Exhibit 10.6

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “Pledge Agreement”) is entered into as of August 5,
2011, among CARROLS LLC, a Delaware limited liability company (the “Borrower”),
each of the Domestic Subsidiaries of the Borrower from time to time party hereto
(individually a “Guarantor” and collectively the “Guarantors”; the Guarantors,
together with the Borrower, individually a “Pledgor” and collectively the
“Pledgors”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as
Administrative Agent under the Credit Agreement referred to below (in such
capacity, the “Administrative Agent”) for the several banks and other financial
institutions as may from time to time become parties to such Credit Agreement
(individually a “Lender” and collectively the “Lenders”).

RECITALS

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof
(as amended, modified, extended, restated, replaced, or supplemented from time
to time, the “Credit Agreement”), among the Borrower, the Guarantors, the
Lenders party thereto and the Administrative Agent, the Lenders have agreed to
make Loans and to issue and/or acquire participation interests in Letters of
Credit upon the terms and subject to the conditions set forth therein; and

WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue and/or acquire participation interests in Letters of Credit under the
Credit Agreement that the Pledgors shall have executed and delivered this Pledge
Agreement to the Administrative Agent for the ratable benefit of the Lenders and
the other Secured Parties.

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1. Definitions. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement, and the
following terms that are defined in the Uniform Commercial Code from time to
time in effect in the State of New York (the “UCC”) are used herein as so
defined: Certificated Security, Entitlement Order, Financial Asset, Investment
Company Security, Securities Account, Security, Security Entitlement, Securities
Intermediary and Uncertificated Security.

2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of the
Credit Party Obligations, each Pledgor hereby pledges and grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a
continuing security interest in any and all right, title and interest

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of such Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the “Pledged Collateral”):

(a) Pledged Equity Interests. (i) 100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding Equity Interests owned by such
Pledgor of each Domestic Subsidiary set forth on Schedule 3.16(e) to the Credit
Agreement and (ii) 65% (or, if less, the full amount owned by such Pledgor) of
each class of the issued and outstanding Equity Interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“Voting Equity”) and
100% (or, if less, the full amount owned by such Pledgor) of each class of the
issued and outstanding Equity Interests not entitled to vote (within the meaning
of Treas. Reg. Section 1.956-2(c)(2)) (“Non-Voting Equity”) owned by such
Pledgor of each first-tier Foreign Subsidiary set forth on Schedule 3.16(e) to
the Credit Agreement (collectively, together with the Equity Interests and other
interests described in clauses (y) and (z) and in Sections 2(b) and 2(c) below,
the “Pledged Equity Interests”), including, but not limited to, the following:

(y) subject to the percentage restrictions described above and in Section 2(b)
below, all shares, securities, membership interests or other equity interests
representing a dividend on any of the Pledged Equity Interests, or representing
a distribution or return of capital upon or in respect of the Pledged Equity
Interests, or resulting from a stock split, revision, reclassification or other
exchange therefor, and any subscriptions, warrants, rights or options issued to
the holder of, or otherwise in respect of, the Pledged Equity Interests; and

(z) subject to the percentage restrictions described above and in Section 2(b)
below and without affecting the obligations of the Pledgors under any provision
prohibiting such action hereunder or under the Credit Agreement, in the event of
any consolidation or merger involving the issuer of any Pledged Equity Interest
and in which such issuer is not the surviving entity, all shares of each class
of the Equity Interests of the successor entity formed by or resulting from such
consolidation or merger.

(b) Additional Interests. (i) 100% (or, if less, the full amount owned by such
Pledgor) of each class of the issued and outstanding Equity Interests owned or
acquired by such Pledgor of any Person which hereafter becomes a Domestic
Subsidiary and (ii) 65% (or, if less, the full amount owned by such Pledgor) of
the Voting Equity and 100% (or, if less, the full amount owned by such Pledgor)
of the Non-Voting Equity owned or acquired by such Pledgor of any Person which
hereafter becomes a first-tier Foreign Subsidiary, including, without
limitation, the certificates representing such Equity Interests.

(c) Other Equity Interests. Subject to the percentage restrictions described
above, any and all other Equity Interests owned by the Pledgors in any Domestic
Subsidiary or any first-tier Foreign Subsidiary.

 

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(d) Proceeds. All proceeds and products of the foregoing, however and whenever
acquired and in whatever form.

Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that a Pledgor may from time to time hereafter pledge and
deliver additional shares of Equity Interests to the Administrative Agent as
collateral security for the Credit Party Obligations. Upon such pledge and
delivery to the Administrative Agent, such additional shares of Equity Interests
shall be deemed to be part of the Pledged Collateral of such Pledgor and shall
be subject to the terms of this Pledge Agreement whether or not Schedule 3.16(e)
to the Credit Agreement is amended to refer to such additional shares.

3. Security for Credit Party Obligations. The security interest created hereby
in the Pledged Collateral of each Pledgor constitutes continuing collateral
security for all of the Credit Party Obligations, whether now existing or
hereafter incurred.

4. Delivery of the Pledged Collateral; Perfection of Security Interest. Each
Pledgor hereby agrees that:

(a) Delivery of Certificates and Instruments. Each Pledgor shall deliver as
security to the Administrative Agent (i) simultaneously with or prior to the
execution and delivery of this Pledge Agreement, all certificates representing
the Pledged Equity Interests owned by such Pledgor and (ii) promptly upon the
receipt thereof by or on behalf of a Pledgor, all other certificates and
instruments constituting Pledged Collateral owned by a Pledgor. Prior to
delivery to the Administrative Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust by such
Pledgor for the benefit of the Administrative Agent pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, substantially in the form provided in Exhibit A attached hereto.

(b) Additional Securities. Subject to the percentage restrictions set forth in
Section 2, if such Pledgor shall receive by virtue of its being the owner of any
Pledged Collateral, any (i) certificate, including without limitation, any
certificate representing a dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of Equity Interests, stock splits, spin-off or split-off,
promissory notes or other instruments; (ii) option or right, whether as an
addition to, substitution for, or an exchange for, any Pledged Collateral or
otherwise; (iii) dividends payable in Equity Interests; or (iv) distributions of
Equity Interests in connection with a partial or total liquidation, dissolution
or reduction of capital, capital surplus or paid-in surplus, then such Pledgor
shall receive such certificate, instrument, option, right or distribution in
trust for the benefit of the Administrative Agent, shall segregate it from such
Pledgor’s other property and shall deliver it forthwith to the Administrative
Agent in the exact form received accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form

 

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provided in Exhibit A attached hereto, to be held by the Administrative Agent as
Pledged Collateral and as further collateral security for the Credit Party
Obligations.

(c) Financing Statements; Other Perfection Actions. Each Pledgor hereby
authorizes the Administrative Agent to prepare and file such financing
statements (including continuation statements) or amendments thereof or
supplements thereto or other instruments as the Administrative Agent may from
time to time deem reasonably necessary in order to perfect and maintain the
security interests granted hereunder in accordance with the UCC, including,
without limitation, any financing statement that describes the Pledged
Collateral as “all personal property” or “all assets” of such Pledgor or that
describes the Pledged Collateral in some other manner as the Administrative
Agent deems reasonably necessary or advisable. Each Pledgor shall also execute
and deliver to the Administrative Agent and/or file such agreements, assignments
or instruments (including affidavits, notices, reaffirmations, amendments and
restatements of existing documents, and any documents as may be necessary if the
law of any jurisdiction other than New York becomes or is applicable to the
Collateral or any portion thereof, in each case as the Administrative Agent may
reasonably request) and do all such other things as the Administrative Agent may
reasonably deem necessary (i) to perfect the Administrative Agent’s security
interests hereunder, including such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other instruments as
the Administrative Agent may from time to time reasonably request in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC and any other personal property security legislation in the appropriate
jurisdictions, (ii) to consummate the transactions contemplated hereby and
(iii) to otherwise protect and assure the Administrative Agent of its rights and
interests hereunder. Each Pledgor agrees to cause the issuer of the Pledged
Equity Interests of such Pledgor to mark its books and records to reflect the
security interest of the Administrative Agent in the Pledged Collateral.

(d) Provisions Relating to Uncertificated Securities, Security Entitlements and
Securities Accounts. The Pledgors shall promptly notify the Administrative Agent
of any Pledged Collateral consisting of an Uncertificated Security or a Security
Entitlement or any Pledged Collateral held in a Securities Account. With respect
to any such Pledged Collateral, (a) the applicable Pledgor and the applicable
issuer of the Uncertificated Security or the applicable Securities Intermediary
shall enter into, upon the request of the Administrative Agent, an agreement
with the Administrative Agent granting control to the Administrative Agent over
such Pledged Collateral, such agreement to be in form and substance reasonably
satisfactory to the Administrative Agent and (b) the Administrative Agent shall
be entitled, upon the occurrence and during the continuance of a Default or an
Event of Default, to notify the applicable issuer of the Uncertificated Security
or the applicable Securities Intermediary that it should follow the instructions
or the Entitlement Orders, respectively, of the Administrative Agent and no
longer follow the instructions or the Entitlement Orders, respectively, of the
applicable Pledgor. Upon receipt by a Pledgor of notice from a Securities
Intermediary of its intent to terminate the Securities Account of such Pledgor
held by such Securities Intermediary, prior to the termination of

 

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such Securities Account the Pledged Collateral in such Securities Account shall
be (i) transferred to a new Securities Account, upon the request of the
Administrative Agent, which shall be subject to a control agreement as provided
above or (ii) transferred to an account held by the Administrative Agent (in
which it will be held until a new Securities Account is established).

5. Representations and Warranties. Each Pledgor hereby represents and warrants
to the Administrative Agent, for the benefit of the Secured Parties, that so
long as any of the Credit Party Obligations (other than contingent indemnity
obligations that survive termination of the Credit Documents pursuant to the
stated terms thereof) remain outstanding or any Credit Document is in effect,
other than Letters of Credit that extend beyond the Maturity Date and are
properly treated in accordance with Section 2.3(k) of the Credit Agreement, and
until all of the Commitments shall have been terminated:

(a) Authorization of Pledged Equity Interests. The Pledged Equity Interests are
duly authorized and validly issued, are fully paid and nonassessable and are not
subject to the preemptive rights of any Person.

(b) Title. Each Pledgor has good and indefeasible title to the Pledged
Collateral of such Pledgor and except as otherwise permitted by the Credit
Agreement, each Pledgor will at all times be the legal and beneficial owner of
such Pledged Collateral free and clear of any Lien, other than Permitted Liens.
There exists no “adverse claim” within the meaning of Section 8-102 of the UCC
with respect to the Pledged Equity Interests of such Pledgor.

(c) Exercising of Rights. The exercise by the Administrative Agent of its rights
and remedies hereunder will not violate any law or governmental regulation or
any material contractual restriction binding on or affecting a Pledgor or any of
its property other than the Burger King Rights.

(d) Pledgor’s Authority. No authorization, approval or action by, and no notice
or filing with any Governmental Authority, the issuer of any Pledged Equity
Interests or third party is required either (i) for the pledge made by a Pledgor
or for the granting of the security interest by a Pledgor pursuant to this
Pledge Agreement or (ii) other than the Burger King Rights, for the exercise by
the Administrative Agent or the Secured Parties of their rights and remedies
hereunder (except as may be required by laws affecting the offering and sale of
securities).

(e) Security Interest/Priority. This Pledge Agreement creates a valid security
interest in favor of the Administrative Agent for the ratable benefit of the
Secured Parties, in the Pledged Collateral. The taking possession by the
Administrative Agent of the certificates (if any) representing the Pledged
Equity Interests and all other certificates and instruments constituting Pledged
Collateral will perfect and establish the first priority of the Administrative
Agent’s security interest in all certificated Pledged Equity Interests and such
certificates and instruments. Upon the filing of UCC financing statements in

 

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the location of each Pledgor’s state of organization, the Administrative Agent
shall have a first priority perfected security interest in all uncertificated
Pledged Equity Interests consisting of partnership or limited liability company
interests that do not constitute a Security pursuant to Section 8-103(c) of the
UCC. With respect to any Pledged Collateral consisting of an Uncertificated
Security or a Security Entitlement or any Pledged Collateral held in a
Securities Account, upon execution and delivery by the applicable Pledgor, the
Administrative Agent and the applicable Securities Intermediary or the
applicable issuer of the Uncertificated Security of an agreement granting
control to the Administrative Agent over such Pledged Collateral, the
Administrative Agent shall have a first priority perfected security interest in
such Pledged Collateral. Except as set forth in this Section, no action is
necessary to perfect the Administrative Agent’s security interest.

(f) No Other Equity Interests. Except as set forth on Schedule 3.16(e) to the
Credit Agreement, as of the Closing Date or as of the last date such Schedule
was updated in accordance with the terms hereof and of the Credit Agreement, no
Pledgor owns any Equity Interest of the Borrower or any of its Domestic
Subsidiaries or any of its first-tier Foreign Subsidiaries.

(g) Partnership and Limited Liability Company Interests. Except as previously
disclosed in writing to the Administrative Agent, none of the Pledged Equity
Interests consisting of partnership or limited liability company interests
(i) is dealt in or traded on a securities exchange or in a securities market,
(ii) by its terms expressly provides that it is a Security governed by Article 8
of the UCC, (iii) is an Investment Company Security, (iv) is held in a
Securities Account or (v) constitutes a Security or a Financial Asset.

6. Covenants. Each Pledgor hereby covenants, that so long as any of the Credit
Party Obligations (other than contingent indemnity obligations that survive
termination of the Credit Documents pursuant to the stated terms thereof) remain
outstanding or any Credit Document is in effect, other than Letters of Credit
that extend beyond the Maturity Date and are properly treated in accordance with
Section 2.3(k) of the Credit Agreement, and until all of the Commitments shall
have been terminated, such Pledgor shall:

(a) Defense of Title. Defend title to and ownership of the Pledged Collateral of
such Pledgor at its own expense against the claims and demands of all other
parties claiming an interest therein; keep the Pledged Collateral free from all
Liens, other than Permitted Liens and the Burger King Rights; and not sell,
exchange, transfer, assign, lease or otherwise dispose of Pledged Collateral of
such Pledgor or any interest therein, except as permitted under the Credit
Agreement and the other Credit Documents.

(b) Further Assurances. Promptly execute and deliver at its expense all further
instruments and documents and take all further action that may be reasonably
necessary or that the Administrative Agent may reasonably request in order to
(i) perfect and protect the security interest created hereby in the Pledged
Collateral of such Pledgor

 

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(including, without limitation, execution and delivery of one or more control
agreements reasonably acceptable to the Administrative Agent, filing of UCC
financing statements and any and all other actions reasonably necessary to
satisfy the Administrative Agent that the Administrative Agent has obtained a
first priority perfected security interest in all Pledged Collateral);
(ii) subject to the Burger King Rights, enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder in respect of the Pledged
Collateral of such Pledgor; and (iii) subject to the Burger King Rights,
otherwise effect the purposes of this Pledge Agreement, including, without
limitation, and if requested by the Administrative Agent, delivering to the
Administrative Agent irrevocable proxies in respect of the Pledged Collateral of
such Pledgor.

(c) Amendments. Not make or consent to any amendment or other modification or
waiver with respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of the
Pledged Collateral of such Pledgor other than pursuant hereto or as may be
permitted under the Credit Agreement.

(d) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged Collateral of such
Pledgor unless the failure to so file could not reasonably be expected to have a
Material Adverse Effect.

(e) Issuance or Acquisition of Equity Interests. Not without executing and
delivering, or causing to be executed and delivered, to the Administrative Agent
such agreements, documents and instruments as the Administrative Agent may
reasonably require, acquire any Pledged Equity Interests that consists of an
interest in a partnership or a limited liability company which (i) is dealt in
or traded on a securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of the UCC,
(iii) is an Investment Company Security, (iv) is held in a Securities Account or
(v) constitutes a Security or a Financial Asset.

(f) Intercreditor Agreement. Upon the request of the Administrative Agent, the
Pledgors will use their commercially reasonable efforts to cooperate with and
assist the Administrative Agent in obtaining from Burger King Corporation an
intercreditor agreement, in form and substance reasonably satisfactory to the
Administrative Agent, among the Administrative Agent, Burger King Corporation
and the applicable Pledgor, to permit the exercise of rights and remedies by the
Administrative Agent hereunder, subject to such rights that Burger King
Corporation may have under the Franchise Agreements, including, without
limitation, any of the Burger King Rights; provided, however, that no such
intercreditor agreement will be required to the extent that as a condition of
obtaining the intercreditor agreement, Burger King Corporation will impose any
obligations on any of the Pledgors, or take away any of such Pledgor’s rights,
under the Franchise Agreements (or documents related thereto) prior to any
exercise of

 

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remedies pursuant to the Loan Documents which, individually or in the aggregate,
will be material and adverse to such Pledgor under any such Franchise Agreement.

7. Performance of Obligations; Advances by Administrative Agent. On failure of
any Pledgor to perform any of the covenants and agreements contained herein, the
Administrative Agent may, at its sole option and in its sole discretion, perform
or cause to be performed the same and in so doing may expend such sums as the
Administrative Agent may reasonably deem advisable in the performance thereof,
including, without limitation, a payment to obtain a release of a Lien (other
than the Burger King Rights), expenditures made in defending against any adverse
claim (other than the Burger King Rights) and all other expenditures which the
Administrative Agent may make for the protection of the security interest hereof
or may be compelled to make by operation of law. All such sums and amounts so
expended shall be repayable by the Pledgors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Credit Party Obligations and shall bear interest from the date said
amounts are expended at the Default Rate. No such performance of any covenant or
agreement by the Administrative Agent on behalf of any Pledgor, and no such
advance or expenditure therefor, shall relieve the Pledgors of any default under
the terms of this Pledge Agreement or the other Credit Documents. The
Administrative Agent may make any payment hereby authorized in accordance with
any bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by a Pledgor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.

8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an event of default
hereunder (an “Event of Default”).

9. Remedies.

(a) General Remedies. Upon the occurrence of an Event of Default and during the
continuation thereof, the Administrative Agent shall have, in respect of the
Pledged Collateral of any Pledgor, in addition to the rights and remedies
provided herein, in the other Credit Documents, or by law, the rights and
remedies of a secured party under the UCC or any other applicable law.

(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default and
during the continuation thereof, without limiting the generality of this Section
and without notice, the Administrative Agent may, in its sole discretion,
subject to the Burger King Rights, sell or otherwise dispose of or realize upon
the Pledged Collateral, or any part thereof, in one or more parcels, at public
or private sale, at any exchange or broker’s board or elsewhere, at such price
or prices and on such other terms as the Administrative Agent may deem
commercially reasonable, for cash, credit or for future delivery or otherwise in
accordance with applicable law. To the extent permitted by law, and subject

 

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to the Burger King Rights, any Secured Party may in such event, bid for the
purchase of such securities. Each Pledgor agrees that, to the extent notice of
sale shall be required by law and has not been waived by such Pledgor, any
requirement of reasonable notice shall be met if notice, specifying the place of
any public sale or the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to such Pledgor, in accordance
with the notice provisions of Section 9.2 of the Credit Agreement at least
ten (10) days before the time of such sale. The Administrative Agent shall not
be obligated to make any sale of Pledged Collateral of such Pledgor regardless
of notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, and subject to the
Burger King Rights, be made at the time and place to which it was so adjourned.

(c) Registration Rights. Subject to the Burger King Rights, if the
Administrative Agent shall determine to exercise its right to sell all or any of
the Pledged Collateral, each Pledgor agrees that, upon request of the
Administrative Agent (which request may be made by the Administrative Agent in
its sole discretion), such Pledgor will, at its own expense:

(i) execute and deliver, and use its best efforts to cause each issuer of the
Pledged Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to file a registration statement
covering such Pledged Collateral under the provisions of the Securities Act
of 1933 and to use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act of 1933 and the rules and regulations of the
Securities and Exchange Commission applicable thereto;

(ii) use its best efforts to qualify the Pledged Collateral under all applicable
state securities or “Blue Sky” laws and to obtain all necessary governmental
approvals for the sale of the Pledged Collateral, as requested by the
Administrative Agent;

(iii) cause each issuer to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act of 1933; and

(iv) use its best efforts to do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law.

 

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Each Pledgor further agrees that a breach of any of the covenants contained in
this Section 9(c) will cause irreparable injury to the Administrative Agent,
that Administrative Agent has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section 9(c) shall be specifically enforceable against such Pledgor, and such
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no default
has occurred giving rise to the Credit Party Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section 9(c) shall in
any way alter the other rights of the Administrative Agent under this Pledge
Agreement.

In the event of any public sale described in this Section 9(c), each Pledgor
agrees to indemnify and hold harmless the Administrative Agent and the Secured
Parties and each of their respective directors, officers, employees and agents
from and against any loss, fee, cost, expense, damage, liability or claim, joint
or several, to which any such persons may become subject or for which any of
them may be liable, under the Securities Act of 1933 or otherwise, insofar as
such losses, fees, costs, expenses, damages, liabilities or claims (or any
litigation commenced or threatened in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, registration statement, prospectus or
other such document published or filed in connection with such public sale, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
will reimburse the Administrative Agent and such other persons for any legal or
other expenses reasonably incurred by the Administrative Agent and such other
persons in connection with any litigation, of any nature whatsoever, commenced
or threatened in respect thereof (including all fees, costs and expenses
whatsoever reasonably incurred by the Administrative Agent and such other
persons and counsel for the Administrative Agent and such other persons in
investigating, preparing for, defending against or providing evidence, producing
documents or taking any other action in respect of, any such commenced or
threatened litigation or any claims asserted, other than with respect to
information supplied in writing by or on behalf of the Administrative Agent for
use herein). This indemnity shall be in addition to any liability which any
Pledgor may otherwise have and shall extend upon the same terms and conditions
to each person, if any, that controls the Administrative Agent or such persons
within the meaning of the Securities Act of 1933.

(d) Private Sale. Upon the occurrence of an Event of Default and during the
continuation thereof, the Pledgors recognize that the Administrative Agent may
deem it impracticable to effect a public sale of all or any part of the Pledged
Collateral and that the Administrative Agent may, therefore, determine to make
one or more private sales of any such Pledged Collateral to a restricted group
of purchasers who will be obligated to agree, among other things, to acquire
such Pledged Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. Each Pledgor acknowledges that any
such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sale shall be
deemed to have

 

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been made in a commercially reasonable manner and that the Administrative Agent
shall have no obligation to delay sale of any such Pledged Collateral for the
period of time necessary to permit the issuer of such Pledged Collateral to
register such Pledged Collateral for public sale under the Securities Act
of 1933. Each Pledgor further acknowledges and agrees that any offer to sell
such Pledged Collateral which has been (i) publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be deemed to involve a
“public sale” under the UCC, notwithstanding that such sale may not constitute a
“public offering” under the Securities Act of 1933, and the Administrative Agent
may, in such event, bid for the purchase of such Pledged Collateral.

(e) Retention of Pledged Collateral. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and during the
continuation thereof, the Administrative Agent may, after providing the notices
required by Sections 9-620 and 9-621 of the UCC (or any successor sections of
the UCC) or otherwise complying with the notice requirements of applicable law
of the relevant jurisdiction and subject to the Burger King Rights, accept or
retain all or any portion of the Pledged Collateral in satisfaction of the
Credit Party Obligations. Unless and until the Administrative Agent shall have
provided such notices, however, the Administrative Agent shall not be deemed to
have retained any Pledged Collateral in satisfaction of any Credit Party
Obligations for any reason.

(f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Administrative
Agent or the Secured Parties are legally entitled, the Pledgors shall be jointly
and severally liable for the deficiency, together with interest thereon at the
Default Rate together with the costs of collection and the reasonable fees of
any attorneys employed by the Administrative Agent to collect such deficiency.
Any surplus remaining after the full payment and satisfaction of the Credit
Party Obligations shall be returned to the Pledgors or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.

(g) Other Security. To the extent that any of the Credit Party Obligations are
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Administrative Agent shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and during the
continuation of any Event of Default, and the Administrative Agent shall have
the right, in its sole discretion, to determine which rights, security, Liens,
security interests or remedies the Administrative Agent shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the Administrative Agent’s
rights or the Credit Party Obligations under this Pledge Agreement or under any
other of the Credit Documents.

 

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10. Rights of the Administrative Agent.

(a) Power of Attorney. Each Pledgor hereby designates and appoints the
Administrative Agent, on behalf of the Secured Parties, and each of its
designees or agents as attorney-in-fact of such Pledgor, irrevocably and with
power of substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuation of an Event of Default:

(i) to demand, collect, settle, compromise, adjust and give discharges and
releases concerning the Pledged Collateral of such Pledgor, all as the
Administrative Agent may reasonably determine in respect of such Pledged
Collateral;

(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral and enforcing any other right in
respect thereof;

(iii) to defend, settle, adjust or compromise any action, suit or proceeding
brought with respect to the Pledged Collateral and, in connection therewith,
give such discharge or release as the Administrative Agent may deem reasonably
appropriate;

(iv) to pay or discharge taxes, Liens, security interests, or other encumbrances
levied or placed on or threatened against the Pledged Collateral;

(v) to direct any parties liable for any payment under any of the Pledged
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct;

(vi) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Pledged Collateral of such Pledgor;

(vii) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Pledged Collateral of
such Pledgor;

(viii) Subject to the Burger King Rights, to execute and deliver and/or file all
assignments, conveyances, statements, financing statements, continuation
statements, pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Administrative Agent may determine necessary
in order to perfect and maintain the security interests and Liens granted

 

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in this Pledge Agreement and in order to fully consummate all of the
transactions contemplated herein;

(ix) Subject to the Burger King Rights, to exchange any of the Pledged
Collateral of such Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer thereof
and, in connection therewith, deposit any of the Pledged Collateral of such
Pledgor with any committee, depository, transfer agent, registrar or other
designated agency upon such terms as the Administrative Agent may determine;

(x) to vote for a shareholder, partner or member resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of the Pledged
Collateral of such Pledgor into the name of the Administrative Agent or into the
name of any transferee to whom the Pledged Collateral of such Pledgor or any
part thereof may be sold pursuant to Section 9 hereof; and

(xi) to do and perform all such other acts and things as the Administrative
Agent may reasonably deem to be necessary, proper or convenient in connection
with the Pledged Collateral of such Pledgor.

This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Credit Party Obligations (other than
contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any Credit
Document is in effect, other than Letters of Credit that extend beyond the
Maturity Date and are properly treated in accordance with Section 2.3(k) of the
Credit Agreement, and until all of the Commitments shall have been terminated.
The Administrative Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Administrative Agent in this Pledge Agreement, and
shall not be liable for any failure to do so or any delay in doing so. The
Administrative Agent shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of attorney is conferred on
the Administrative Agent solely to perfect, protect, preserve and realize upon
its security interest in the Pledged Collateral.

(b) Assignment by the Administrative Agent. The Administrative Agent may, in
accordance with the Credit Agreement, from time to time assign the Credit Party
Obligations or any portion thereof and/or the Pledged Collateral or any portion
thereof to a successor Administrative Agent, and the assignee shall be entitled
to all of the rights and remedies of the Administrative Agent under this Pledge
Agreement in relation thereto.

(c) The Administrative Agent’s Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral while being
held by the Administrative Agent hereunder, the Administrative Agent shall have
no duty or

 

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liability to preserve rights pertaining thereto, it being understood and agreed
that Pledgors shall be responsible for preservation of all rights in the Pledged
Collateral of such Pledgor, and the Administrative Agent shall be relieved of
all responsibility for the Pledged Collateral upon surrendering it or tendering
the surrender of it to the Pledgors. The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own
property, which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Administrative Agent
shall not have responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relating
to any Pledged Collateral, whether or not the Administrative Agent has or is
deemed to have knowledge of such matters; or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged Collateral.

(d) Voting Rights in Respect of the Pledged Collateral.

(i) So long as no Event of Default shall have occurred and be continuing, to the
extent permitted by law, each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such Pledgor or any
part thereof for any purpose not inconsistent with the terms of this Pledge
Agreement or the Credit Agreement.

(ii) Upon the occurrence and during the continuance of a Default or an Event of
Default and notice thereof from the Administrative Agent to the Pledgor, all
rights of a Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to paragraph (i) of this
subsection (d) shall cease and all such rights shall thereupon become vested in
the Administrative Agent which shall then have the sole right to exercise such
voting and other consensual rights, subject to the Burger King Rights.

(e) Dividend and Distribution Rights in Respect of the Pledged Collateral.

(i) So long as no Event of Default shall have occurred and be continuing, each
Pledgor may receive and retain any and all dividends (other than dividends
payable in the form of Equity Interests and other dividends constituting Pledged
Collateral which are required to be delivered to the Administrative Agent
pursuant to Section 4 above), distributions or interest paid in respect of the
Pledged Collateral to the extent they are allowed under the Credit Agreement.

(ii) Upon the occurrence and during the continuation of an Event of Default:

(A) all rights of a Pledgor to receive the dividends, distributions and interest
payments which it would otherwise be authorized to receive

 

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and retain pursuant to paragraph (i) of this subsection (e) shall cease and all
such rights shall thereupon be vested in the Administrative Agent which shall
then have the sole right to receive and hold as Pledged Collateral such
dividends, distributions and interest payments; and

(B) all dividends, distributions and interest payments which are received by a
Pledgor contrary to the provisions of clause (A) of this subsection (ii) shall
be received in trust for the benefit of the Administrative Agent, shall be
segregated from other property or funds of such Pledgor, and shall be forthwith
paid over to the Administrative Agent as Pledged Collateral in the exact form
received, to be held by the Administrative Agent as Pledged Collateral and as
further collateral security for the Credit Party Obligations.

(f) Release of Pledged Collateral. The Administrative Agent may release any of
the Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, Lien, pledge or security interest of
this Pledge Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall continue as a first priority Lien
on all Pledged Collateral not expressly released or substituted.

11. Application of Proceeds. After the exercise of remedies by the
Administrative Agent or the Secured Parties pursuant to Section 7.2 of the
Credit Agreement (or after the Commitments shall automatically terminate and the
Loans (with accrued interest thereon) and all other amounts under the Credit
Documents shall automatically become due and payable in accordance with the
terms of such Section), any proceeds of the Pledged Collateral, when received by
the Administrative Agent or any of the Secured Parties in cash or its
equivalent, will be applied in reduction of the Credit Party Obligations in the
order set forth in Section 2.11(b) of the Credit Agreement, and each Pledgor
irrevocably waives the right to direct the application of such payments and
proceeds and acknowledges and agrees that the Administrative Agent shall have
the continuing and exclusive right to apply and reapply any and all such
proceeds in the Administrative Agent’s sole discretion, notwithstanding any
entry to the contrary upon any of its books and records, subject to the Burger
King Rights.

12. Continuing Agreement.

(a) This Pledge Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect so long as any of the Credit Party
Obligations (other than contingent indemnity obligations that survive
termination of the Credit Documents pursuant to the stated terms thereof) remain
outstanding or any Credit Document is in effect, and until all of the
Commitments shall have been terminated, other than Letters of Credit that extend
beyond the Maturity Date and are properly treated in accordance with
Section 2.3(k) of the Credit Agreement. Upon such payment and termination, this
Pledge Agreement shall be automatically terminated and the

 

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Administrative Agent and the Secured Parties shall, upon the request and at the
expense of the Pledgors, forthwith release all of the Liens and security
interests granted hereunder and shall deliver all UCC termination statements
and/or other documents reasonably requested by the Pledgors evidencing such
termination. Notwithstanding the foregoing, all releases and indemnities
provided hereunder shall survive termination of this Pledge Agreement.

(b) This Pledge Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Credit Party Obligations is rescinded or must otherwise be restored
or returned by the Administrative Agent or any Secured Party as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the event
payment of all or any part of the Credit Party Obligations is rescinded or must
be restored or returned, all reasonable costs and expenses (including, without
limitation, any reasonable legal fees and disbursements) incurred by the
Administrative Agent or any Secured Party in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Credit Party
Obligations.

13. Amendments; Waivers; Modifications. This Pledge Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in Section 9.1 of the Credit Agreement.

14. Successors in Interest. This Pledge Agreement shall create a continuing
security interest in the Pledged Collateral and shall be binding upon each
Pledgor, its successors and assigns and shall inure, together with the rights
and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent and the Secured Parties and their successors and permitted
assigns; provided, however, that none of the Pledgors may assign its rights or
delegate its duties hereunder except as permitted by the Credit Agreement.

15. Notices. All notices required or permitted to be given under this Pledge
Agreement shall be in conformance with Section 9.2 of the Credit Agreement.

16. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart. Delivery of executed counterparts of
the Pledge Agreement by facsimile or other electronic means shall be effective
as an original and shall constitute a representation that an original shall be
delivered upon the request of the Administrative Agent.

17. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning, construction
or interpretation of any provision of this Pledge Agreement.

 

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18. Governing Law; Submission to Jurisdiction and Service of Process; Waiver of
Jury Trial; Venue. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. The terms of Sections 9.13 and 9.16 of
the Credit Agreement are incorporated herein by reference, mutatis mutandis, and
the parties hereto agree to such terms.

19. Severability. If any provision of this Pledge Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

20. Entirety. This Pledge Agreement and the other Credit Documents represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to this Pledge Agreement, the other Credit
Documents or the transactions contemplated herein and therein.

21. Survival. All representations and warranties of the Pledgors hereunder shall
survive the execution and delivery of this Pledge Agreement, the other Credit
Documents and the delivery of the Notes and the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement.

22. Joint and Several Obligations of Pledgors.

(a) Each of the Pledgors is accepting joint and several liability hereunder in
consideration of the financial accommodations to be provided by the Lenders
under the Credit Agreement, for the mutual benefit, directly and indirectly, of
each of the Pledgors and in consideration of the undertakings of each of the
Pledgors to accept joint and several liability for the obligations of each of
them.

(b) Each of the Pledgors, jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Pledgors with respect to the payment and
performance of all of the Credit Party Obligations arising under this Pledge
Agreement, the other Credit Documents, it being the intention of the parties
hereto that all the Credit Party Obligations shall be the joint and several
obligations of each of the Pledgors without preferences or distinction among
them.

(c) Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Pledgor shall
be adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Pledgor
hereunder shall be limited to the maximum

 

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amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).

23. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Each of the parties hereto has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.

 

BORROWER:    

CARROLS LLC,

a Delaware limited liability company

      By:   /s/ Joseph A. Zirkman       Name:   Joseph A. Zirkman       Title:  
Vice President, General Counsel and Secretary GUARANTORS:     None

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Accepted and agreed to as of the date first above written.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

By:   /s/ Thomas P. Tansi Name:   Thomas P. Tansi Title:   Managing Director