THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION THEREFROM.
 
STOCK PURCHASE WARRANT
 
Warrant No.: ____________
 
To Purchase [__________] Shares of Common Stock of
 
SHELLS SEAFOOD RESTAURANTS, INC.
 
THIS CERTIFIES that, for value received, [___________] (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth in this Stock Purchase Warrant (the “Warrant”),
at any time on or after the Initial Exercise Date (as defined below) and on or
prior to the close of business on the Expiration Date (as defined below) but not
thereafter, to subscribe for and purchase from Shells Seafood Restaurants, Inc.,
a corporation incorporated in the State of Delaware (the “Company”), up to
[________] shares (the “Warrant Shares”) of Common Stock, $0.01 par value, of
the Company (the “Common Stock”). The purchase price of one share of Common
Stock (the “Exercise Price”) under this Warrant shall be equal to $1.30 per
share. The Exercise Price and the number of Warrant Shares for which the Warrant
is exercisable shall be subject to adjustment as provided herein. The period
from and after the Initial Exercise Date to and including the Expiration Date is
referred to herein as the “Exercise Period.”
 
This Warrant is issued pursuant to that certain Securities Purchase Agreement,
dated as of ________ __, 2005, by and between the Company and the Holder (the
“Purchase Agreement”). As provided in the Purchase Agreement, the Company has
covenanted and agreed to use its best efforts to effect an Authorized Capital
Increase (as such term is defined in the Purchase Agreement) and to give the
Holder hereof notice of the same. As used in this Warrant, (i) the “Initial
Exercise Date” shall mean the date as of which the Authorized Capital Increase
is actually effected and (ii) the “Expiration Date” shall mean May __, 2010;
provided, however, that if the Authorized Capital Increase is not effected by
June 1, 2005, then the term “Expiration Date” shall mean the date which is the
fifth anniversary of the date the Authorized Capital Increase is effected.
 
1. Title to Warrant
 
Prior to the end of the Exercise Period and subject to compliance with
applicable laws and Section 7 hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.
 

--------------------------------------------------------------------------------

 
2. Authorization of Shares
 
The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
 
3. Exercise of Warrant, Cash Payment
 
(a) Except as provided in Section 4 herein, exercise of the purchase rights
represented by this Warrant may be made at any time or times during the Exercise
Period by the surrender of this Warrant and the Notice of Exercise Form annexed
hereto duly executed, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered
Holder at the address of such Holder appearing on the books of the Company) and
upon payment of the Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank, the Holder shall be
entitled to receive a certificate for the number of Warrant Shares so purchased.
Certificates for shares purchased hereunder shall be delivered to the Holder
within three (3) trading days after the date on which this Warrant shall have
been exercised as aforesaid. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by surrender of the Warrant and payment to the
Company of the Exercise Price and all taxes required to be paid by the Holder,
if any, pursuant to Section 5 prior to the issuance of such shares, have been
paid.
 
(b) If this Warrant shall have been exercised in part, the Company shall, at the
time of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
 
4. No Fractional Shares or Scrip
 
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. As to any fraction of a share, which Holder
would otherwise be entitled to purchase upon such exercise, the Company shall
pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price.
 
5. Charges, Taxes and Expenses
 
Issuance of certificates for Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the Holder
or in such name or names as may be directed by the Holder; provided, however,
that in the event certificates for Warrant Shares are to be issued in a name
other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.
 
2

--------------------------------------------------------------------------------

 
6. Closing of Books
 
The Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant.
 
7. Transfer, Division and Combination
 
(a) This Warrant may not be sold, transferred, assigned or hypothecated by the
Holder except in accordance with any applicable state and Federal securities
laws. The transfer of this Warrant and all rights hereunder, in whole or in
part, shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the principal office of the Company,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued. Notwithstanding the
above, the Holder shall not transfer this Warrant or any rights hereunder to any
person or entity which is then engaged in a business that is, in the reasonable
judgment of the Company, in direct competition with the Company.
 
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
 
(c) The Company shall prepare, issue and deliver at its own expense (other than
transfer taxes) the new Warrant or Warrants under this Section 7.
 
(d) The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.
 
8. No Rights as Shareholder until Exercise
 
This Warrant does not entitle the Holder to any voting rights or other rights as
a shareholder of the Company prior to the exercise hereof.
 
3

--------------------------------------------------------------------------------

 
9. Loss, Theft, Destruction or Mutilation of Warrant
 
The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, if required by the Company’s then existing written policy, may include
the posting of a bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.
 
10. Saturdays, Sundays, Holidays, etc.
 
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall be a Saturday, Sunday or a legal
holiday, then such action may be taken or such right may be exercised on the
next succeeding day not a Saturday, Sunday or legal holiday.
 
11. Adjustments of Exercise Price and Number of Warrant Shares
 
The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following. In case the Company shall (i) pay a dividend
in shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or
(iv) issue any shares of its capital stock in a reclassification of the Common
Stock, then the number of Warrant Shares purchasable upon exercise of this
Warrant immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company which it would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. Upon each such adjustment of the kind
and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the Holder shall thereafter be entitled to purchase the
number of Warrant Shares or other securities resulting from such adjustment at
an Exercise Price per Warrant Share or other security obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares purchasable pursuant hereto immediately prior to such
adjustment and dividing by the number of Warrant Shares or other securities of
the Company purchasable hereunder resulting from such adjustment. An adjustment
made pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
 
12. Effect of Merger or Reorganization
 
Upon a merger, consolidation, acquisition of all or substantially all of the
property or stock, liquidation or other reorganization of the Company
(collectively, a “Reorganization”) during the Exercise Period, as a result of
which the shareholders of the Company receive cash, stock or other property in
exchange for their shares of Common Stock, the Holder shall be given notice of
such proposed action as provided in Section 18(c) and lawful provision shall be
made so that the Holder shall thereafter be entitled to receive, upon exercise
of this Warrant, the number of shares of securities of the successor corporation
resulting from such Reorganization (and cash and other property), to which a
holder of the Warrant Shares issuable upon exercise of this Warrant would have
been entitled in such Reorganization if this Warrant had been exercised
immediately prior to such Reorganization. In any such case, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interest of the Holder after the Reorganization to the end
that the provisions of this Warrant (including adjustments of the Exercise Price
and the number and type of securities purchasable pursuant to the terms of this
Warrant) shall be applicable after that event, as near as reasonably may be, in
relation to any shares deliverable after that event upon the exercise of this
Warrant.
 
4

--------------------------------------------------------------------------------

 
13. Notice of Adjustment
 
Whenever the number of Warrant Shares or number or kind of securities or other
property purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall promptly mail by registered or
certified mail, return receipt requested, to the Holder notice of such
adjustment or adjustments setting forth the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant and the
Exercise Price of such Warrant Shares (and other securities or property) after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
Such notice, in the absence of manifest error, shall be conclusive evidence of
the correctness of such adjustment.
 
14. Notice of Corporate Action
 
If at any time:
 
(a) the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or other distribution, or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other securities or property, or to receive any
other right; or
 
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
 
(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
 
then, in any one or more of such cases, the Company shall give to Holder:
 

 
(i)
at least 10 days’ prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and

 
5

--------------------------------------------------------------------------------

 

 
(ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least
10 days’ prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify

 

 
(A)
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and

 

 
(B)
the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their Warrant Shares
for securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently given
if addressed to Holder at the last address of Holder appearing on the books of
the Company and delivered in accordance with Section 18(c).

 
15. Authorized Shares
 
Subject to effecting an Authorized Capital Increase, the Company covenants that
during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the Principal Market upon which the Common Stock may be listed. As used herein
“Principal Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market, the
Over-The-Counter Bulletin Board or the “Pink Sheets” published by the National
Quotation Bureau Incorporated Sheets on which the Common Stock is listed or
quoted.
 
The Company will
 
6

--------------------------------------------------------------------------------

 
(a) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value;
 
(b) take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant; and
 
(c) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant; provided, however, that the Company shall not be required to
qualify to do business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented, subject itself to
general taxation in any such jurisdiction or provide any undertakings that cause
the Company undue expense or burden.
 
Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.
 
16.  Mandatory Exercise
 
This Warrant must be exercised in whole by the Holder upon the first business
day following the occurrence of the following conditions: (i) the closing price
for the Common Stock on the Over-The-Counter Bulletin Board or any other stock
quotation system or exchange upon which the Common Stock is listed for any
consecutive twenty (20) trading days is equal to or exceeds $2.00; and (ii)
during such 20-day period, the average daily trading volume of the Common Stock
on such stock quotation system or exchange is at least 100,000 shares.
Notwithstanding the foregoing language in this Section 16, the Holder shall not
be obligated to exercise this Warrant prior to the date on which the
Registration Statement (as such term is defined in the Purchase Agreement) is
declared effective.
 
17. Registration Rights
 
The Company agrees to register the Warrant Shares for resale under the
Securities Act on the terms and subject to the conditions set forth in Article V
of the Purchase Agreement.
 
18. Miscellaneous
 
(a) Jurisdiction. This Warrant shall constitute a contract under the laws of
Delaware without regard to its conflict of law, principles or rules.
 
(b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, will have restrictions upon
resale imposed by state and federal securities laws.
 
7

--------------------------------------------------------------------------------

 
(c) Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be
 

 
(i)
hand delivered;

 

 
(ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid;

 

 
(iii)
delivered by reputable air courier service with charges prepaid, for next day
delivery; or

 

 
(iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice.

 
Any notice or other communication required or permitted to be given hereunder
shall be deemed effective
 

 
(i) 
upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or

 

 
(ii)
on the first business day following the date of sending by reputable courier
service, fully prepaid, addressed to such address, or

 

 
(iii)
upon actual receipt of such mailing, if mailed.

 
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Shares issued pursuant thereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Company maintained for such purposes, or with respect to the Company, to the
address provided on the signature page hereof. Any party hereto may from time to
time change its address for notices by giving at least ten (10) days written
notice of such changed address to the other party hereto.
 
(d) Limitation of Liability. No provision hereof, in the absence of affirmative
action by Holder to purchase Warrant Shares, and no enumeration herein of the
rights or privileges of Holder, shall give rise to any liability of Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
 
8

--------------------------------------------------------------------------------

 
(e) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are intended to be
for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
 
(f) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.
 
(g) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
 
(h) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
 
[Signature Page Follows]
 
9

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
 
Dated: _______ __, 2005
 
SHELLS SEAFOOD RESTAURANTS, INC.
 
By:_____________________________      
Name: 
Its: 

 
Address: 16313 North Dale Mabry Highway, Suite 100, Tampa, Florida 33618

 
10

--------------------------------------------------------------------------------

 
NOTICE OF EXERCISE
 
To: Shells Seafood Restaurants, Inc.
 
The undersigned hereby elects to purchase ___________________ shares of Common
Stock of Shells Seafood Restaurants, Inc. covered by such Warrant and herewith
makes payment of $_____________, representing the full purchase price for such
shares at the price per share provided for in such Warrant.
 
The undersigned agrees to pay all applicable transfer taxes, if any that are
applicable to such Warrant exercise.
 
Please issue a certificate or certificates representing said Warrant Shares in
the name of the undersigned or in such other name as is specified below:
 
_______________________________

 
The Warrant Shares shall be delivered to the following:
 
_______________________________
 
_______________________________
 
_______________________________
 

  [PURCHASER]
 
By: __________________________________
Name:
Title:
Dated: ________________________

 
Page 1

--------------------------------------------------------------------------------

 

 
ASSIGNMENT FORM
 
(To assign the foregoing warrant, execute
 
this form and supply required information.
 
Do not use this form to exercise the warrant.)
 
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to
 
_______________________________________________ whose address is
________________________________________________________.
 
_______________________________________________________________.
 
Dated: ______________, _______
 

   
Holder’s Signature: _____________________________
 
Holder’s Address: _____________________________
 
_____________________________

 
Page 2

--------------------------------------------------------------------------------