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.

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:

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:

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.

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:

(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.

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.

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 basis ^{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.} . 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.

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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.

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.

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:

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.

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.

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