Shells Seafood Restaurants, Inc

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International Guild of Hospitality & Restaurant Managers

16313 North Dale Mabry Highway,
Suite 100
Tampa , FL 33618

Phone: (813) 961-0944
Fax: (813) 961-6865

www.shellsseafood.com

Shells Seafood Restaurants, Inc., incorporated in April 1993, owns and operates Shells full-service restaurants. The Company owns 24 Shells restaurants, owns a 51% ownership interest in one Shells restaurant and manages four additional Shells restaurants pursuant to contractual arrangements. All 29 of these Shells restaurants are located in Florida .

During 2001, the Company discontinued operations of eight Ohio restaurants, three Illinois restaurants, two Indiana restaurants, one Kentucky restaurant, and two Florida restaurants.

Shells is a full service, neighborhood concept, designed to appeal to a broad range of customers, particularly families and young adults, by serving generous portions of high-quality seafood and offering friendly and efficient service. The menu emphasizes original entree customer favorites at more attractive price points. Shells restaurants feature a wide selection of seafood items, including shrimp, oysters, clams, scallops, lobster, crab, crawfish and daily fresh fish specials, cooked to order in a variety of ways: steamed, sauteed, grilled, blackened and fried. In addition, the Company's restaurants offer a wide selection of signature pasta dishes, appetizers, salads, and desserts and full bar service. All Shells restaurants are open for dinner and 19 restaurant locations are also open for lunch.

In an effort to increase Shells' name recognition and benefit from customer loyalty, the Company's restaurants have a prototypical image. The restaurants are identified by the exterior "Shells" logo sign and a common interior color scheme and design. The Company's restaurants are decorated with a tropical flair, bright colors and cheerful signage to create a high-energy, casual atmosphere consistent with the Shells concept. The Company's commitment to promoting a casual, fun dining experience is underscored by the design of its menu and by the colorful "island" shirts worn by its service staff.

The Shells restaurant system currently consists of: 24 restaurants that are wholly owned by the Company; one restaurant, in Melbourne , Florida , in which the Company has an interest of 51%; and four restaurants that the Company manages and operates, but does not own. Three of the managed restaurants are managed and operated by the Company pursuant to management and license agreements, which became effective in July 1993. Pursuant to these agreements, the Company provides management services and license proprietary information required to operate these restaurants for a percentage of that restaurant's sales. The management agreements grant the Company authority to determine the programs and policies affecting the day-to-day operations of each of these managed restaurants. Although the management agreements differ slightly, they generally have an initial term of 30 years and provide that the third-party owners are responsible for funding all the restaurant expenses, including food and beverage costs, staffing, training, recruiting, inventory and working capital.

The fourth managed restaurant is operated pursuant to the terms of an agreement requiring that the restaurant is operated in conformity with the policies and procedures established by the Company for Shells restaurants. The restaurant is currently managed by Shells pursuant to an oral agreement

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