan: (1) the Note;
      (2)
      Security Agreements

    granting
      to Lender security interests in the Collateral; (3) financing statements and
      all
      other documents per fecting Lender’s Security

    Interests;
      (4) evidence of insurance as required below; (5) together with all such Related
      Documents as Lender may require for the Loan;

    all
      in
      form and substance satisfactory to Lender and Lender’s counsel.

    Borrower
      ’s Authorization. Borrower
      shall have provided in form and substance satisfactory to Lender properly cer
      tified resolutions, duly

    authorizing
      the execution and delivery of this Agreement, the Note and the Related
      Documents. In addition, Bor rower shall have provided

    such
      other
      resolutions, author izations, documents and instruments as Lender or its
      counsel, may require.

    Payment
      of Fees and Expenses. Borrower
      shall have paid to Lender all fees, charges, and other expenses which are then
      due and payable

    as
      specified in this Agreement or any Related Document.

    Representations
      and Warranties. The
      representations and warranties set forth in this Agreement, in the Related
      Documents, and in any

    document
      or cer tificate delivered to Lender under this Agreement are true and
      correct.

    No
      Event of Default. There
      shall not exist at the time of any Advance a condition which would constitute
      an
      Event of Default under this

    Agreement
      or under any Related Document.

    

    REPRESENTATIONS
      AND WARRANTIES. Borrower
      represents and war rants to Lender , as of the date of this Agreement, as of
      the
      date of each

    disbursement
      of loan proceeds, as of the date of any renewal, extension or modification
      of
      any Loan, and at all times any Indebtedness exists:

    Organization.
      Borrower
      is a corporation for profit which is, and at all times shall be, duly organized,
      validly existing, and in good standing

    under
      and
      by vir tue of the laws of the State of Delaware. Bor rower is duly author ized
      to transact business in the State of Florida and all

    other
      states in which Borrower is doing business, having obtained all necessary
      filings, governmental licenses and approvals for each state

    in
      which
      Borrower is doing business. Specifically, Borrower is, and at all times shall
      be, duly qualified as a foreign corporation in all states

    in
      which
      the failure to so qualify would have a mater ial adverse effect on its business
      or financial condition. Bor rower has the full power

    and
      author
      ity to own its properties and to transact the business in which it is presently
      engaged or presently proposes to engage. Borrower

    maintains
      an office at 16313 Nor th Dale Mabry Hwy, Suite 100, Tampa, FL 33618. Unless
      Bor
      rower has designated otherwise in wr iting,

    the
      pr
      incipal office is the office at which Bor rower keeps its books and records
      including its records concerning the Collateral. Borrower

    will
      notify Lender prior to any change in the location of Borrower ’s state of
      organization or any change in Borrower ’s name. Bor rower shall

    do
      all
      things necessary to preserve and to keep in full force and effect its existence,
      r ights and privileges, and shall comply with all

    regulations,
      rules, ordinances, statutes, orders and decrees of any governmental or
      quasi-governmental authority or court applicable to

    Borrower
      and Borrower’s business activities.

    Assumed
      Business Names. Borrower
      has filed or recorded all documents or filings required by law relating to
      all
      assumed business names

    used
      by
      Bor rower. Excluding the name of Borrower, the following is a complete list
      of
      all assumed business names under which Borrower

    does
      business: None.

    Authorization.
      Bor
      rower’s execution, delivery, and performance of this Agreement and all the
      Related Documents have been duly

    authorized
      by all necessary action by Borrower and do not conflict with, result in a
      violation of, or constitute a default under (1) any

    provision
      of (a) Bor rower’ s ar ticles of incorporation or organization, or bylaws, or
      (b) any agreement or other instrument binding upon

    Borrower
      or (2) any law, governmental regulation, court decree, or order applicable
      to
      Bor rower or to Borrower ’s properties.

    Financial
      Information. Each
      of
      Bor rower’s financial statements supplied to Lender truly and completely
      disclosed Borrower’s financial

    condition
      as of the date of the statement, and there has been no material adverse change
      in Bor rower’s financial condition subsequent to

    the
      date
      of the most recent financial statement supplied to Lender. Borrower has no
      material contingent obligations except as disclosed in

    such
      financial statements.

    Legal
      Effect. This
      Agreement constitutes, and any instrument or agreement Bor rower is required
      to
      give under this Agreement when

    delivered
      will constitute legal, valid, and binding obligations of Borrower enforceable
      against Bor rower in accordance with their respective

    terms.

    Proper
      ties. Except
      as
      contemplated by this Agreement or as previously disclosed in Borrower’s
      financial statements or in writing to Lender

    and
      as
      accepted by Lender, and except for property tax liens for taxes not presently
      due and payable, Bor rower owns and has good title to

    all
      of
      Borrower ’s properties free and clear of all Secur ity Interests, and has not
      executed any security documents or financing statements

    relating
      to such properties. All of Bor rower’s properties are titled in Borrower’s legal
      name, and Borrower has not used or filed a financing

    statement
      under any other name for at least the last five (5) years.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Hazardous
      Substances. Except
      as
      disclosed to and acknowledged by Lender in writing, Borrower represents and
      warrants that: (1) Dur ing

    the
      per
      iod of Bor rower’s ownership of the Collateral, there has been no use,
      generation, manufacture, storage, treatment, disposal, release

    or
      threatened release of any Haz ardous Substance by any person on, under , about
      or from any of the Collateral. (2) Bor rower has no

    knowledge
      of, or reason to believe that there has been (a) any breach or violation of
      any
      Environmental Laws; (b) any use, generation,

    manufacture,
      storage, treatment, disposal, release or threatened release of any Hazardous
      Substance on, under , about or from the

    Collateral
      by any prior owners or occupants of any of the Collateral; or (c) any actual
      or
      threatened litigation or claims of any kind by any

    person
      relating to such matters. (3) Neither Borrower nor any tenant, contractor,
      agent
      or other authoriz ed user of any of the Collateral

    shall
      use,
      generate, manufacture, store, treat, dispose of or release any Hazardous
      Substance on, under , about or from any of the

    Collateral;
      and any such activity shall be conducted in compliance with all applicable
      federal, state, and local laws, regulations, and

    ordinances,
      including without limitation all Environmental Laws. Borrower author izes Lender
      and its agents to enter upon the Collateral to

    make
      such
      inspections and tests as Lender may deem appropriate to determine compliance
      of
      the Collateral with this section of the

    Agreement.
      Any inspections or tests made by Lender shall be at Bor rower’ s expense and for
      Lender’ s purposes only and shall not be

    construed
      to create any responsibility or liability on the part of Lender to Borrower
      or
      to any other person. The representations and

    war
      ranties contained herein are based on Borrower’s due diligence in investigating
      the Collateral for haz ardous waste and Hazardous

    Substances.
      Borrower hereby (1) releases and waives any future claims against Lender for
      indemnity or contribution in the event

    Borrower
      becomes liable for cleanup or other costs under any such laws, and (2) agrees
      to
      indemnify and hold harmless Lender against

    any
      and
      all claims, losses, liabilities, damages, penalties, and expenses which Lender
      may directly or indirectly sustain or suffer resulting

    from
      a
      breach of this section of the Agreement or as a consequence of any use,
      generation, manufacture, storage, disposal, release or

    threatened
      release of a hazardous waste or substance on the Collateral. The provisions
      of
      this section of the Agreement, including the

    obligation
      to indemnify, shall survive the payment of the Indebtedness and the termination,
      expiration or satisfaction of this Agreement and

    shall
      not
      be affected by Lender’s acquisition of any interest in any of the Collateral,
      whether by foreclosure or otherwise.

    Litigation
      and Claims. No
      litigation, claim, investigation, administrative proceeding or similar action
      (including those for unpaid taxes)

    against
      Borrower is pending or threatened, and no other event has occurred which may
      mater ially adversely affect Borrower ’s financial

    condition
      or proper ties, other than litigation, claims, or other events, if any, that
      have been disclosed to and acknowledged by Lender in

    writing.

    Taxes.
      To
      the
      best of Bor rower’s knowledge, all of Bor rower’ s tax returns and repor ts that
      are or were required to be filed, have been

    filed,
      and
      all taxes, assessments and other governmental charges have been paid in full,
      except those presently being or to be contested by

    Borrower
      in good faith in the ordinary course of business and for which adequate reserves
      have been provided.

    Lien
      Pr iority. Unless
      otherwise previously disclosed to Lender in writing, Borrower has not entered
      into or granted any Security

    Agreements,
      or permitted the filing or attachment of any Security Interests on or affecting
      any of the Collateral directly or indirectly

    securing
      repayment of Borrower ’s Loan and Note, that would be prior or that may in any
      way be superior to Lender ’s Secur ity Interests and

    rights
      in
      and to such Collateral.

    Binding
      Effect. This
      Agreement, the Note, all Security Agreements (if any) , and all Related
      Documents are binding upon the signers

    thereof,
      as well as upon their successors, representatives and assigns, and are legally
      enforceable in accordance with their respective

    terms.

    

    AFFIRMATIVE
      COVENANTS. Borrower
      covenants and agrees with Lender that, so long as this Agreement remains in
      effect, Borrower will:

    Notices
      of Claims and Litigation. Promptly
      inform Lender in wr iting of (1) all material adverse changes in Borrower ’s
      financial condition,

    and
      (2)
      all existing and all threatened litigation, claims, investigations,
      administrative proceedings or similar actions affecting Borrower or

    any
      Guarantor which could materially affect the financial condition of Borrower
      or
      the financial condition of any Guarantor .

    Financial
      Records. Maintain
      its books and records in accordance with GAAP, applied on a consistent basis,
      and permit Lender to examine

    and
      audit
      Borrower’s books and records at all reasonable times.

    Financial
      Statements. Furnish
      Lender with the following:

    Annual
      Statements. As
      soon as
      available, but in no event later than thir ty (30) days after the end of each
      fiscal year, Bor rower’s

    balance
      sheet and income statement for the year ended, prepared by Bor
      rower.

    Interim
      Statements. As
      soon as
      available, but in no event later than thirty (30) days after the end of each
      fiscal quar ter, Bor rower’s

    balance
      sheet and profit and loss statement for the period ended, prepared by Borrower
      .

    Tax
      Returns. As
      soon as
      available, but in no event later than thirty (30) days after the applicable
      filing date for the tax repor ting per iod

    ended,
      Federal and other governmental tax returns, prepared by Borrower .

    All
      financial repor ts required to be provided under this Agreement shall be
      prepared in accordance with GAAP, applied on a consistent

    basis,
      and
      certified by Borrower as being true and correct.

    Additional
      Information. Furnish
      such additional information and statements, as Lender may request fromtime
      to
      time.

    Insurance.
      Maintain
      fire and other r isk insurance, public liability insurance, and such other
      insurance as Lender may require with respect to

    Borrower
      ’s properties and operations, in form, amounts, coverages and with insurance
      companies acceptable to Lender . Bor rower, upon

    request
      of
      Lender, will deliver to Lender from time to time the policies or certificates
      of
      insurance in form satisfactory to Lender , including

    stipulations
      that coverages will not be cancelled or diminished without at least ten (10)
      days prior wr itten notice to Lender . Each insurance

    policy
      also shall include an endorsement providing that coverage in favor of Lender
      will not be impaired in any way by any act, omission or

    default
      of
      Borrower or any other person. In connection with all policies cover ing assets
      in which Lender holds or is offered a security

    interest
      for the Loans, Borrower will provide Lender with such lender ’s loss payable or
      other endorsements as Lender may require.

    Insurance
      Repor ts. Furnish
      to
      Lender , upon request of Lender, reports on each existing insurance policy
      showing such information as

    Lender
      may
      reasonably request, including without limitation the following: (1) the name
      of
      the insurer; (2) the risks insured; (3) the

    amount
      of
      the policy; (4) the proper ties insured; (5) the then current property values
      on
      the basis of which insurance has been obtained,

    and
      the
      manner of determining those values; and (6) the expiration date of the policy.
      In addition, upon request of Lender (however not

    more
      often
      than annually), Borrower will have an independent appraiser satisfactory to
      Lender determine, as applicable, the actual cash

    value
      or
      replacement cost of any Collateral. The cost of such appraisal shall be paid
      by
      Bor rower.

    Other
      Agreements. Comply
      with all terms and conditions of all other agreements, whether now or hereafter
      existing, between Bor rower

    and
      any
      other party and notify Lender immediately in writing of any default in
      connection with any other such agreements.

    Loan
      Proceeds. Use
      all
      Loan proceeds solely for Borrower’s business operations, unless specifically
      consented to the contrary by Lender in

    writing.

    Taxes,
      Charges and Liens. Pay
      and
      discharge when due all of its indebtedness and obligations, includingwithout
      limitation all assessments,

    taxes,
      governmental charges, levies and liens, of every kind and nature, imposed upon
      Borrower or its proper ties, income, or profits, prior

    to
      the
      date on which penalties would attach, and all lawful claims that, if unpaid,
      might become a lien or charge upon any of Borrower ’s

    properties,
      income, or profits.

    Performance.
      Perform
      and comply, in a timely manner , with all terms, conditions, and provisions
      set
      forth in this Agreement, in the Related

    Documents,
      and in all other instruments and agreements between Borrower and Lender.
      Borrower shall notify Lender immediately in

    writing
      of
      any default in connection with any agreement.

    Operations.
      Maintain
      executive and management personnel with substantially the same qualifications
      and experience as the present

    executive
      and management personnel; provide wr itten notice to Lender of any change in
      executive and management personnel; conduct its

    business
      affairs in a reasonable and prudent manner.

    Environmental
      Studies. Promptly
      conduct and complete, at Bor rower’s expense, all such investigations, studies,
      samplings and testings as

    may
      be
      requested by Lender or any governmental authority relative to any substance,
      or
      any waste or by-product of any substance defined

    as
      toxic
      or a hazardous substance under applicable federal, state, or local law, rule,
      regulation, order or directive, at or affecting any

    property
      or any facility owned, leased or used by Bor rower.

    Compliance
      with Governmental Requirements. Comply
      with all laws, ordinances, and regulations, now or hereafter in effect, of
      all

    governmental
      authorities applicable to the conduct of Borrower ’s properties, businesses and
      operations, and to the use or occupancy of the

    Collateral,
      including without limitation, the Amer icans With Disabilities Act. Borrower
      may
      contest in good faith any such law, ordinance,

    or
      regulation and withhold compliance during any proceeding, including appropr
      iate
      appeals, so long as Bor rower has notified Lender in

    writing
      prior to doing so and so long as, in Lender’ s sole opinion, Lender ’s interests
      in the Collateral are not jeopardiz ed. Lender may

    require
      Borrower to post adequate security or a surety bond, reasonably satisfactory
      to
      Lender , to protect Lender’s interest.

    Inspection.
      Permit
      employees or agents of Lender at any reasonable time to inspect any and all
      Collateral for the Loan or Loans and

    Borrower
      ’s other proper ties and to examine or audit Borrower ’s books, accounts, and
      records and to make copies and memoranda of

    Borrower
      ’s books, accounts, and records. If Bor rower now or at any time hereafter
      maintains any records (including without limitation

    computer
      generated records and computer software programs for the generation of such
      records) in the possession of a third par ty,

    Borrower
      ,
      upon request of Lender, shall notify such par ty to permit Lender free access
      to
      such records at all reasonable times and to

    provide
      Lender with copies of any records it may request, all at Borrower ’s
      expense.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Compliance
      Certificates. Unless
      waived in wr iting by Lender , provide Lender at least annually, with a
      certificate executed by Bor rower’s

    chief
      financial officer , or other officer or person acceptable to Lender, certifying
      that the representations and war ranties set forth in this

    Agreement
      are true and correct as of the date of the certificate and further cer tifying
      that, as of the date of the certificate, no Event of

    Default
      exists under this Agreement.

    Environmental
      Compliance and Reports. Bor
      rower
      shall comply in all respects with any and all Environmental Laws; not cause
      or
      permit to

    exist,
      as
      a result of an intentional or unintentional action or omission on Borrower
’s
      par t or on the par t of any third party, on property

    owned
      and/or occupied by Borrower , any environmental activity where damage may result
      to the environment, unless such environmental

    activity
      is pursuant to and in compliance with the conditions of a permit issued by
      the
      appropriate federal, state or local governmental

    authorities;
      shall furnish to Lender promptly and in any event within thir ty (30) days
      after
      receipt thereof a copy of any notice, summons,

    lien,
      citation, directive, letter or other communication from any governmental agency
      or instrumentality concerning any intentional or

    unintentional
      action or omission on Borrower ’s par t in connection with any environmental
      activity whether or not there is damage to the

    environment
      and/or other natural resources.

    Additional
      Assurances. Make,
      execute and deliver to Lender such promissory notes, mortgages, deeds of trust,
      security agreements,

    assignments,
      financing statements, instruments, documents and other agreements as Lender
      or
      its attorneys may reasonably request to

    evidence
      and secure the Loans and to per fect all Security Interests.

    

    LENDER’S
      EXPENDITURES. If
      any
      action or proceeding is commenced that would materially affect Lender’s interest
      in the Collateral or if

    Bor
      rower
      fails to comply with any provision of this Agreement or any Related Documents,
      including but not limited to Bor rower’ s failure to

    discharge
      or pay when due any amounts Borrower is required to discharge or pay under
      this
      Agreement or any Related Documents, Lender on

    Bor
      rower’s behalf may (but shall not be obligated to) take any action that Lender
      deems appropr iate, including but not limited to discharging or

    paying
      all
      taxes, liens, security interests, encumbrances and other claims, at any time
      levied or placed on any Collateral and paying all costs for

    insuring,
      maintaining and preserving any Collateral. All such expenditures incurred or
      paid by Lender for such purposes will then bear interest at

    the
      rate
      charged under the Note from the date incurred or paid by Lender to the date
      of
      repayment by Borrower. All such expenses will become

    a
      part of
      the Indebtedness and, at Lender ’s option, will (A) be payable on demand; (B) be
      added to the balance of the Note and be

    apportioned
      among and be payable with any installment payments to become due dur ing either
      (1) the term of any applicable insurance policy;

    or
      (2) the
      remaining term of the Note; or (C) be treated as a balloon payment which will
      be
      due and payable at the Note’s matur ity.

    

    NEGATIVE
      COVENANTS. Bor
      rower
      covenants and agrees with Lender that while this Agreement is in effect,
      Borrower shall not, without the

    pr
      ior
      written consent of Lender:

    Indebtedness
      and Liens. (1)
      Except
      for trade debt incurred in the normal course of business and indebtedness to
      Lender contemplated by

    this
      Agreement, create, incur or assume indebtedness for bor rowed money, including
      capital leases, (2) sell, transfer , mortgage, assign,

    pledge,
      lease, grant a security interest in, or encumber any of Borrower’s assets
      (except as allowed as Permitted Liens) , or (3) sell with

    recourse
      any of Bor rower’s accounts, except to Lender.

    Continuity
      of Operations. (1)
      Engage
      in any business activities substantially different than those in which Bor
      rower
      is presently engaged,

    (2)
      cease
      operations, liquidate, merge, transfer, acquire or consolidate with any other
      entity, change its name, dissolve or transfer or sell

    Collateral
      out of the ordinary course of business, or (3) pay any dividends on Borrower’s
      stock (other than dividends payable in its stock),

    provided,
      however that notwithstanding the foregoing, but only so long as no Event of
      Default has occurred and is continuing or would

    result
      from the payment of dividends, if Borrower is a "Subchapter S Corporation"
      (as
      defined in the Internal Revenue Code of 1986, as

    amended),
      Borrower may pay cash dividends on its stock to its shareholders from time
      to
      time in amounts necessary to enable the

    shareholders
      to pay income taxes and make estimated income tax payments to satisfy their
      liabilities under federal and state law which

    arise
      solely from their status as Shareholders of a Subchapter S Corporation because
      of their ownership of shares of Borrower’s stock, or

    purchase
      or retire any of Borrower’ s outstanding shares or alter or amend Bor rower’ s
      capital structure.

    Loans,
      Acquisitions and Guaranties. (1)
      Loan,
      invest in or advance money or assets to any other person, enterpr ise or entity,
      (2)

    purchase,
      create or acquire any interest in any other enterprise or entity, or (3) incur
      any obligation as surety or guarantor other than in

    the
      ordinary course of business.

    Agreements.
      Borrower
      will not enter into any agreement containing any provisions which would be
      violated or breached by the

    per
      formance of Bor rower’s obligations under this Agreement or in connection
      herewith.

    

    CESSATION
      OF ADVANCES. If
      Lender
      has made any commitment to make any Loan to Borrower , whether under this
      Agreement or under any

    other
      agreement, Lender shall have no obligation to make Loan Advances or to disburse
      Loan proceeds if: (A) Borrower or any Guarantor is in

    default
      under the terms of this Agreement or any of the Related Documents or any other
      agreement that Borrower or any Guarantor has with

    Lender
      ;
      (B) Bor rower or any Guarantor dies, becomes incompetent or becomes insolvent,
      files a petition in bankruptcy or similar proceedings,

    or
      is
      adjudged a bankrupt; (C) there occurs a mater ial adverse change in Borrower
’s
      financial condition, in the financial condition of any

    Guarantor
      , or in the value of any Collateral secur ing any Loan; or (D) any Guarantor
      seeks, claims or otherwise attempts to limit, modify or

    revoke
      such Guarantor ’s guaranty of the Loan or any other loan with Lender; or (E)
      Lender in good faith deems itself insecure, even though no

    Event
      of
      Default shall have occurred.

    

    RIGHT
      OF SETOFF. To
      the
      extent permitted by applicable law, Lender reserves a r ight of setoff in all
      Bor rower’s accounts with Lender (whether

    checking,
      savings, or some other account). This includes all accounts Borrower holds
      jointly with someone else and all accounts Borrower may

    open
      in
      the future. However , this does not include any IRA or Keogh accounts, or any
      trust accounts for which setoff would be prohibited by

    law.
      Borrower authorizes Lender, to the extent permitted by applicable law, to charge
      or setoff all sums owing on the Indebtedness against any

    and
      all
      such accounts.

    

    DEFAULT.
      Each
      of
      the following shall constitute an Event of Default under this
      Agreement:

    Payment
      Default. Bor
      rower
      fails to make any payment when due under the Loan.

    Other
      Defaults. Borrower
      fails to comply with or to perform any other term, obligation, covenant or
      condition contained in this Agreement

    or
      in any
      of the Related Documents or to comply with or to perform any term, obligation,
      covenant or condition contained in any other

    agreement
      between Lender and Borrower .

    Default
      in Favor of Third Par ties. Borrower
      or any Grantor defaults under any loan, extension of credit, secur ity
      agreement, purchase or

    sales
      agreement, or any other agreement, in favor of any other creditor or person
      that
      may mater ially affect any of Bor rower’s or any

    Grantor’s
      property or Bor rower’ s or any Grantor’s ability to repay the Loans or perform
      their respective obligations under this Agreement or

    any
      of the
      Related Documents.

    False
      Statements. Any
      warranty, representation or statement made or furnished to Lender by Borrower
      or
      on Borrower ’s behalf under this

    Agreement
      or the Related Documents is false or misleading in any mater ial respect, either
      nowor at the time made or furnished or becomes

    false
      or
      misleading at any time thereafter.

    Insolvency.
      The
      dissolution or termination of Bor rower’s existence as a going business, the
      insolvency of Borrower , the appointment of a

    receiver
      for any part of Bor rower’s property, any assignment for the benefit of
      creditors, any type of creditor workout, or the

    commencement
      of any proceeding under any bankruptcy or insolvency laws by or against
      Borrower.

    Defective
      Collateralization. This
      Agreement or any of the Related Documents ceases to be in full force and effect
      (including failure of any

    collateral
      document to create a valid and perfected security interest or lien) at any
      time
      and for any reason.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Creditor
      or For feiture Proceedings. Commencement
      of foreclosure or for feiture proceedings, whether by judicial proceeding,
      self-help,

    repossession
      or any other method, by any creditor of Borrower or by any governmental agency
      against any collateral securing the Loan.

    This
      includes a garnishment of any of Borrower’s accounts, including deposit
      accounts, with Lender. However, this Event of Default shall

    not
      apply
      if there is a good faith dispute by Bor rower as to the validity or
      reasonableness of the claim which is the basis of the creditor or

    for
      feiture proceeding and if Borrower gives Lender wr itten notice of the creditor
      or forfeiture proceeding and deposits with Lender monies or

    a
      surety
      bond for the creditor or forfeiture proceeding, in an amount determined by
      Lender, in its sole discretion, as being an adequate

    reserve
      or
      bond for the dispute.

    Events
      Affecting Guarantor. Any
      of the
      preceding events occurs with respect to any Guarantor of any of the Indebtedness
      or any

    Guarantor
      dies or becomes incompetent, or revokes or disputes the validity of, or
      liability under, any Guaranty of the Indebtedness. In the

    event
      of a
      death, Lender, at its option, may, but shall not be required to, permit the
      Guarantor ’s estate to assume unconditionally the

    obligations
      ar ising under the guaranty in a manner satisfactory to Lender , and, in doing
      so, cure any Event of Default.

    Change
      in Ownership. Any
      change
      in ownership of twenty-five percent (25%) or more of the common stock of
      Borrower.

    Adverse
      Change. A
      material
      adverse change occurs in Borrower’s financial condition, or Lender believes the
      prospect of payment or

    per
      formance of the Loan is impaired.

    Insecurity.
      Lender
      in
      good faith believes itself insecure.

    Right
      to Cure. If
      any
      default, other than a default on Indebtedness, is curable and if Borrower or
      Grantor, as the case may be, has not been

    given
      a
      notice of a similar default within the preceding twelve (12) months, it may
      be
      cured if Borrower or Grantor, as the case may be,

    after
      receiving wr itten notice from Lender demanding cure of such default: (1) cure
      the default within fifteen (15) days; or (2) if the cure

    requires
      more than fifteen (15) days, immediately initiate steps which Lender deems
      in
      Lender’ s sole discretion to be sufficient to cure the

    default
      and thereafter continue and complete all reasonable and necessary steps
      sufficient to produce compliance as soon as reasonably

    practical.

    
       

    

    EFFECT
      OF AN EVENT OF DEFAULT. If
      any
      Event of Default shall occur, except where otherwise provided in this Agreement
      or the Related

    Documents,
      all commitments and obligations of Lender under this Agreement or the Related
      Documents or any other agreement immediately will

    terminate
      ( including any obligation to make fur ther Loan Advances or disbursements),
      and, at Lender’s option, all Indebtedness immediately will

    become
      due
      and payable, all without notice of any kind to Borrower , except that in the
      case of an Event of Default of the type descr ibed in the

    "Insolvency"
      subsection above, such acceleration shall be automatic and not optional. In
      addition, Lender shall have all the rights and remedies

    provided
      in the Related Documents or available at law, in equity, or otherwise. Except
      as
      may be prohibited by applicable law, all of Lender’s

    rights
      and
      remedies shall be cumulative and may be exercised singular ly or concurrently.
      Election by Lender to pursue any remedy shall not

    exclude
      pursuit of any other remedy, and an election to make expenditures or to take
      action to perform an obligation of Bor rower or of any

    Grantor
      shall not affect Lender’s right to declare a default and to exercise its rights
      and remedies.

    

    MISCELLANEOUS
      PROVISIONS. The
      following miscellaneous provisions are a part of this Agreement:

    Amendments.
      This
      Agreement, together with any Related Documents, constitutes the entire
      understanding and agreement of the parties

    as
      to the
      matters set forth in this Agreement. No alteration of or amendment to this
      Agreement shall be effective unless given in wr iting

    and
      signed
      by the par ty or parties sought to be charged or bound by the alteration or
      amendment.

    Attorneys’
      Fees; Expenses. Bor
      rower
      agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s
      reasonable

    attorneys’
      fees and Lender’s legal expenses, incurred in connection with the enforcement of
      this Agreement. Lender may hire or pay

    someone
      else to help enforce this Agreement, and Borrower shall pay the costs and
      expenses of such enforcement. Costs and expenses

    include
      Lender’s reasonable attorneys’ fees and legal expenses whether or not there is a
      lawsuit, including reasonable attorneys’ fees and

    legal
      expenses for bankruptcy proceedings (including effor ts to modify or vacate
      any
      automatic stay or injunction), appeals, and any

    anticipated
      post-judgment collection services. Borrower also shall pay all court costs
      and
      such additional fees as may be directed by the

    court.

    Caption
      Headings. Caption
      headings in this Agreement are for convenience purposes only and are not to
      be
      used to interpret or define the

    provisions
      of this Agreement.

    Consent
      to Loan Par ticipation. Borrower
      agrees and consents to Lender ’s sale or transfer, whether now or later , of one
      or more

    par
      ticipation interests in the Loan to one or more purchasers, whether related
      or
      unrelated to Lender . Lender may provide, without any

    limitation
      whatsoever, to any one or more purchasers, or potential purchasers, any
      information or knowledge Lender may have about

    Borrower
      or about any other matter relating to the Loan, and Borrower hereby waives
      any
      rights to privacy Borrower may have with respect

    to
      such
      matters. Borrower additionally waives any and all notices of sale of
      participation interests, as well as all notices of any repurchase

    of
      such
      par ticipation interests. Borrower also agrees that the purchasers of any such
      participation interests will be considered as the

    absolute
      owners of such interests in the Loan and will have all the rights granted under
      the participation agreement or agreements

    governing
      the sale of such participation interests. Borrower further waives all rights
      of
      offset or counterclaim that it may have now or later

    against
      Lender or against any purchaser of such a participation interest and
      unconditionally agrees that either Lender or such purchaser may

    enforce
      Bor rower’s obligation under the Loan irrespective of the failure or insolvency
      of any holder of any interest in the Loan. Borrower

    fur
      ther
      agrees that the purchaser of any such participation interests may enforce its
      interests ir respective of any personal claims or

    defenses
      that Borrower may have against Lender .

    Governing
      Law. This Agreement will be governed by federal law applicable to Lender and,
      to
      the extent not preempted by federal law, the

    laws
      of the State of Flor ida without regard to its conflicts of law provisions.
      This
      Agreement has been accepted by Lender in the State of

    Florida.

    No
      Waiver by Lender. Lender
      shall not be deemed to have waived any rights under this Agreement unless such
      waiver is given in wr iting

    and
      signed
      by Lender . No delay or omission on the part of Lender in exercising any right
      shall operate as a waiver of such right or any

    other
      r
      ight. A waiver by Lender of a provision of this Agreement shall not prejudice
      or
      constitute a waiver of Lender’s right otherwise to

    demand
      strict compliance with that provision or any other provision of this Agreement.
      No prior waiver by Lender , nor any course of

    dealing
      between Lender and Borrower, or between Lender and any Grantor , shall
      constitute a waiver of any of Lender ’s rights or of any of

    Borrower
      ’s or any Grantor ’s obligations as to any future transactions. Whenever the
      consent of Lender is required under this Agreement,

    the
      granting of such consent by Lender in any instance shall not constitute
      continuing consent to subsequent instances where such consent

    is
      required and in all cases such consent may be granted or withheld in the sole
      discretion of Lender .

    Notices.
      Any
      notice
      required to be given under this Agreement shall be given in writing, and shall
      be effective when actually delivered,

    when
      actually received by telefacsimile (unless otherwise required by law), when
      deposited with a nationally recognized overnight courier,

    or,
      if
      mailed, when deposited in the United States mail, as first class, certified
      or
      registered mail postage prepaid, directed to the addresses

    shown
      near
      the beginning of this Agreement. Any party may change its address for notices
      under this Agreement by giving written notice

    to
      the
      other parties, specifying that the purpose of the notice is to change the par
      ty’s address. For notice purposes, Borrower agrees to

    keep
      Lender informed at all times of Borrower ’s current address. Unless otherwise
      provided or required by law, if there is more than one

    Borrower
      ,
      any notice given by Lender to any Borrower is deemed to be notice given to
      all
      Borrowers.

    Severability.
      If
      a court
      of competent jur isdiction finds any provision of this Agreement to be illegal,
      invalid, or unenforceable as to any

    circumstance,
      that finding shall not make the offending provision illegal, invalid, or
      unenforceable as to any other circumstance. If feasible,

    the
      offending provision shall be considered modified so that it becomes legal,
      valid
      and enforceable. If the offending provision cannot be so

    modified,
      it shall be considered deleted from this Agreement. Unless otherwise required
      by
      law, the illegality, invalidity, or unenforceability

    of
      any
      provision of this Agreement shall not affect the legality, validity or
      enforceability of any other provision of this Agreement.

    Subsidiar
      ies and Affiliates of Bor rower. To
      the
      extent the context of any provisions of this Agreement makes it appropriate,
      including

    without
      limitation any representation, war ranty or covenant, the word "Borrower" as
      used in this Agreement shall include all of Borrower ’s

    subsidiaries
      and affiliates. Notwithstanding the foregoing however, under no circumstances
      shall this Agreement be construed to require

    Lender
      to
      make any Loan or other financial accommodation to any of Borrower’s subsidiaries
      or affiliates.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Successors
      and Assigns. All
      covenants and agreements by or on behalf of Borrower contained in this Agreement
      or any Related

    Documents
      shall bind Bor rower’s successors and assigns and shall inure to the benefit of
      Lender and its successors and assigns. Borrower

    shall
      not,
      however, have the r ight to assign Bor rower’s rights under this Agreement or
      any interest therein, without the pr ior wr itten

    consent
      of
      Lender .

    Survival
      of Representations and War ranties. Borrower
      understands and agrees that in extending Loan Advances, Lender is relying on
      all

    representations,
      war ranties, and covenants made by Borrower in this Agreement or in any cer
      tificate or other instrument delivered by

    Borrower
      to Lender under this Agreement or the Related Documents. Borrower further agrees
      that regardless of any investigation made by

    Lender,
      all such representations, war ranties and covenants will survive the extension
      of Loan Advances and delivery to Lender of the

    Related
      Documents, shall be continuing in nature, shall be deemed made and redated
      by
      Borrower at the time each Loan Advance is made,

    and
      shall
      remain in full force and effect until such time as Borrower’s Indebtedness shall
      be paid in full, or until this Agreement shall be

    terminated
      in the manner provided above, whichever is the last to occur.

    Time
      is of the Essence. Time
      is of
      the essence in the performance of this Agreement.

    Waive
      Jury. All par ties to this Agreement hereby waive the right to any jury trial
      in
      any action, proceeding, or counterclaim brought by any

    par
      ty against any other par ty.

    

    DEFINITIONS.
      The
      following capitaliz ed words and terms shall have the following meanings when
      used in this Agreement. Unless specifically

    stated
      to
      the contrary, all references to dollar amounts shall mean amounts in lawful
      money of the United States of Amer ica. Words and terms

    used
      in
      the singular shall include the plural, and the plural shall include the singular
      , as the context may require. Words and terms not otherwise

    defined
      in
      this Agreement shall have the meanings attr ibuted to such terms in the Uniform
      Commercial Code. Accounting words and terms not

    otherwise
      defined in this Agreement shall have the meanings assigned to themin accordance
      with generally accepted accounting principles as in

    effect
      on
      the date of this Agreement:

    Advance.
      The
      word
      "Advance" means a disbursement of Loan funds made, or to be made, to Bor rower
      or on Borrower ’s behalf on a line

    of
      credit
      or multiple advance basis under the terms and conditions of this
      Agreement.

    Agreement.
      The
      word
      "Agreement" means this Business Loan Agreement, as this Business Loan Agreement
      may be amended or modified

    fromtime
      to time, together with all exhibits and schedules attached to this Business
      Loan
      Agreement from time to time.

    Borrower
      . The
      word
      "Borrower" means Shells Seafood Restaurants, Inc. and includes all co-signers
      and co-makers signing the Note and all

    their
      successors and assigns.

    Collateral.
      The
      word
      "Collateral" means all proper ty and assets granted as collateral secur ity
      for
      a Loan, whether real or personal property,

    whether
      granted directly or indirectly, whether granted now or in the future, and
      whether granted in the form of a security interest,

    mortgage,
      collateral mor tgage, deed of trust, assignment, pledge, crop pledge, chattel
      mortgage, collateral chattel mortgage, chattel trust,

    factor’s
      lien, equipment trust, conditional sale, trust receipt, lien, charge, lien
      or
      title retention contract, lease or consignment intended as a

    secur
      ity
      device, or any other security or lien interest whatsoever, whether created
      by
      law, contract, or otherwise.

    Environmental
      Laws. The
      words
      "Environmental Laws" mean any and all state, federal and local statutes,
      regulations and ordinances

    relating
      to the protection of human health or the environment, including without
      limitation the Comprehensive Environmental Response,

    Compensation,
      and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
      ("CERCLA"), the Super fund Amendments and

    Reauthorization
      Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation
      Act, 49 U.S.C. Section 1801, et seq.,

    the
      Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
      other applicable state or federal laws, rules, or

    regulations
      adopted pursuant thereto.

    Event
      of Default. The
      words
      "Event of Default" mean any of the events of default set forth in this Agreement
      in the default section of this

    Agreement.

    GAAP.
      The
      word
      "GAAP" means generally accepted accounting principles.

    Grantor.
      The
      word
      "Grantor" means each and all of the persons or entities granting a Secur ity
      Interest in any Collateral for the Loan,

    including
      without limitation all Borrowers granting such a Security Interest.

    Guarantor.
      The
      word
      "Guarantor" means any guarantor, surety, or accommodation party of any or all
      of
      the Loan.

    Guaranty.
      The
      word
      "Guaranty" means the guaranty from Guarantor to Lender, including without
      limitation a guaranty of all or part of the

    Note.

    Hazardous
      Substances. The
      words
      "Hazardous Substances" mean mater ials that, because of their quantity,
      concentration or physical,

    chemical
      or infectious characteristics, may cause or pose a present or potential hazard
      to human health or the environment when

    improper
      ly used, treated, stored, disposed of, generated, manufactured, transpor ted
      or
      otherwise handled. The words "Hazardous

    Substances"
      are used in their very broadest sense and include without limitation any and
      all
      hazardous or toxic substances, mater ials or

    waste
      as
      defined by or listed under the Environmental Laws. The term "Hazardous
      Substances" also includes, without limitation, petroleum

    and
      petroleumby-products or any fraction thereof and asbestos.

    Indebtedness.
      The
      word
      "Indebtedness" means the indebtedness evidenced by the Note or Related
      Documents, including all principal and

    interest
      together with all other indebtedness and costs and expenses for which Bor rower
      is responsible under this Agreement or under any

    of
      the
      Related Documents.

    Lender.
      The
      word
      "Lender" means COLONIAL BANK, N.A., its successors and assigns.

    Loan.
      The
      word
      "Loan" means any and all loans and financial accommodations from Lender to
      Borrower whether now or hereafter

    existing,
      and however evidenced, including without limitation those loans and financial
      accommodations descr ibed herein or described on

    any
      exhibit or schedule attached to this Agreement from time to time.

    Note.
      The
      word
      "Note" means the Note executed by Shells Seafood Restaurants, Inc. in the pr
      incipal amount of $500,000.00 dated

    December
      28, 2005, together with all renewals of, extensions of, modifications of,
      refinancings of, consolidations of, and substitutions for

    the
      note
      or credit agreement.

    Permitted
      Liens. The
      words
      "Permitted Liens" mean (1) liens and security interests securing Indebtedness
      owed by Bor rower to Lender ;

    (2)
      liens
      for taxes, assessments, or similar charges either not yet due or being contested
      in good faith; (3) liens of materialmen,

    mechanics,
      warehousemen, or carr iers, or other like liens arising in the ordinary course
      of business and securing obligations which are not

    yet
      delinquent; (4) purchase money liens or purchase money secur ity interests
      upon
      or in any proper ty acquired or held by Borrower in the

    ordinary
      course of business to secure indebtedness outstanding on the date of this
      Agreement or permitted to be incurred under the

    paragraph
      of this Agreement titled "Indebtedness and Liens"; (5) liens and security
      interests which, as of the date of this Agreement,

    have
      been
      disclosed to and approved by the Lender in wr iting; and (6) those liens and
      security interests which in the aggregate constitute

    an
      immaterial and insignificant monetary amount with respect to the net value
      of
      Borrower’s assets.

    Related
      Documents. The
      words
      "Related Documents" mean all promissory notes, credit agreements, loan
      agreements, environmental

    agreements,
      guaranties, security agreements, mortgages, deeds of trust, security deeds,
      collateral mortgages, and all other instruments,

    agreements
      and documents, whether now or hereafter existing, executed in connection with
      the Loan.

    Security
      Agreement. The
      words
      "Security Agreement" mean and include without limitation any agreements,
      promises, covenants,

    arrangements,
      understandings or other agreements, whether created by law, contract, or
      otherwise, evidencing, governing, representing, or

    creating
      a
      Security Interest.

    Security
      Interest. The
      words
      "Secur ity Interest" mean, without limitation, any and all types of collateral
      security, present and future,

    whether
      in
      the form of a lien, charge, encumbrance, mortgage, deed of trust, security
      deed,
      assignment, pledge, crop pledge, chattel

    mortgage,
      collateral chattel mortgage, chattel trust, factor’s lien, equipment trust,
      conditional sale, trust receipt, lien or title retention

    contract,
      lease or consignment intended as a security device, or any other security or
      lien interest whatsoever whether created by law,

    contract,
      or otherwise.

    

    BORROWER
      ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT
      AND
      BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED DECEMBER
      28,
      2005.

    

    BORROWER:

    SHELLS
      SEAFOOD RESTAURANTS, INC.

    By:/s/
      Warren
      R. Nelson, Vice President/CFO 

    Shells
      Seafood Restaurants, Inc.

    LENDER:

    COLONIAL
      BANK, N.A.

    By:/s/
      David
      Ogburn, Authorized
      Signer

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