Exhibit 10.7

HOLDINGS PLEDGE AGREEMENT

THIS HOLDINGS PLEDGE AGREEMENT (this “Pledge Agreement”) is entered into as of
August 5, 2011, among CARROLS CORPORATION, a Delaware corporation (the
“Pledgor”) 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 Carrols LLC, a Delaware limited
liability company (the “Borrower”), each of the Domestic Subsidiaries of the
Borrower from time to time party thereto (the “Guarantors”), the Lenders party
thereto and the Administrative Agent, the Lenders have agreed to make Loans to
the Borrower 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 Pledgor 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, the 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 of the
Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the “Pledged Collateral”):

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(a) Pledged Equity Interests. 100% (or, if less, the full amount owned by such
Pledgor) of the issued and outstanding Equity Interests owned by the Pledgor of
the Borrower as set forth on Schedule 2(a) hereto (the “Pledged Equity
Interests”), together with the certificates (or other agreements or
instruments), if any, representing such Equity Interests, and all options and
other rights, contractual or otherwise, with respect thereto, including, but not
limited to, 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, 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) 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 the 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 the Pledgor and shall be
subject to the terms of this Pledge Agreement whether or not Schedule 2(a) is
amended to refer to such additional shares.

3. Security for Credit Party Obligations. The security interest created hereby
in the Pledged Collateral of the 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. The
Pledgor hereby agrees that:

(a) Delivery of Certificates and Instruments. The 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 the Pledgor and (ii) promptly upon the
receipt thereof by or on behalf of the Pledgor, all other certificates and
instruments constituting Pledged Collateral owned by the Pledgor. Prior to
delivery to the Administrative Agent, all such certificates and instruments
constituting Pledged Collateral of the Pledgor shall be held in trust by the
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.

 

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(b) Additional Securities. If the 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 the Pledgor shall receive such certificate, instrument, option,
right or distribution in trust for the benefit of the Administrative Agent,
shall segregate it from the 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 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. The 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 as the
Administrative Agent deems reasonably necessary or advisable. The 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. The
Pledgor agrees to cause the issuer of the Pledged Equity Interests of the
Pledgor to mark its books and records to reflect the security interest of the
Administrative Agent in the Pledged Collateral.

5. Representations and Warranties. The 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

 

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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. The Pledgor has good and indefeasible title to the Pledged Collateral
of the Pledgor and except as otherwise permitted by the Credit Agreement, the
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 the 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 the 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 the
Pledgor or for the granting of the security interest by the Pledgor pursuant to
this Pledge Agreement or (ii) for the exercise by the Administrative Agent or
the Secured Parties of their rights and remedies hereunder (except as may be
required by the Franchise Agreements (as defined in the Credit Agreement) and 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 the
location of the 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 Pledgor, the
Administrative Agent and the applicable Securities Intermediary or the
applicable issuer of the Uncertificated Security of an agreement granting
control to the

 

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Administrative Agent over such Pledged Collateral, the Administrative Agent
shall have a first priority perfected security interest in such Pledged
Collateral.

(f) No Other Equity Interests. Except as set forth on Schedule 2(a), the Pledgor
does not own 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. The 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, the Pledgor shall:

(a) Defense of Title. Defend title to and ownership of the Pledged Collateral of
the 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
the Pledgor or any interest therein, except as permitted pursuant to 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 the Pledgor (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 the 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 the Pledgor.

 

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(c) Amendments. Not make or consent to any amendment or other modification or
waiver with respect to any of the Pledged Collateral of the Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of the
Pledged Collateral of the Pledgor.

(d) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by the 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 the Pledgor
unless the failure to so file could not reasonably be expected to have a
Material Adverse Effect.

7. Performance of Obligations; Advances by Administrative Agent. On failure of
the 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 Borrower 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 the Pledgor or the Borrower, and no such advance or expenditure
therefor, shall relieve the Pledgor 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 the 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 the 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.

 

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(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 to
the Burger King Rights, any Secured Party may in such event, bid for the
purchase of such securities. The Pledgor agrees that, to the extent notice of
sale shall be required by law and has not been waived by the 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 the Borrower, 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 the 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, the Pledgor agrees that, upon request of the
Administrative Agent (which request may be made by the Administrative Agent in
its sole discretion), the Pledgor and the Borrower will, at their 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;

 

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(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.

The 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 the Pledgor, and the
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), the Pledgor and
the Borrower agree 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 the
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 Pledgor recognizes that the Administrative Agent may
deem it

 

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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. The 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 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. The 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) Reserved.

(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 the
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

 

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or the Credit Party Obligations under this Pledge Agreement or under any other
of the Credit Documents.

10. Rights of the Administrative Agent.

(a) Power of Attorney. The 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 the 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 the 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 the Pledgor;

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

 

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necessary in order to perfect and maintain the security interests and Liens
granted 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 the 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 the
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 the Pledgor into the name of the Administrative Agent or into the
name of any transferee to whom the Pledged Collateral of the 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 the 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

 

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the Administrative Agent hereunder, the Administrative Agent shall have no duty
or liability to preserve rights pertaining thereto, it being understood and
agreed that the Pledgor shall be responsible for preservation of all rights in
the Pledged Collateral of the 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 Pledgor. 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, the Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of the 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 the 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, the
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:

 

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

 

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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 Administrative Agent and the Secured Parties shall, upon the request and
at the expense of the Pledgor, 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 Pledgor 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 the
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 the Pledgor may not assign its rights or
delegate its duties hereunder.

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, and
if delivered to the Pledgor, shall be made to the following address:

Carrols Corporation

968 James Street

Syracuse, New York 13203

Attention: General Counsel

Telephone: (315) 424-0513

Fax: (315) 475-9616

Email: izirkman@carrols.com

 

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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.

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 Pledgor 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. 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.

 

HOLDINGS:     CARROLS CORPORATION,     a Delaware corporation     By:   /s/
Joseph A. Zirkman     Name:   Joseph A. Zirkman     Title:   Vice President,
General Counsel and Secretary

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Acknowledged and Agreed: CARROLS LLC, a Delaware limited liability company By:  
/s/ Joseph A. Zirkman Name:   Joseph A. Zirkman Title:   Vice President, General
Counsel and Secretary

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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