<PAGE>



                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                     MADISON DEARBORN CAPITAL PARTNERS, L.P.

                   MADISON DEARBORN CAPITAL PARTNERS II, L.P.

                           ATLANTIC RESTAURANTS, INC.

                                       AND

                          CARROLS HOLDINGS CORPORATION





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<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                          Page

<S>     <C>                                                                                 <C>
1.      Authorization and Closing..........................................................  1
        1A.    Purchase and Sale of the Securities.........................................  1
        1B.    The Closing.................................................................  1
        1C.    Purchase Price..............................................................  2

2.      Conditions of the Investors' Obligation at the Closing.............................  2
        2A.    Representations and Warranties; Covenants...................................  2
        2B.    Registration Agreement......................................................  2
        2C.    Executive Options...........................................................  2
        2D.    Stockholders Agreement......................................................  2
        2E.    Securities Law Compliance...................................................  3
        2F.    Loan Agreement..............................................................  3
        2G.    Employment Agreements.......................................................  3
        2H.    Third Party Consents and Approvals..........................................  3
        2I.    Governmental Consents and Approvals.........................................  3
        2J.    Purchase and Sale of the Securities.........................................  3
        2K.    Key-Man Life Insurance......................................................  3
        2L.    Execution by Bank...........................................................  4
        2M.    Purchase of Shares by Alan Vituli, Daniel T. Accordino and Joseph A.
                   Zirkman.................................................................  4
        2N.    Amendment of Certificate of Incorporation...................................  4
        2O.    Opinion of the Company's Counsel............................................  4
        2P.    Closing Documents...........................................................  4
        2Q.    Proceedings.................................................................  5
        2R.    Waiver......................................................................  5
        2S.    Fees and Expenses...........................................................  5

3.      Conditions of the Company's and Selling Shareholder's Obligations at the
        Closing............................................................................  5
        3A.    Representations and Warranties..............................................  5
        3B.    Registration Agreement......................................................  5
        3C.    Stockholders Agreement......................................................  6
        3D.    Third Party Consents and Approvals..........................................  6
        3E.    Governmental Consents and Approvals.........................................  6
        3F.    Fees and Expenses...........................................................  6

4.      Pre-closing Covenants..............................................................  6
        4A.    Company Covenants...........................................................  6
        4B.    Selling Shareholder Covenants...............................................  7
        4C.    Investors' Covenant.........................................................  7
</TABLE>


                                       i




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<PAGE>


<TABLE>
<S>     <C>                                                                                 <C>
5.      Transfer of Restricted Securities..................................................  7
        5A.    General Provisions..........................................................  7
        5B.    Opinion Delivery............................................................  7
        5C.    Rule 144A...................................................................  8
        5D.    Legend Removal..............................................................  8

6.      Representations and Warranties of the Company; Covenants...........................  8
        6A.    Organization, Corporate Power and Licenses..................................  8
        6B.    Capital Stock and Related Matters...........................................  8
        6C.    Subsidiaries; Investments...................................................  9
        6D.    Authorization; No Breach....................................................  9
        6E.    Securities Laws............................................................. 10
        6F.    Financial Statements........................................................ 10
        6G.    Absence of Undisclosed Liabilities.......................................... 10
        6H.    Affiliated Transactions..................................................... 11
        6I.    No Material Adverse Change.................................................. 11
        6J.    Absence of Certain Developments............................................. 11
        6K.    Assets...................................................................... 12
        6L.    Tax Matters................................................................. 15
        6M.    Contracts and Commitments................................................... 16
        6N.    Intellectual Property Rights................................................ 18
        6O.    Litigation, etc............................................................. 19
        6P.    Brokerage................................................................... 19
        6Q.    Governmental Consent, etc................................................... 19
        6R.    Insurance................................................................... 19
        6S.    Employees................................................................... 19
        6T.    ERISA....................................................................... 20
        6U.    Compliance with Laws........................................................ 21
        6V.    Environmental and Safety Matters............................................ 22
        6W.    Disclosure.................................................................. 23
        6X.    Closing Date................................................................ 23
        6Y.    Reports with the Securities and Exchange Commission......................... 23

7.      Representations and Warranties of the Selling Shareholder.......................... 24
        7A.    The ARI Shares.............................................................. 24
        7B.    Authorization............................................................... 24
        7C.    Company Representations..................................................... 25
        7D.    Compliance with Laws........................................................ 25
        7E.    Ownership of Selling Shareholder............................................ 25
        7F.    Brokerage................................................................... 25
        7G.    Closing Date................................................................ 26

8.      Investors' Representations and Warranties.......................................... 26
        8A.    Investors' Investment Representations....................................... 26
        8B.    Brokerage................................................................... 26
</TABLE>

                                       ii





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<PAGE>

<TABLE>

<S>     <C>                                                                                 <C>
        8C.    Governmental Consent, etc................................................... 26
        8D.    Closing Date................................................................ 27

9.      Definitions........................................................................ 27
        9A.    Definitions................................................................. 27

10.     Termination........................................................................ 30
        10A.   Conditions of Termination................................................... 30
        10B.   Effect of Termination....................................................... 30

11.     Miscellaneous...................................................................... 30
        11A.   Expenses.................................................................... 31
        11B.   Remedies.................................................................... 31
        11C.   Consent to Amendments....................................................... 31
        11D.   Successors and Assigns...................................................... 31
        11E.   Severability................................................................ 32
        11F.   Counterparts................................................................ 32
        11G.   Descriptive Headings; Interpretation........................................ 32
        11H.   Governing Law............................................................... 32
        11I.   Notices..................................................................... 32
        11J.   No Strict Construction...................................................... 34
        11K.   Indemnification............................................................. 34
        11L.   Further Assurances.......................................................... 38
        11M.   Consent to Jurisdiction..................................................... 39

Schedules and Exhibits

List of Exhibits
List of Disclosure Schedules
</TABLE>


                                      iii




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<PAGE>




                            STOCK PURCHASE AGREEMENT

               THIS STOCK PURCHASE  AGREEMENT  (this  "Agreement") is made as of
February  25,  1997  by and  among  Carrols  Holdings  Corporation,  a  Delaware
corporation (the "Company"),  Atlantic Restaurants, Inc., a Delaware corporation
(the  "Selling  Shareholder"  and,  together with the Company,  the  "Sellers"),
Madison  Dearborn Capital  Partners,  L.P. and Madison Dearborn Capital Partners
II,  L.P.   (together  with  Madison  Dearborn  Capital   Partners,   L.P.,  the
"Investors").  Except as  otherwise  indicated  herein,  capitalized  terms used
herein are defined in Section 9 hereof.

               WHEREAS,  the  authorized  capital stock of the Company  includes
3,000,000  shares  of common  stock,  par value  $0.01  per share  (the  "Common
Stock"), of which 850,000 shares are issued and outstanding;

               WHEREAS,  the Selling Shareholder owns beneficially and of record
850,000 of the outstanding shares of Common Stock; and

               WHEREAS,  on the terms and subject to the conditions set forth in
this Agreement,  the Investors  desire to acquire 283,334 shares of Common Stock
from  the  Company  and  283,333   shares  of  Common  Stock  from  the  Selling
Shareholder.

               NOW, THEREFORE, the parties hereto agree as follows:

               Section 1.    Authorization and Closing.

               1A.  Purchase and Sale of the  Securities.  At the  Closing,  the
Company shall sell to the Investors, and subject to the terms and conditions set
forth herein,  the Investors shall purchase and acquire from the Company 283,334
shares of Common Stock (the "Company Shares") at a price of $108.2353 per share,
and the Selling  Shareholder  shall sell to the  Investors  and,  subject to the
terms and conditions set forth herein,  the Investors shall purchase and acquire
from the Selling  Shareholder  283,333  shares of Common Stock (the "ARI Shares"
and, together with the Company Shares, the "Shares") at a price of $108.2353 per
share.

               1B. The Closing. The closing of the transactions  contemplated by
this  Agreement  (the  "Closing")  shall take place at the offices of Kirkland &
Ellis,  153 East 53rd Street,  New York, New York, or at such other place as may
be mutually agreeable to each of the parties hereto, commencing at 10:00 a.m. on
the date which is five business  days after the date on which the  conditions to
the Closing set forth in Section 2 and Section 3 have been  satisfied or waived,
or at such  other time and on such other  date as the  parties  hereto  mutually
agree.  At the Closing,  the Sellers shall deliver to the  Investors:  (i) stock
certificates  evidencing the Company Shares  registered in such Investors' name;
and (ii) stock certificates  evidencing the ARI Shares,  such certificates being
duly endorsed or accompanied by duly executed forms of assignment.

               1C. Purchase  Price. At the Closing,  the Investors shall pay the
purchase price for the Company Shares and the ARI Shares as follows:







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<PAGE>


                      (i) an amount equal to  $30,666,740.49 by wire transfer of
        immediately  available funds to an account or accounts designated by the
        Company; and

                      (ii) an amount equal to $30,666,632.25 by wire transfer of
        immediately  available funds to an account or accounts designated by the
        Selling Shareholder.

               Section  2.  Conditions  of  the  Investors'  Obligation  at  the
Closing2. Conditions of the Investors' Obligation at the Closing. The obligation
of the  Investors to purchase and pay for the Company  Shares and the ARI Shares
at the Closing is subject to the satisfaction as of the Closing of the following
conditions:

               2A.  Representations  and  Warranties;   Covenants.   Subject  to
paragraphs   11K(iii)(a)  and  11K(iii)(d)   hereof,  the   representations  and
warranties contained in Section 6 and Section 7 hereof shall be true and correct
in all material respects at and as of the Closing as though then made, except to
the extent of changes caused by the transactions  expressly contemplated herein,
and the Company and the Selling Shareholder shall have performed in all material
respects all of the covenants  required to be performed by them hereunder  prior
to the Closing.

               2B. Registration Agreement. The Company, the Selling Shareholder,
the  Investors,  Alan Vituli and  certain  management  optionholders  shall have
entered  into a  registration  agreement  in form and  substance as set forth in
Exhibit A attached hereto (the "Registration  Agreement"),  and the Registration
Agreement shall be in full force and effect as of the Closing.

               2C.  Executive  Options.  The Company  shall have entered into an
Unvested Stock Option  Agreement with each of Alan Vituli,  Daniel T. Accordino,
and Joseph A. Zirkman in form and substance set forth in Exhibit B1,  Exhibit B2
and Exhibit B3 attached hereto, respectively. The Company shall have adopted the
Carrols Holdings  Corporation 1996 Long-Term Incentive Plan (the "1996 Plan") in
form and  substance set forth in Exhibit B4 attached  hereto.  The Company shall
have entered into stock option agreements with each of Alan Vituli and Daniel T.
Accordino  pursuant to the 1996 Plan in form and  substance set forth on Exhibit
B5 and Exhibit B6 attached hereto,  respectively.  Each of the option agreements
referred to in this paragraph 2C shall collectively be referred to herein as the
"Executive Option Agreements."

               2D. Stockholders Agreement. The Company, the Selling Shareholder,
the  Investors,  Alan Vituli and  certain  management  optionholders  shall have
entered into a stockholders agreement in form and substance set forth in Exhibit
C attached hereto (the "Stockholders Agreement"), and the Stockholders Agreement
shall be in full force and effect as of the Closing. At the Closing, the Selling
Shareholder  shall surrender any and all stock  certificates held by the Selling
Shareholder on the date thereof to the Company so that such  certificate(s)  may
be imprinted with the legends in  substantially  the form set forth in paragraph
8A hereof and paragraph 6 of the Stockholders Agreement.


                                      -2-





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               2E.  Securities Law  Compliance.  The Company shall have made all
filings under all  applicable  federal and state  securities  laws  necessary to
consummate  the  issuance of the Company  Shares  pursuant to this  Agreement in
compliance with such laws.

               2F. Loan Agreement.  The Company and its Subsidiaries  shall have
entered into a loan agreement  providing for one or more loan facilities in form
and  substance  reasonably  satisfactory  to the  Investors  (together  with all
related agreements and instruments, the "Loan Agreement").

               2G. Employment Agreements.  The Company shall have entered into a
Second  Amended and Restated  Employment  Agreement with each of Alan Vituli and
Daniel  T.  Accordino  (the  "Employment  Agreements")  in  form  and  substance
satisfactory  to the  Investors  set forth in Exhibit D1 and Exhibit D2 attached
hereto, respectively,  and each of the Employment Agreements shall not have been
amended or modified and shall be in full force and effect as of the Closing.

               2H.  Third  Party  Consents  and  Approvals.  The Company and the
Selling  Shareholder  shall  have  received  or  obtained  all  third  party and
shareholder  consents and approvals that are necessary for the  consummation  of
the transactions  contemplated hereby or that are required in order to prevent a
breach of or default under, a termination or modification of, or acceleration of
the terms of, any  contract,  agreement  or document  listed or described on the
Schedules  attached  hereto,  in each  case on terms and  conditions  reasonably
satisfactory to the Investors  (including,  without limitation,  the approval of
Burger King Corporation).

               2I.  Governmental  Consents  and  Approvals.  The Company and the
Selling  Shareholder  shall have  received  or  obtained  all  governmental  and
regulatory consents and approvals that are necessary for the consummation of the
transactions   contemplated  hereby,  in  each  case  on  terms  and  conditions
reasonably  satisfactory  to the Investors  and, to the extent  applicable,  the
waiting period under the Hart-Scott-Rodino  Antitrust  Improvements Act of 1976,
as amended (the "Hart-Scott-Rodino Act"), shall have expired or been terminated.

               2J. Purchase and Sale of the Securities.  The sale of the Company
Shares  and the sale of the ARI  Shares to the  Investors  shall  have  occurred
simultaneously hereunder.

               2K.  Key-Man Life  Insurance.  The Company  shall have obtained a
key-man life  insurance  policy on the life of Alan Vituli in the face amount of
$10,000,000  which  policy  shall be in full force and effect as of the Closing.
Such insurance shall name the Company as beneficiary and shall provide that such
insurance policy may not be canceled unless the insurance carrier gives at least
30 days prior written notice of such cancellation to the Investors.

               2L.  Execution by Bank.  Bahrain  International  Bank,  E.C. (the
"Bank") shall have  executed and  delivered  this  Agreement,  the  Stockholders
Agreement and the Registration Agreement.

               2M.  Purchase of Shares by Alan Vituli,  Daniel T.  Accordino and
Joseph  A.  Zirkman.  Simultaneously  with the  consummation  of sale of the ARI
Shares and the Company 



                                      -3-





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<PAGE>



Shares to the Investors, Alan Vituli shall purchase 9,827 shares of Common Stock
at a price of $101.7646 per share, Daniel T. Accordino shall purchase 860 shares
of Common  Stock at a price of $101.7646  per share and Joseph A. Zirkman  shall
purchase 123 shares of Common Stock at a price of $101.7646, each amount payable
by wire transfer of immediately available funds.

               2N.  Amendment of  Certificate  of  Incorporation.  The Company's
Certificate of Incorporation shall have been amended to eliminate all authorized
shares of nonvoting common stock and all stockholder preemptive rights therein.

               2O. Opinion of the Company's  Counsel.  The Investors  shall have
received  from each of  Schulte  Roth & Zabel LLP and Joseph A.  Zirkman,  Esq.,
counsel for the Company,  and Pryor,  Cashman,  Sherman & Flynn, counsel for the
Selling  Shareholder,  an  opinion  with  respect  to the  matters  set forth in
Exhibits E1, E2 and E3 attached hereto,  respectively,  which shall be addressed
to the  Investors,  dated  the date of the  Closing  and in form  and  substance
satisfactory to the Investors.

               2P.  Closing  Documents.  The Company shall have delivered to the
Investors the documents listed in  subparagraphs  (i) through (vi) below and the
Selling  Shareholder  shall have delivered to the Investors the documents listed
in subparagraph (vii) below:

                      (i) an Officer's  Certificate  of the  Company,  dated the
        date of the Closing,  stating that the conditions specified in Section 1
        and paragraphs 2A through 2N, inclusive, have been fully satisfied;

                      (ii) certified  copies of the resolutions  duly adopted by
        the Company's board of directors authorizing the execution, delivery and
        performance  of  this  Agreement,   the  Registration   Agreement,   the
        Stockholders  Agreement  and each of the other  agreements  contemplated
        hereby to which the Company is a party;

                      (iii)  certified  copies of the Company's  Certificate  of
        Incorporation  and  the  Company's  bylaws,  each  as in  effect  at the
        Closing;

                      (iv)  certified   copies  of  the  Loan   Agreement,   the
        Employment  Agreements  and the  Executive  Option  Agreements,  each in
        effect at the Closing;

                      (v) copies of all third party and  governmental  consents,
        approvals and filings  required in connection  with the  consummation of
        the  transactions  hereunder  (including  the  waiver of all  preemptive
        rights and rights of first refusal with respect to the issuance and sale
        of the Company Shares and ARI Shares hereunder);

                      (vi) such other  documents  relating  to the  transactions
        contemplated  by this  Agreement  as the  Investors  or its  counsel may
        reasonably request; and

                      (vii) an Officer's Certificate of the Selling Shareholder,
        dated the date of the Closing, stating that, with respect to the Selling
        Shareholder,  the  conditions set forth in paragraphs 2A, 2H, 2I, 2J and
        2L have been fully  satisfied,  and certified  copies of



                                      -4-





<PAGE>
 
<PAGE>


        the  resolutions  duly  adopted by the  Selling  Shareholder's  board of
        directors  and  by  the  Bank's  board  of  directors   authorizing  the
        execution,  delivery and performance of this Agreement, the Registration
        Agreement,  the Stockholders  Agreement and each of the other agreements
        contemplated  hereby  to which  the  Selling  Shareholder  or the  Bank,
        respectively, is a party.

               2Q.  Proceedings.  All corporate and other  proceedings  taken or
required  to be  taken  by the  Company  in  connection  with  the  transactions
contemplated  hereby  to be  consummated  at or  prior  to the  Closing  and all
documents  incident  thereto shall be  satisfactory in form and substance to the
Investors and their special counsel.

               2R.  Waiver.  Any  condition  specified  in this Section 2 may be
waived if consented to by the  Investors;  provided that no such waiver shall be
effective  against the Investors unless it is set forth in a writing executed by
the Investors.

               2S. Fees and  Expenses.  At the Closing,  the Company  shall have
reimbursed the Investors for the  reasonable  fees and expenses of their special
counsel and all other expenses associated with their due diligence review of the
Company and its  Subsidiaries,  and the Company  shall have paid the Investors a
transaction fee in the aggregate amount of $500,000.

               Section 3. Conditions of the Company's and Selling  Shareholder's
Obligations   at  the   Closing3.   Conditions  of  the  Company's  and  Selling
Shareholder's Obligations at the Closing. The obligations of the Company and the
Selling Shareholder to sell the Company Shares and the ARI Shares, respectively,
at the  Closing  are  subject  to the  satisfaction  as of  the  Closing  of the
following conditions:

               3A.  Representations  and  Warranties.  The  representations  and
warranties  contained  in  Section  8 hereof  shall be true and  correct  in all
material  respects at and as of the  Closing as though then made,  except to the
extent of changes caused by the transactions expressly contemplated herein.

               3B. Registration Agreement. The Company, the Selling Shareholder,
the Investors,  Alan Vituli and the other  management  optionholders  shall have
entered into the Registration Agreement, and the Registration Agreement shall be
in full force and effect as of the Closing.

               3C. Stockholders Agreement. The Company, the Selling Shareholder,
the Investors,  Alan Vituli and the other  management  optionholders  shall have
entered into the Stockholders Agreement, and the Stockholders Agreement shall be
in full force and effect as of the Closing.

               3D.  Third  Party  Consents  and  Approvals.  The Company and the
Selling Shareholder shall have received or obtained all third party consents and
approvals  that  are  necessary  for  the   consummation  of  the   transactions
contemplated  hereby  or that are  required  in order to  prevent a breach of or
default under, a termination or  modification  of, or  acceleration of the terms
of, any  contract,  agreement  or document  listed or  described on the attached
Contracts Schedule (all of which are listed on the Third Party Approval Schedule
attached hereto), in each


                                      -5-








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<PAGE>

case on terms  and conditions  reasonably  satisfactory  to the Company and  the
Selling Shareholder, as the case may be.

               3E. Governmental  Consents  and   Approvals.  The Company and the
Selling  Shareholder  shall have  received  or  obtained  all  governmental  and
regulatory consents and approvals that are necessary for the consummation of the
transactions  contemplated hereby (all of which are  listed on the  Governmental
Approval Schedule), in each case on terms and conditions reasonably satisfactory
to the  Company  and  the Selling  Shareholder,  as the case may be,  and to the
extent  applicable,  the waiting period under the  Hart-Scott-Rodino  Act,  have
expired or been terminated.

               3F. Fees and  Expenses.  At the Closing,  the Company  shall have
reimbursed the Selling Shareholder for the reasonable fees and expenses of their
special counsel in connection with this transaction.

               Section 4.    Pre-closing Covenants

               4A. Company Covenants. Prior to the Closing,  the Company shall:

                      (i) provide the Investors' representatives with reasonable
        access during normal  business  hours to the  employees,  facilities and
        books and  records of the  Company  and its  Subsidiaries  and allow the
        Investors'  representatives  to make copies of such books and records as
        reasonably requested;

                      (ii)  provide  the   Investors   with  copies  of  monthly
        financial statements of the Company and its Subsidiaries  promptly after
        preparation  thereof and promptly provide any and all other  information
        reasonably requested by the Investors;

                      (iii)  promptly  notify  the  Investors  of  any  material
        adverse event or occurrence affecting the financial condition, operating
        results, assets, operations,  business prospects,  employee relations or
        customer or supplier relations of the Company and its Subsidiaries taken
        as a  whole,  and any  other  event or  occurrence  which  would  have a
        material  adverse  effect  upon  the  consummation  of the  transactions
        contemplated hereby (including,  without  limitation,  the filing of any
        lawsuit against the Company having such effect); and

                      (iv) cooperate  with the Investors in connection  with the
        consummation of the transactions  contemplated hereby (including without
        limitation the filing of any forms and related  materials as required by
        the Hart-Scott-Rodino  Act) and use its reasonable best efforts to cause
        the  closing  conditions  set  forth  in  Sections  2 and 3 to be  fully
        satisfied.

               4B.  Selling  Shareholder  Covenants.  Prior to the Closing,  the
Selling  Shareholder  shall  cooperate with the Investors in connection with the
consummation  of  the  transactions  contemplated  hereby  (including,   without
limitation,  the filing of any forms and  



                                      -6-







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<PAGE>


related  materials  as  required  by the  Hart-Scott-Rodino  Act)  and  use  its
reasonable  best efforts to cause the closing  conditions set forth in Section 2
and 3 to be fully satisfied.

               4C.  Investors'  Covenant.  Prior to the Closing,  the  Investors
shall   either   file  all   forms   and  other   materials   required   by  the
Hart-Scott-Rodino  Act or deliver to the Company and the Selling  Shareholder  a
written statement  certifying that the Investors will have less than $10,000,000
of net sales and total assets (as determined under the Hart-Scott-Rodino Act) as
of the date of the Closing.

               Section  5.  Transfer  of  Restricted  Securities.

               5A. General  Provisions.  Restricted  Securities are transferable
only pursuant to (i) public offerings  registered under the Securities Act, (ii)
Rule 144 or Rule 144A of the Securities and Exchange  Commission (or any similar
rule or rules then in force) if such rule is available  and (iii) subject to the
conditions specified in paragraph 5B below, any other legally available means of
transfer.

               5B.  Opinion  Delivery.  In  connection  with the transfer of any
Restricted  Securities  (other than a transfer  described in paragraph  5A(i) or
(ii) above),  the holder  thereof  shall deliver  written  notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an  opinion of  counsel  which (to the  Company's  reasonable  satisfaction)  is
knowledgeable  in  securities  law matters to the effect  that such  transfer of
Restricted  Securities may be effected  without  registration of such Restricted
Securities  under  the  Securities  Act.  In  addition,  if  the  holder  of the
Restricted  Securities  delivers  to the  Company an opinion of counsel  that no
subsequent  transfer of such Restricted  Securities  shall require  registration
under the  Securities  Act, the Company shall  promptly  upon such  contemplated
transfer deliver new  certificates  for such Restricted  Securities which do not
bear the  Securities Act legend set forth in paragraph 8A. If the Company is not
required to deliver new certificates for such Restricted  Securities not bearing
such  legend,  the  holder  thereof  shall  not  transfer  the  same  until  the
prospective  transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this paragraph and paragraph 8A.

               5C.  Rule 144A.  Upon the request of the  Investors,  the Company
shall  promptly  supply to the Investors or their  prospective  transferees  all
information  regarding the Company required to be delivered in connection with a
transfer pursuant to Rule 144A of the Securities and Exchange Commission.

               5D. Legend Removal. If any Restricted  Securities become eligible
for sale  pursuant to Rule 144(k),  the Company  shall,  upon the request of the
holder of such Restricted  Securities (and, if necessary,  an opinion of counsel
reasonably  satisfactory  to the  Company),  remove  the  legend  set  forth  in
paragraph 8A from the certificates for such Restricted Securities.

               Section  6.   Representations  and  Warranties  of  the  Company;
Covenants6.  Representations  and  Warranties  of the Company;  Covenants.  As a
material  inducement to the Investors to enter into this  Agreement and purchase
the Company Shares and the ARI Shares  hereunder,  the Company hereby represents
and warrants that:



                                      -7-





<PAGE>
 
<PAGE>



               6A. Organization,  Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and is qualified to do business in every  jurisdiction  in which its
ownership of property or conduct of business requires it to qualify. The Company
possesses all requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties, to carry
on  its  businesses  as  now  conducted  and  to  carry  out  the   transactions
contemplated  by  this   Agreement.   The  copies  of  the  Company's  and  each
Subsidiary's  charter  documents  and bylaws  which have been  furnished  to the
Investors' special counsel reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete.

               6B.   Capital  Stock  and  Related Matters.

               (i)    As   of  the  date   hereof  and,   except  as   expressly
contemplated by this Agreement, as of the Closing, the "Capitalization Schedule"
correctly sets forth the authorized and outstanding capital stock of the Company
and the name and number of shares of capital stock held by each  stockholder  of
the  Company.  As of the  Closing,  except  as set  forth on the  Capitalization
Schedule,  neither the Company nor any  Subsidiary  shall have  outstanding  any
stock or securities  convertible or  exchangeable  for any shares of its capital
stock  or  containing  any  profit  participation  features,  nor  shall it have
outstanding  any rights or options to  subscribe  for or to purchase its capital
stock or any  stock  or  securities  convertible  into or  exchangeable  for its
capital stock or any stock  appreciation  rights or phantom stock rights.  As of
the  Closing,  neither the Company  nor any  Subsidiary  shall be subject to any
obligation  (contingent  or otherwise)  to  repurchase  or otherwise  acquire or
retire any shares of its capital stock, any warrants, options or other rights to
acquire its capital  stock,  or any obligation to make any payments with respect
to any  profit  participation  features  of any of its  capital  stock,  carried
interest  rights,  stock  appreciation  rights,  phantom stock rights or similar
rights,  except as set forth on the Capitalization  Schedule and except pursuant
to the Certificate of Incorporation and the Executive Option  Agreements.  As of
the Closing,  all of the outstanding shares of the Company's capital stock shall
be validly issued, fully paid and nonassessable.

               (ii)   Except  as set  forth  in  the  Company's  Certificate  of
Incorporation,  as of the date hereof, there are no statutory or, to the best of
the Company's knowledge, contractual stockholders preemptive rights or rights of
refusal with respect to the issuance of the Common Stock hereunder.  The Company
has not violated any applicable  federal or state  securities laws in connection
with the offer, sale or issuance of any of its capital stock. To the best of the
Company's knowledge,  there are no agreements between the Company's stockholders
with respect to the voting or transfer of the  Company's  capital  stock or with
respect  to  any  other  aspect  of  the  Company's  affairs,   except  for  the
Stockholders Agreement.

               (iii)  As of the Closing,  upon the delivery thereof,  all of the
Company Shares shall be validly issued,  fully paid and  nonassessable  and free
and clear of any  claims,  liens,  encumbrances,  security  interests,  options,
participation rights, appreciation rights, carried interest obligations, charges
and restrictions of any kind ("Adverse Claims").


                                      -8-





<PAGE>
 
<PAGE>



               6C.    Subsidiaries;  Investments.   The   attached   "Subsidiary
Schedule" correctly sets forth  the  name of each Subsidiary,  the  jurisdiction
of its  incorporation  and the Persons owning  the  outstanding capital stock of
such Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,  possesses all
requisite  corporate  power and authority and all material licenses, permits and
authorizations  necessary  to own its properties and to carry on its  businesses
as now being conducted  and is qualified to do business in every jurisdiction in
which  its  ownership  of  property or the conduct of  business  requires  it to
qualify. Except as set forth on the Subsidiary Schedule,  all of the outstanding
shares  of  capital stock of each Subsidiary are validly issued,  fully paid and
nonassessable,  and  all  such  shares  are  owned  by  the  Company  or another
Subsidiary free and clear of any Lien and not subject to any  option or right to
purchase  any  such  shares.  Except  as  set forth on the Subsidiary  Schedule,
neither  the Company nor any Subsidiary  owns or holds the  right to acquire any
shares of stock or any other  security  or interest in any other Person.

               6D.    Authorization;  No  Breach. The execution,   delivery  and
performance of this  Agreement,  the  Registration Agreement,  the  Stockholders
Agreement,  the  Loan  Agreement  and  all  other agreements contemplated hereby
to which the  Company is a party have been duly authorized by the Company.  This
Agreement,  the  Registration  Agreement,  the Stockholders  Agreement, the Loan
Agreement  and all other agreements contemplated hereby to which the  Company is
a party  each  constitutes  a  valid  and  binding  obligation  of  the Company,
enforceable  in  accordance   with   its   terms.  Except  as  set  forth on the
"Restrictions  Schedule"  attached  hereto,  the execution and delivery  by  the
Company and the Selling Shareholder, as the case may be, of this Agreement,  the
Registration Agreement, the Stockholders  Agreement,  the Loan Agreement and all
other  agreements  contemplated  hereby  to  which  the  Company  or the Selling
Shareholder  is a party,  the  offering,  sale and  issuance of the Common Stock
and  the  fulfillment  of  and compliance  with the respective  terms hereof and
thereof  by  the  Company or the Selling  Shareholder,  do not and shall not (i)
conflict with or result  in a  breach  of the  terms,  conditions  or provisions
of,  (ii) constitute a default under,  (iii) result in the creation of any lien,
security  interest, charge or encumbrance upon the Company's or any Subsidiary's
capital  stock or  assets  pursuant  to,  (iv) give any third party the right to
modify,  terminate or accelerate any obligation under, (v) result in a violation
of,  (vi)  require  any  authorization,  consent,  approval,  exemption or other
action  by  or  notice  or  declaration  to,  or  filing  with,  any  court   or
administrative or governmental body or agency pursuant to, or (vii) give rise to
any Adverse  Claim with respect to any of the  Company's  capital stock or other
equity  securities (or any securities  convertible  into or exchangeable for any
shares of the Company's  capital stock or other equity  securities)  under,  the
charter or bylaws of the Company or any Subsidiary, or any law, statute, rule or
regulation to which the Company,  any  Subsidiary or the Selling  Shareholder is
subject,  or any agreement  (oral or written),  instrument,  order,  judgment or
decree to which the  Company,  any  Subsidiary  or the  Selling  Shareholder  is
subject.

               6E. Securities    Laws.   No   consent, authorization,  approval,
permit, or order of or filing with any governmental or regulatory   authority is
required under current laws and regulations  in  connection  with the  execution
and delivery of this  Agreement or the offer, issuance,  sale or delivery of the
Company Shares or the ARI Shares,  other than the  qualification  


                                      -9-





<PAGE>
 
<PAGE>



under applicable state securities laws, which  qualification  will, if required,
be effected as a condition of the sales contemplated hereby.

               6F.  Financial  Statements.  Attached  hereto  as the  "Financial
Statements Schedule" are the following financial statements:

                      (i) the audited consolidated balance sheets of the Company
        and its Subsidiaries as of December 31, 1993, 1994 and 1995, the related
        statements  of  income  and  cash  flows  (or  the  equivalent)  for the
        respective twelve-month periods then ended; and

                      (ii)  the  unaudited  consolidated  balance  sheet  of the
        Company and its  Subsidiaries  as of  September  30,  1996 (the  "Latest
        Balance Sheet"), and the related statements of income and cash flows (or
        the equivalent) for the nine-month period then ended.

Each of the  foregoing  financial  statements  (including in all cases the notes
thereto,  if any) is complete in all material  respects,  is consistent with the
books and records of the Company  (which,  in turn, are complete in all material
respects) and has been prepared in accordance with generally accepted accounting
principles, consistently applied, and presents fairly the consolidated financial
condition,  results  of  operations  and  cash  flows  of the  Company  and  its
Subsidiaries  as of the dates and for the periods set forth therein,  except for
the absence of notes in the Latest Balance Sheet and subject to normal  year-end
audit adjustments for recurring accruals.

               6G.  Absence of Undisclosed  Liabilities.  Except as set forth on
the attached  "Liabilities  Schedule," the Company and its  Subsidiaries  do not
have  any  obligation  or  liability  (whether  accrued,  absolute,  contingent,
unliquidated  or otherwise,  whether due or to become due and regardless of when
asserted)  arising out of transactions  entered into at or prior to the Closing,
or any  action or  inaction  at or prior to the  Closing,  or any state of facts
existing at or prior to the Closing other than: (i) liabilities set forth on the
Latest  Balance  Sheet  (including  any notes  thereto),  (ii)  liabilities  and
obligations  which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a liability  resulting from breach
of contract,  breach of warranty, tort,  infringement,  claim or lawsuit), (iii)
liabilities and obligations  expressly  disclosed in the other Schedules to this
Agreement and (iv) liabilities and obligations under  agreements,  contracts and
commitments not required to be disclosed on the Schedules hereto.

               6H. Affiliated Transactions.  Except as set forth on the attached
"Affiliated Transaction Schedule" and for employment agreements and stock option
agreements  between the Company and certain of its  officers,  to the  Company's
knowledge,  no officer,  director,  employee,  stockholder,  or Affiliate of the
Company or any individual  related by blood,  marriage,  or adoption to any such
individual or any entity in which such person or individual  owns any beneficial
interest,  is a  party  to any  material  agreement,  contract,  commitment,  or
transaction  with the Company or has any material  interest in any property used
by the Company or any Subsidiary.


                                      -10-





<PAGE>
 
<PAGE>



               6I. No  Material  Adverse  Change.  Since the date of the  Latest
Balance Sheet, there has been no material adverse event or occurrence  affecting
the  financial  condition,  operating  results,  assets,  operations,   business
prospects,  employee  relations or customer or supplier relations of the Company
and its Subsidiaries taken as a whole.

               6J.  Absence  of  Certain   Developments.   Except  as  expressly
contemplated  by this  Agreement or as set forth on the  attached  "Developments
Schedule,"  since the date of the Latest Balance Sheet,  neither the Company nor
any Subsidiary have:

                      (a) issued any notes,  bonds or other debt  securities  or
        any  capital  stock  or  other  equity   securities  or  any  securities
        convertible, exchangeable or exercisable into any capital stock or other
        equity securities;

                      (b) borrowed  any amount or incurred or become  subject to
        any liabilities, except for current liabilities incurred in the ordinary
        course of business and liabilities  under contracts  entered into in the
        ordinary  course  of  business,   and  except  for  any   sale/leaseback
        transactions entered into in the ordinary course of business between the
        date hereof and the Closing within the Board's current authorization;

                      (c)   discharged   or  satisfied  any  Lien  or  paid  any
        obligation  or  liability,  other than current  liabilities  paid in the
        ordinary course of business;

                      (d) declared or made any payment or  distribution  of cash
        or other property to its stockholders  with respect to its capital stock
        or other equity securities (except for regularly  scheduled dividends on
        the  Company's   preferred   stock  in  accordance  with  the  Company's
        Certificate of Incorporation) or purchased or redeemed any shares of its
        capital stock or other equity securities (including, without limitation,
        any  warrants,  options or other rights to acquire its capital  stock or
        other equity securities);

                      (e)  mortgaged or pledged any of its  properties or assets
        or subjected them to any Lien,  except Liens for current  property taxes
        not yet due and payable;

                      (f) sold,  assigned  or  transferred  any of its  tangible
        assets, except in the ordinary course of business, or canceled any debts
        or claims;

                      (g) sold,  assigned or  transferred  any patents or patent
        applications,  trademarks,  service marks, trade names, corporate names,
        copyrights or copyright registrations, trade secrets or other intangible
        assets,  or disclosed any  proprietary  confidential  information to any
        Person;

                      (h) suffered any extraordinary losses or waived any rights
        of  value,  whether  or  not in  the  ordinary  course  of  business  or
        consistent with past practice;

                      (i) made capital expenditures or commitments therefor that
        aggregate in excess of $200,000, except for capital expenditures made in
        the ordinary course of business between the date hereof and the Closing;



                                      -11-





<PAGE>
 
<PAGE>


                      (j) made any  loans or  advances  to,  guarantees  for the
        benefit of, or any  Investments in, any Persons in excess of $100,000 in
        the aggregate;

                      (k) made any charitable contributions or pledges in excess
        of $50,000 in the aggregate;

                      (l)  suffered  any damage,  destruction  or casualty  loss
        exceeding in the aggregate $100,000, not covered by insurance;

                      (m) made any  Investment in or taken steps to  incorporate
        any Subsidiary;

                      (n) acquired any operating  business or any assets outside
        of the ordinary  course of business or entered any  commitment to do so;
        or

                      (o)  except  for this  Agreement  or any  other  agreement
        contemplated  hereby,  entered into any other material transaction other
        than in the ordinary course of business.

               6K.  Assets.   Except  as  set  forth  on  the  attached  "Assets
Schedule," the Company and each Subsidiary have good and marketable title to, or
a valid leasehold  interest in, the properties and assets used by them,  located
on their premises or shown on the Latest  Balance Sheet or acquired  thereafter,
free and clear of all Liens, except for properties and assets disposed of in the
ordinary  course of  business  since the date of the  Latest  Balance  Sheet and
except  for  Liens  disclosed  on the  Latest  Balance  Sheet  or  1995  audited
consolidated  balance sheet of the Company and its  Subsidiaries  (including any
notes  thereto)  and Liens for current  property  taxes not yet due and payable.
Except as described on the Assets Schedule,  the Company's and each Subsidiary's
buildings and other  improvements,  equipment and other  tangible  assets are in
good  operating  condition in all  material  respects and are fit for use in the
ordinary  course of  business.  The Company and each  Subsidiary  own, or have a
valid  leasehold or other  interest in, all assets  necessary for the conduct of
their respective  businesses as presently conducted and as presently proposed to
be conducted.

               (i)    Owned Properties.  The "Assets Schedule" sets forth a list
of all owned real  property (the "Owned Real  Property")  used by the Company or
any Subsidiary in the operation of the Company's business.  With respect to each
such parcel of Owned Real Property  except as disclosed on the Assets  Schedule:
(a) the Company or one of its  Subsidiaries  has good and  marketable fee simple
title in such parcel,  free and clear of all encumbrances;  and (b) there are no
leases, subleases, licenses,  concessions, or other agreements, written or oral,
granting  to any person  the right of use or  occupancy  of any  portion of such
parcel.

               (ii)   Leased  Properties.  The Assets Schedule sets forth a list
of all of the  leases  and  subleases  ("Leases")  in which the  Company  or any
subsidiary  has  a  leasehold  and  subleasehold   interest  (the  "Leased  Real
Property")   (the  Owned  Real   Property  and  the  Leased  Real  Property  are
collectively  referred to herein as the "Real Property").  Each of the Leases is
in full force and effect and the Company holds a valid and existing leasehold or
subleasehold  



                                      -12-





<PAGE>
 
<PAGE>



interest  under  each of the  Leases.  The  Company  has made  available  to the
Investors  true,  correct,  complete and  accurate  copies of each of the Leases
described  in the Assets  Schedule.  With  respect  to each Lease  listed on the
Assets Schedule: (a) the Lease is legal, valid, binding, enforceable and in full
force and effect;  (b) the validity,  binding nature and  enforceability  of the
Lease shall not be adversely  affected by the transaction  contemplated  hereby;
(c) neither the Company, nor to the Company's knowledge,  any other party to the
Lease is in breach or default,  and no event has occurred which,  with notice or
lapse of time, would constitute such a breach or default or permit  termination,
modification  or  acceleration  under the  Lease;  (d) no party to the Lease has
repudiated  any  provision  thereof;  (e) the Lease has not been modified in any
respect,  except to the extent  that such  modifications  are  disclosed  by the
documents made available to the Investors'  special  counsel;  and (f) except as
set forth on the Assets  Schedule,  the Company has not  assigned,  transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the Lease.

               (iii) Real Property Disclosure. Except as disclosed on the Assets
Schedule,  there is no real  property  leased  or owned  by the  Company  or any
subsidiary and used in the Company's business.

               (iv)   No Proceedings.  There are no pending or, to the Company's
knowledge, threatened proceedings in eminent domain or other similar proceedings
affecting any portion of the Real  Property.  There exists no writ,  injunction,
decree,  order or judgment  outstanding,  nor any litigation,  pending or to our
knowledge  threatened,  relating to the  ownership,  lease,  use,  occupancy  or
operation by any person of the Real Property.

               (v)    Current  Use.  The  current use or  occupancy  of the Real
Property  does not violate in any material  respect any  instrument of record or
agreement affecting such Real Property or any covenant, condition,  restriction,
easement,  agreement or order of any governmental  authority having jurisdiction
over any of the Real  Property.  No  damage or  destruction  has  occurred  with
respect to any of the Real Property that, individually or in the aggregate,  has
had or resulted in, or will have or result in, a significant  adverse  effect on
the operation of the Company's business.

               (vi)   Condition and Operation of Improvements. All buildings and
all components of all  buildings,  structures  and other  improvements  included
within the Owned Real Property (the  "Improvements"),  are in good condition and
repair and are adequate to operate such  facilities  as currently  used.  To the
best of the  Company's  knowledge  and belief,  there are no facts or conditions
affecting  any of the  Improvements  and the Leased Real  Property  which would,
individually or in the aggregate,  interfere in any significant respect with the
use,  occupancy or operation thereof as currently used,  occupied or operated or
intended  to be  used,  occupied  or  operated.  To the  best  of the  Company's
knowledge and belief,  there are no structural  deficiencies  or latent  defects
affecting any Improvements.  All water, gas, electrical,  steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other similar
systems serving the Real Property are installed and operating and are sufficient
to enable the Real  Property to  continue to be used and  operated in the manner
currently  being  used and  operated.  Each such  utility  or other  service  is
provided by a public or private  utility or 


                                      -13-





<PAGE>
 
<PAGE>


service  company  and enters the Owned Real  Property  from an  adjacent  public
street or valid private  easement owned by the supplier of such utility or other
service.  Each  Improvement  has direct access to a public street  adjoining the
Real  Property on which such  Improvement  is situated  over the  driveways  and
accessways currently being used in connection with the use and operation of such
Improvement and no existing accessway crosses or encroaches upon any property or
property interest not owned by the Company.

               (vii)  Permits. All certificates of occupancy, permits, licenses,
franchises,  approvals  and  authorizations  (collectively,  the "Real  Property
Permits") of all  governmental  authorities  having  jurisdiction  over the Real
Property,  required or  appropriate to have been issued to the Company to enable
the Real  Property to be lawfully  occupied and used for all of the purposes for
which it is currently  occupied and used,  have been lawfully issued and are, as
of the date hereof, in full force and effect, with no suspension,  revocation or
modification of any Real Property Permit pending or threatened.

               (viii) Compliance  with  Laws.  The  Real  Property  is  in  full
compliance with all applicable building, zoning, subdivision,  health and safety
and other land use and similar laws  affecting the Real Property  (collectively,
the "Real  Property  Laws"),  and the  Company  has not  received  any notice of
violation or claimed violation of any Real Property Law. There is no pending or,
to the  best  knowledge  of the  Company,  any  anticipated  change  in any Real
Property Law that will have or result in a significant  adverse  effect upon the
ownership, alteration, use, occupancy or operation of the Real Properties or any
portion thereof.  Nothing in this paragraph 6K(viii) shall be deemed to apply to
compliance with Environmental and Safety Requirements,  which are covered by the
representations and warranties set forth in paragraph 6V hereof.

               6L.   Tax Matters.

               (i)    Except as set forth on the attached "Taxes Schedule":  the
Company and each  Subsidiary  have filed all Tax Returns which they are required
to file under applicable laws and  regulations;  the Company and each Subsidiary
have either paid all Taxes due and owing by them  (whether or not such Taxes are
required  to be shown on a Tax  Return)  or  accrued  such  Taxes on the  Latest
Balance Sheet  (excluding any amount  recorded which is  attributable  solely to
timing differences between book and Tax income); the Company and each Subsidiary
have withheld and paid over to the appropriate  taxing authority all Taxes which
they are  required  to  withhold  from  amounts  paid or owing to any  employee,
stockholder,  creditor  or  other  third  party;  neither  the  Company  nor any
Subsidiary  has waived any statute of  limitations  with respect to any Taxes or
agreed  to any  extension  of  time  with  respect  to  any  Tax  assessment  or
deficiency;  the accrual for Taxes on the Latest Balance Sheet would be adequate
to pay all Tax liabilities of the Company and its  Subsidiaries  with respect to
their  current  tax year if such year were  treated as ending on the date of the
Latest Balance Sheet (excluding any amount recorded which is attributable solely
to timing differences between book and Tax income); since the date of the Latest
Balance Sheet, the Company and its Subsidiaries  have not incurred any liability
for Taxes other than in the ordinary  course of business;  the assessment of any
additional  Taxes  for  periods  for which Tax  Returns  have been  filed by the
Company and each Subsidiary shall not exceed the recorded  liability therefor on
the Latest Balance Sheet  (excluding any amount  recorded which is



                                      -14-





<PAGE>
 
<PAGE>



attributable  solely to timing  differences  between book and Tax  income);  the
federal income Tax Returns of the Company and its Subsidiaries have been audited
and closed or otherwise  are closed for all tax years  through 1992; no foreign,
federal, state or local tax audits or administrative or judicial proceedings are
pending or being  conducted  with respect to the Company or any  Subsidiary,  no
information  related to Tax matters has been requested by any foreign,  federal,
state or local taxing  authority and no written  notice  indicating an intent to
open an audit or other review has been received by the Company from any foreign,
federal,  state or local  taxing  authority;  there are no  material  unresolved
questions or claims raised by a taxing authority concerning the Company's or any
Subsidiary's  Tax  liability;  and the  Company  and its  Subsidiaries  have net
operating loss  carryforwards for federal income Tax purposes as of December 31,
1996 of at least $25 million  (ignoring for this purpose any  limitations on the
use of these net operating  losses arising either out of the  acquisition of the
Company by the Selling  Shareholder or out of the  transactions  contemplated by
this Agreement).

               (ii)   Neither  the Company nor any of its  Subsidiaries has made
an election under 'SS'341(f) of the IRC.  Neither the Company nor any Subsidiary
is liable for the Taxes of another Person that is not a Subsidiary in a material
amount under (a) Treas.  Reg. 'SS' 1.1502-6 (or comparable  provisions of state,
local or foreign  law),  (b) as a transferee  or  successor,  (c) by contract or
indemnity or (d) otherwise. Neither the Company nor any Subsidiary is a party to
any tax sharing agreement that includes any entity other than the Company or any
Subsidiary.  Neither the Company nor any  Subsidiary  has made any payments,  is
obligated to make payments or is a party to an agreement  that could obligate it
to make any payments that would not be deductible under IRC 'SS'280G.

               (iii)  "Tax"  or "Taxes" means  federal,  state,  county,  local,
foreign or other income, gross receipts, ad valorem,  franchise,  profits, sales
or use, transfer, registration, excise, utility, environmental,  communications,
real or  personal  property,  capital  stock,  license,  payroll,  wage or other
withholding,   employment,   social  security,   severance,  stamp,  occupation,
alternative or add-on minimum,  estimated and other taxes of any kind whatsoever
(including, without limitation,  deficiencies,  penalties, additions to tax, and
interest  attributable  thereto) whether disputed or not. "Tax Return" means any
return,  information  report or filing  with  respect  to Taxes,  including  any
schedules attached thereto and including any amendment thereof.

               6M.   Contracts and Commitments.

               (i)    Except  as expressly  contemplated by this Agreement or as
set  forth  on the  attached  "Contracts  Schedule"  or the  attached  "Employee
Benefits  Schedule,"  neither the Company  nor any  Subsidiary  is a party to or
bound by any written or oral:

                      (a) pension,  profit sharing, stock option, employee stock
        purchase or other plan or  arrangement  providing  for deferred or other
        compensation  to  employees  or  any  other  employee  benefit  plan  or
        arrangement,  or  any  collective  bargaining  agreement  or  any  other
        contract  with any  labor  union,  or  severance  agreements,  programs,
        policies or arrangements;

                      (b) contract for the employment of any officer, individual
        employee or



                                      -15-





<PAGE>
 
<PAGE>


        other  Person  on a  full-time,  part-time,  consulting  or other  basis
        providing annual compensation in excess of $100,000 or contract relating
        to loans to officers,  directors or Affiliates  which, in the aggregate,
        exceed $50,000;

                      (c)  contract  under which the Company or  Subsidiary  has
        advanced or loaned any other Person  amounts in the aggregate  exceeding
        $50,000;

                      (d) agreement or indenture  relating to borrowed  money or
        other  Indebtedness or the mortgaging,  pledging or otherwise  placing a
        Lien on any  material  asset or material  group of assets of the Company
        and its Subsidiaries;

                      (e)  guarantee  of any  obligation  in excess  of  $25,000
        (other than by the  Company of a  Wholly-Owned  Subsidiary's  debts or a
        guarantee by a Subsidiary of the Company's debts or another Subsidiary's
        debts);

                      (f) lease or  agreement  under  which the  Company  or any
        Subsidiary  is  lessee of or holds or  operates  any  property,  real or
        personal,  owned by any  other  party,  except  for any lease of real or
        personal  property under which the aggregate  annual rental  payments do
        not exceed $50,000;

                      (g) other than as set forth on the Assets Schedule,  lease
        or agreement  under which the Company or any  Subsidiary is lessor of or
        permits  any  third  party  to hold or  operate  any  property,  real or
        personal, owned or controlled by the Company or any Subsidiary;

                      (h) contract or group of related  contracts  with the same
        party or group of affiliated  parties the  performance of which involves
        consideration in excess of $100,00 per annum;

                      (i) assignment, license, indemnification or agreement with
        respect to any intangible property (including,  without limitation,  any
        Intellectual Property Rights) having a value in excess of $50,000;

                      (j)    express  warranties with respect  to  its  services
        rendered or its products sold or leased;

                      (k)  agreement  under  which it has granted any Person any
        registration rights (including, without limitation, demand and piggyback
        registration rights);

                      (l)    sales, distribution or franchise agreement;

                      (m)    contract or  agreement  prohibiting  it from freely
        engaging in any business or competing anywhere in the world; or

                      (n)  any  other   agreement   which  is  material  to  its
        operations and business prospects and involves a consideration in excess
        of $50,000 annually.


                                      -16-





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<PAGE>



               (ii)   All of the contracts, agreements and instruments set forth
on the Contracts Schedule are valid,  binding and enforceable in accordance with
their  respective  terms.  The Company and each  Subsidiary  have  performed all
obligations required to be performed by them under the contracts, agreements and
instruments  listed on the Contracts Schedule and are not in default under or in
breach of nor in receipt of any claim of default or breach  under any  contract,
agreement or instrument listed on the Contracts Schedule;  no event has occurred
which with the passage of time or the giving of notice or both would result in a
default, breach or event of noncompliance by the Company or any Subsidiary under
any contract,  agreement or instrument to which the Company or any Subsidiary is
subject;  neither the Company nor any Subsidiary has any present  expectation or
intention of not fully performing all such obligations;  and neither the Company
nor any  Subsidiary  has  knowledge of any breach or  anticipated  breach by the
other parties to any contract, agreement, instrument or commitment listed on the
Contracts Schedule.

               (iii)  The   Contracts  Schedule  shall  list  each  Burger  King
Franchise  Agreement  and  shall  disclose  the  termination  date of each  such
agreement.  The Company has neither any knowledge nor any reason to believe that
any  franchise  agreement  terminating  within five years after the date of this
Agreement will not, if so requested by the Company,  be renewed on substantially
similar  terms and  without a cost per  restaurant  in excess of $40,000 for the
successor  franchise fee payable to Burger King  Corporation in connection  with
such renewal.

               (iv)   The  Company has made available to the Investors'  special
counsel  a true and  correct  copy of each of the  written  instruments,  plans,
contracts  and  agreements  and an  accurate  description  of each  of the  oral
arrangements,  contracts and  agreements  which are referred to on the Contracts
Schedule, together with all amendments, waivers or other changes thereto.

               6N.   Intellectual Property Rights.

               (i)    The attached  "Intellectual  Property Schedule" contains a
complete  and  accurate  list of all (a)  patented  or  registered  Intellectual
Property  Rights  owned or used by the  Company or any  Subsidiary,  (b) pending
patent  applications and applications  for  registrations of other  Intellectual
Property Rights filed by the Company or any Subsidiary,  (c) unregistered  trade
names and corporate names owned or used by the Company or any Subsidiary and (d)
unregistered  trademarks,  service  marks,  copyrights,  mask works and computer
software  owned  or used by the  Company  or any  Subsidiary.  The  Intellectual
Property Schedule also contains a complete and accurate list of all licenses and
other rights  granted by the Company or any  Subsidiary  to any third party with
respect to any  Intellectual  Property  Rights and all licenses and other rights
granted by any third party to the Company or any Subsidiary  with respect to any
Intellectual  Property Rights, in each case identifying the subject Intellectual
Property Rights.  The Company or one of its Subsidiaries  owns all right,  title
and  interest  to,  or has the right to use  pursuant  to a valid  license,  all
Intellectual  Property  Rights  necessary for the operation of the businesses of
the Company and its  Subsidiaries  as presently  conducted free and clear of all
Liens.  The loss or expiration  of any  Intellectual  Property  Right or related
group  of  Intellectual  Property  Rights  owned or used by the  Company  or any
Subsidiary  has not had and would not  reasonably be expected to have a material
adverse effect on the conduct of the Company's and its Subsidiaries'



                                      -17-





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<PAGE>


respective businesses, and no such loss or expiration is threatened,  pending or
reasonably  foreseeable.  The  Company  and  its  Subsidiaries  have  taken  all
necessary  and  desirable  actions to  maintain  and  protect  the  Intellectual
Property  Rights  which they own. To the best of the  Company's  knowledge,  the
owners of any  Intellectual  Property  Rights  licensed  to the  Company  or any
Subsidiary  have taken all  necessary  and  desirable  actions to  maintain  and
protect the Intellectual Property Rights which are subject to such licenses.

               (ii)   Except as set forth on the Intellectual Property Schedule,
(a) the Company and its Subsidiaries own all right, title and interest in and to
all of the Intellectual Property Rights listed on such schedule,  free and clear
of all Liens,  (b) there have been no claims  made  against  the  Company or any
Subsidiary  asserting the invalidity,  misuse or unenforceability of any of such
Intellectual Property Rights, and there are no grounds for the same, (c) neither
the Company nor any  Subsidiary has received any notices of, and is not aware of
any facts which indicate a likelihood of, any  infringement or  misappropriation
by, or conflict with, any third party with respect to such Intellectual Property
Rights (including, without limitation, any demand or request that the Company or
any  Subsidiary  license any rights from a third party),  and (d) the conduct of
the Company's and each Subsidiary's business has not infringed,  misappropriated
or conflicted  with and does not infringe,  misappropriate  or conflict with any
Intellectual  Property Rights of other Persons,  nor would any future conduct as
presently   contemplated   infringe,   misappropriate   or  conflict   with  any
Intellectual Property Rights of other Persons. The transactions  contemplated by
this  Agreement  shall have no material  adverse  effect on the Company's or any
Subsidiary's  right,  title and  interest  in and to the  Intellectual  Property
Rights listed on the Intellectual Property Schedule.

               6O.  Litigation,  etc.  Except  as  set  forth  on  the  attached
"Litigation  Schedule,"  there  are  no  actions,  suits,  proceedings,  orders,
investigations  or claims  pending or, to the  Company's  knowledge,  threatened
against the Company or any Subsidiary (or to the Company's knowledge, pending or
threatened  against  any of the  officers,  directors  or key  employees  of the
Company and its  Subsidiaries  with respect to the Company's or any Subsidiary's
businesses  or proposed  business  activities),  or pending or threatened by the
Company or any  Subsidiary  against  any third  party,  at law or in equity,  or
before or by any governmental department,  commission,  board, bureau, agency or
instrumentality  (including,  without limitation, any actions, suit, proceedings
or  investigations  with  respect  to  the  transactions  contemplated  by  this
Agreement); neither the Company nor any Subsidiary is subject to any arbitration
proceedings under collective  bargaining agreements or otherwise or, to the best
of  the  Company's  knowledge,  any  governmental  investigations  or  inquiries
(including,  without  limitation,  inquiries as to the  qualification to hold or
receive any license or permit);  and, to the  Company's  knowledge,  there is no
basis for any of the foregoing.

               6P.  Brokerage.  There are no claims for  brokerage  commissions,
finders'  fees or  similar  compensation  in  connection  with the  transactions
contemplated  by this Agreement  based on any  arrangement or agreement  binding
upon  the  Company  or any  Subsidiary.  The  Company  shall  pay,  and hold the
Investors harmless against, any liability,  loss or expense (including,  without
limitation,  reasonable  attorneys' fees and out-of-pocket  expenses) arising in
connection with any such claim.


                                      -18-





<PAGE>
 
<PAGE>



               6Q. Governmental Consent, etc. Except for any filings required to
be made pursuant to the Hart-Scott-Rodino Act, no permit,  consent,  approval or
authorization  of, or declaration to or filing with, any governmental  authority
is required in connection  with the execution,  delivery and  performance by the
Company of this Agreement or the other agreements  contemplated  hereby,  or the
consummation  by the Company of any other  transactions  contemplated  hereby or
thereby, except as expressly contemplated herein or in the exhibits hereto.

               6R.  Insurance.  The  attached  "Insurance  Schedule"  contains a
description  of  each  insurance  policy  maintained  by  the  Company  and  its
Subsidiaries  with respect to its properties,  assets and  businesses,  and each
such policy is in full force and effect as of the  Closing.  Neither the Company
nor any  Subsidiary  is in default  with  respect to its  obligations  under any
insurance policy maintained by it. The insurance coverage of the Company and its
Subsidiaries  is customary for  corporations  of similar size engaged in similar
lines of business.  Except as set forth on the Insurance  Schedule,  the Company
and its Subsidiaries do not have any self-insurance or co-insurance programs.

               6S.  Employees.  Except  as set forth on the  attached  "Employee
Schedule,"  the Company is not aware that any  executive  or key employee of the
Company  or any  Subsidiary  or any group of  employees  of the  Company  or any
Subsidiary  has any  plans  to  terminate  employment  with the  Company  or any
Subsidiary.  The  Company and each  Subsidiary  have  complied  in all  material
respects with all laws relating to the employment of labor  (including,  without
limitation,  provisions  thereof relating to wages,  hours,  equal  opportunity,
sexual harassment,  collective bargaining and the payment of social security and
other  taxes),  and the Company is not aware that it or any  Subsidiary  has any
material labor relations  problems  (including,  without  limitation,  any union
organization  activities,  threatened  or actual  strikes or work  stoppages  or
material  grievances).  Neither  the  Company,  its  Subsidiaries  nor,  to  the
Company's knowledge after due inquiry,  any of their employees is subject to any
noncompete,  nondisclosure,  confidentiality,  employment, consulting or similar
agreements  relating to,  affecting or in conflict  with the present or proposed
business  activities of the Company and its Subsidiaries,  except for agreements
between  the  Company  and its  present  and  former  employees,  those  certain
Franchise  Agreements  between Burger King Corporation and the Company or any of
its  Subsidiaries  and  those  agreements  set  forth on the  attached  Employee
Schedule.

               6T.   ERISA.

               (i)    Multiemployer   Plans.  The  Company  does  not  have  any
obligation  to  contribute  to (or any other  liability,  including  current  or
potential withdrawal liability, with respect to) any Multiemployer Plan.

               (ii)   Retiree Welfare Plans. Except as set forth on the attached
Employee Benefits Schedule, the Company does not maintain or have any obligation
to contribute to (or any other  liability with respect to) any Employee  Benefit
Plan or arrangement whether or not terminated,  which provides medical,  health,
life insurance or other  welfare-type  benefits for current or future retired or
terminated  employees  (except for limited  continued  medical benefit  



                                      -19-





<PAGE>
 
<PAGE>


coverage  required to be provided  under Section 4980B of the IRC or as required
under applicable state law).

               (iii)  Defined  Benefit  Plans.  The Company  does not  maintain,
contribute to or have any liability under (or with respect to) any employee plan
which is a Defined Benefit Plan, whether or not terminated.

               (iv)   Defined Contribution Plans. The Company does not maintain,
contribute to or have any liability under (or with respect to) any employee plan
which is a Defined Contribution Plan, whether or not terminated,  other than the
Carrols  Corporation  Corporate  Division  Employee  Savings  Plan (the  "Profit
Sharing Plan").

               (v)    Other Plans. Except as set forth in the "Employee Benefits
Schedule",  the Company does not  maintain,  contribute to or have any liability
under (or with respect to) any Employee  Benefit Plan or  arrangement  providing
benefits to current or former  employees,  including  any bonus  plan,  plan for
deferred  compensation,  employee  health or other welfare benefit plan or other
arrangement, whether or not terminated.

               (vi)   Each   Employee  Benefit  Plan  and  all  related  trusts,
insurance contracts, and funds have been maintained,  funded and administered in
compliance with applicable  laws and  regulations,  including but not limited to
ERISA and the IRC.  None of the  Company,  any trustee or  administrator  of any
Employee  Benefit Plan, or any other person has engaged in any transaction  with
respect to any Plan which would reasonably  subject the Company,  or any trustee
or  administrator  of any Employee  Benefit  Plan, or any party dealing with any
Employee  Benefit Plan, or the Investors to any tax or penalty  imposed by ERISA
or the IRC. To the Company's knowledge, no actions,  suits, claims,  complaints,
charges, proceedings,  hearings,  investigations, or demands with respect to the
Plans (other than routine  claims for benefits) are pending or  threatened,  and
the Company has no knowledge of any facts which could reasonably give rise to or
reasonably be expected to give rise to any actions,  suits, claims,  complaints,
charges, proceedings, hearings, investigations or demands.

               (vii)  Each   Employee  Benefit  Plan  that  is  intended  to  be
qualified  under  Section  401(a)  of the IRC,  and each  trust  forming  a part
thereof,  has received a favorable  determination  letter from the IRS as to the
qualification  under  the IRC of such  Plan and the  tax-exempt  status  of such
related  trust and nothing  has  occurred  since the date of such  determination
letter  that  would  adversely  affect  the  qualification  of such  Plan or the
tax-exempt status of such related trust.

               (viii) No  underfunded  Defined Benefit Plan has been, during the
five years preceding the Closing Date,  transferred out of the Controlled  Group
of  Companies  of which  the  Company  is a member or was a member  during  such
five-year period.

               (ix)  As  of  the  Closing  Date,  all  required  or  recommended
payments,  premiums,  contributions,  reimbursements or accruals with respect to
any Employee  Benefit Plan for all periods  ending prior to or as of the Closing
Date shall have been made or properly accrued.  No Employee Benefit Plan has any
material unfunded liabilities.



                                      -20-





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<PAGE>




               (x)    With  respect to each Employee  Benefit Plan,  the Company
has provided the Investors with true, complete and correct copies, to the extent
applicable,  of (A) all  documents  pursuant to which the Plans are  maintained,
funded and  administered,  (B) the two most  recent  annual  reports  (Form 5500
series) filed with the IRS (with attachments), (C) the two most recent actuarial
reports,  (D) the two most recent  financial  statements,  (E) all  governmental
rulings,  determinations,  and opinions (and pending  requests for  governmental
rulings,  determinations and opinions), and (F) the most recent valuation of the
present and future  obligations  under each Employee  Benefit Plan that provides
post-retirement or  post-employment  health,  life insurance,  accident or other
"welfare-type" benefits.

               (xi) For  purposes  of this  paragraph  6T,  the  term  "Company"
includes all  organizations  under common  control with the Company  pursuant to
Section 414(b) or (c) of the IRC.

               6U.  Compliance  with Laws.  Except as set forth on the  attached
"Compliance  Schedule",  neither the Company nor any Subsidiary has violated any
law or any  governmental  regulation or requirement  which  violation has had or
would  reasonably  be  expected  to have an adverse  effect  upon the  financial
condition,  operating results,  assets,  operations or business prospects of the
Company and its  Subsidiaries  taken as a whole, and neither the Company nor any
Subsidiary has received  notice of any such  violation,  and neither the Company
nor any Subsidiary has violated any health code regulations or requirements, and
neither  the  Company  nor  any  Subsidiary  has  received  notice  of any  such
violation.  Nothing in this  paragraph 6U shall be deemed to apply to compliance
with   Environmental  and  Safety   Requirements,   which  are  covered  by  the
representations and warranties set forth in paragraph 6V hereof.

               6V.   Environmental and Safety Matters.

               (i)    For  purposes of this Agreement,  the term  "Environmental
and  Safety  Requirements"  shall mean all  federal,  state,  local and  foreign
statutes,  regulations,  ordinances  and other  provisions  having  the force or
effect of law, all judicial and administrative  orders and  determinations,  all
contractual  obligations  and all common  law,  in each case  concerning  public
health and safety,  worker  health and safety and pollution or protection of the
environment (including,  without limitation, all those relating to the presence,
use, production,  generation, handling, transport, treatment, storage, disposal,
distribution,  labeling,  testing,  processing,  discharge,  Release, threatened
Release,   containment  or  cleanup  of  any  Hazardous  Materials;   "Hazardous
Materials" shall include (a) any element, compound, or chemical that is defined,
listed or otherwise  classified as a contaminant,  pollutant,  toxic  pollutant,
toxic  or  hazardous  substance,   extremely  hazardous  substance  or  chemical
hazardous waste, medical waste, biohazardous or infectious waste, special waste,
or solid waste  under  Environmental  and Safety  Requirements,  (b)  petroleum,
petroleum-based or petroleum-derived products, (c) polychlorinated biphenyls and
(d) asbestos-containing materials; "Release" shall have the meaning set forth in
the  Comprehensive  Environmental  Response,  Compensation  and Liability Act of
1980, as amended ("CERCLA"); "Environmental Claims" shall include any complaint,
summons,   citation,  notice  of  violation,   notice  of  potential  liability,
directive,  order,  claim,  litigation,  investigation,  proceeding,  judgement,
letter or other communication from any 



                                      -21-





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<PAGE>



governmental agency, department, bureau, office or other authority, or any third
party involving  violations of Environmental and Safety Requirements or Releases
of  Hazardous  Materials;  "Environmental  Liabilities"  shall mean any monetary
obligations, losses, liabilities (including strict liability), damages, punitive
damages,  consequential  damages,  treble damages, costs and expenses (including
all reasonable out-of-pocket costs for environmental site assessments,  remedial
investigation and feasibility studies), fines, penalties, sanctions and interest
incurred  as a result  of any  Environmental  Claim  filed  by any  Governmental
Authority or any third party which relate to any violations of Environmental and
Safety  Requirements,  Remedial  Actions,  Releases  or  threatened  Releases of
Hazardous Materials;  and "Remedial Action" means all actions taken to clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the environment, prevent or minimize a Release or
threatened Release of Hazardous  Materials so they do not migrate or endanger or
threaten  to  endanger  public  health or  welfare or the  environment,  perform
pre-remedial   studies  and  investigations  and  post-remedial   operation  and
maintenance activities, or any other actions authorized by 42 U.S.C. 9601.

              (ii) Except as set forth on the attached "Environmental Schedule":

                      (a) the Company and its  Subsidiaries  have  complied with
        and are  currently  in  compliance  with all  Environmental  and  Safety
        Requirements, and neither the Company nor its Subsidiaries have received
        any Environmental  Claims relating to the Company or its Subsidiaries or
        any of their properties or facilities;

                      (b) without limiting the generality of the foregoing,  the
        Company and its  Subsidiaries  have obtained and complied  with, and are
        currently  in  compliance   with,   all  permits,   licenses  and  other
        authorizations  that may be required  pursuant to any  Environmental and
        Safety  Requirements for the occupancy of their properties or facilities
        or the operation of their businesses;

                      (c) neither this  Agreement  nor the  consummation  of the
        transactions contemplated by this Agreement shall impose any obligations
        on the Company and its Subsidiaries  for site  investigation or cleanup,
        or  notification  to or  consent  of any  government  agencies  or third
        parties  under any  Environmental  and Safety  Requirements  (including,
        without   limitation,   any   so   called   "transaction-triggered"   or
        "responsible property transfer" laws and regulations);

                      (d) neither the  Company nor any of its  Subsidiaries  has
        treated, stored, disposed of, arranged for or permitted the disposal of,
        transported,  handled or  Released  any  substance  (including,  without
        limitation,  any hazardous substance) or owned, occupied or operated any
        facility or property,  so as to give rise to  liabilities of the Company
        or its  Subsidiaries  for response costs,  natural  resource  damages or
        attorneys fees pursuant to CERCLA, or any other Environmental and Safety
        Requirements; and

                      (e) neither the Company nor any of its  Subsidiaries  has,
        contractually  assumed or undertaken any Remedial Action,  obligation or
        Environmental   Liability   of  any  other   Person   relating   to  any
        Environmental and Safety Requirements.


                                      -22-





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<PAGE>




               6W.  Disclosure.  Neither this Agreement nor any of the exhibits,
schedules or  attachments  hereto nor any  certificate  delivered by the Company
hereunder  contain any untrue  statement  of a material  fact or omit a material
fact  necessary  to  make  each  statement   contained  herein  or  therein  not
misleading. There is no confidential or nonpublic fact which the Company has not
disclosed  to the  Investors  in  writing  and  of  which  any of its  officers,
directors or executive  employees is aware and which has had or would reasonably
be expected to have a material  adverse  effect  upon the  financial  condition,
operating results, assets, customer or supplier relations, employee relations or
business prospects of the Company and its Subsidiaries taken as a whole.

               6X.  Closing  Date.  The  representations  and  warranties of the
Company  contained in this Section 6 and  elsewhere  in this  Agreement  and all
information  contained in any exhibit,  schedule or attachment  hereto or in any
certificate delivered by, or on behalf of, the Company to the Investors pursuant
to this  Agreement or any schedule  hereto shall be true and correct on the date
of the  Closing as though  then made,  except as  affected  by the  transactions
expressly contemplated by this Agreement.

               6Y.  Reports with the  Securities  and Exchange  Commission.  The
Company has made available to the Investors and the Investors'  special  counsel
complete and accurate  copies of its Form 10-K for its three most recent  fiscal
years,  all other  reports  or  documents  required  to be filed by the  Company
pursuant  to Section  13(a) or 15(d) of the  Securities  Exchange  Act since the
filing of the most recent Form 10-K.  Such  filings do not contain any  material
false  statements  or any  misstatement  of any material fact and do not omit to
state  any  fact  necessary  to  make  the  statements  set  forth  therein  not
misleading.  The Company has made all filings with the  Securities  and Exchange
Commission  which it is required to make,  and the Company has not  received any
request from the  Securities  and Exchange  Commission  to file any amendment or
supplement to any of the current or pending filings described in this paragraph.

               Section  7.   Representations   and  Warranties  of  the  Selling
Shareholder7.  Representations and Warranties of the Selling  Shareholder.  As a
material  inducement to the Investors to enter into this Agreement,  the Selling
Shareholder hereby represents and warrants to the Investors that:

               7A.  The  ARI  Shares.  As of the  date  of  this  Agreement  and
immediately  prior to the Closing,  the Selling  Shareholder is, and will be (as
the case may be), the record and  beneficial  owner of 850,000  shares of Common
Stock of the Company.  Such shares have been duly authorized and validly issued,
are fully paid and nonassessable,  and are owned by the Selling Shareholder free
and clear of any Adverse  Claims.  Upon delivery to the Investors at the Closing
of  certificates  representing  the ARI  Shares,  such  certificates  being duly
endorsed or accompanied  by duly executed forms of assignment,  and upon receipt
by the Selling  Shareholder of the purchase  price for the ARI Shares,  good and
valid title to the ARI Shares shall pass to the Investors, free and clear of any
Adverse  Claims  (regardless  of any knowledge the Investors have of any Adverse
Claims or potential Adverse Claims). The Selling Shareholder has neither entered
into nor violated any agreement,  written or oral, that would create any rights,
or would give rise to any Adverse  Claims or potential  Adverse  Claims,  in any
shares  held by the Selling  Shareholder  as of the date of this  Agreement  and
immediately  prior to the  Closing  Date,  or that  



                                      -23-





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<PAGE>



would result in any loss, liability or damage with respect to the Company or any
of its Subsidiaries.

               7B.  Authorization.  Each of the Selling Shareholder and the Bank
has full  power  and  authority  to enter  into  this  Agreement  and the  other
agreements, instruments, documents and certificates to be executed and delivered
by  Selling  Shareholder  or the  Bank,  respectively,  pursuant  hereto  and to
consummate the transactions  contemplated hereby. All acts and other proceedings
required to be taken by the Selling  Shareholder  or the Bank to  authorize  the
execution,   delivery  and  performance  of  this  Agreement,  the  Registration
Agreement,  the Stockholders  Agreement,  and all other agreements  contemplated
hereby  to  which  the  Selling  Shareholder  or the  Bank is a  party,  and the
consummation of the transactions  contemplated  hereby have been (or in the case
of the Bank,  prior to the Closing will be) duly and properly  taken and each of
such  agreements  constitutes  a valid  and  binding  agreement  of the  Selling
Shareholder  and the Bank,  respectively,  enforceable in accordance  with their
terms.  The  execution and delivery by the Selling  Shareholder  and the Bank of
this Agreement,  the Registration Agreement, the Stockholders Agreement, and all
other  agreements  contemplated  hereby to which the Selling  Shareholder or the
Bank is a party do not and shall not (i) conflict  with or result in a breach of
terms,  conditions  or provisions  of, (ii)  constitute a default  under,  (iii)
result in the creation of any lien,  security  interest,  charge or  encumbrance
upon the Selling  Shareholder's  capital stock or assets  pursuant to, (iv) give
any third party the right to modify,  terminate  or  accelerate  any  obligation
under,  (v) result in a violation of, (vi) require any  authorization,  consent,
approval,  exemption or other action by or notice or  declaration  to, or filing
with, any court or administrative or governmental body or agency pursuant to, or
(vii)  give rise to any  Adverse  Claim  with  respect  to any of the  Company's
capital  stock  (other than the ARI Shares) or other equity  securities  (or any
securities  convertible  into or  exchangeable  for any shares of the  Company's
capital stock or other equity  securities)  under,  the charter or bylaws of the
Selling  Shareholder  or the Bank,  or any law,  statute,  rule or regulation to
which the Selling  Shareholder or the Bank is subject, or any agreement (oral or
written), instrument, order, judgment or decree to which the Selling Shareholder
or the Bank is subject.

               7C. Company Representations.  To the Selling Shareholder's actual
knowledge  (other than with respect to  representations  and  warranties  of the
Company contained in paragraphs 6B, 6D and 6P hereof) all of the representations
and  warranties  contained  in Section 6 are true and  correct  in all  material
respects  on the date of this  Agreement  and shall be true and  correct  in all
material respects on the Closing Date.

               7D. Compliance with Laws. Neither the Selling Shareholder nor any
of its  Affiliates  has  violated  any  law or any  governmental  regulation  or
requirement  which violation has had or would  reasonably be expected to have an
adverse  effect  upon  the  financial  condition,   operating  results,  assets,
operations  or business  prospects  of the Company and its  Subsidiaries  or any
effect on its  ownership of the Company and its  Subsidiaries  taken as a whole,
and the  Selling  Shareholder  has not  received  notice of any such  violation.
Neither the Selling  Shareholder nor any of its Affiliates is subject to, or has
any reason to believe it may be subject  to,  any  liability  or  corrective  or
remedial obligation arising under any federal, state, local or foreign law, rule
or regulation  (including the common law) relating to or regulating  securities,
currency,  banking,  or 


                                      -24-





<PAGE>
 
<PAGE>



exchange controls affecting the Company or the Selling  Shareholder's  ownership
of the Company and its Subsidiaries.

               7E.  Ownership of Selling  Shareholder.  BIB (Bermuda)  Holdings,
Ltd.  and  certain  executive  employees  and  directors  of the  Bank  and  its
Affiliates own in the aggregate 100% of the issued and outstanding capital stock
of the Selling  Shareholder  (provided  that such employees and directors do not
own more than 20% of the issued and  outstanding  capital  stock of the  Selling
Shareholder  nor more than 20% of the voting power of the Selling  Shareholder),
and the Bank  owns  100% of the  issued  and  outstanding  capital  stock of BIB
(Bermuda) Holdings, Ltd. and Dilmun Financial Services.

               7F.  Brokerage.  There are no claims for  brokerage  commissions,
finders'  fees or  similar  compensation  in  connection  with the  transactions
contemplated  by this Agreement  based on any  arrangement or agreement  binding
upon the Selling  Shareholder or any of its Affiliates.  The Selling Shareholder
shall  pay,  and  hold the  Company  and the  Investors  harmless  against,  any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out-of-pocket expenses) arising in connection with any such claim.

               7G.  Closing  Date.  The  representations  and  warranties of the
Selling Shareholder  contained in this Section 7 and elsewhere in this Agreement
shall be true and correct in all material respects on the date of the Closing as
though then made.

               Section 8. Investors' Representations and Warranties.

               8A. Investors' Investment Representations.  Each of the Investors
hereby  represents  that it is acquiring  the  Restricted  Securities  purchased
hereunder  or  acquired  pursuant  hereto for its own  account  with the present
intention of holding such securities for purposes of investment, and that it has
no intention of selling such securities in a public distribution in violation of
the federal  securities laws or any applicable state  securities laws;  provided
that nothing contained herein shall prevent the Investors and subsequent holders
of Restricted  Securities from  transferring  such securities in compliance with
the provisions of Section 5 hereof. Each certificate or instrument  representing
Restricted  Securities  shall be imprinted  with a legend in  substantially  the
following form:

        "The securities  represented by this certificate were originally  issued
        on _________,  1997, and have not been  registered  under the Securities
        Act of 1933, as amended.  The transfer of the securities  represented by
        this  certificate  is subject to the  conditions  specified in the Stock
        Purchase  Agreement,  dated as of February 25, 1997,  and as amended and
        modified  from time to time,  between  the issuer  (the  "Company")  and
        certain  investors,  and the  Company  reserves  the right to refuse the
        transfer of such  securities  until such  conditions have been fulfilled
        with  respect  to such  transfer.  A copy of such  conditions  shall  be
        furnished by the Company to the holder  hereof upon written  request and
        without charge."

               8B.  Brokerage.  There are no claims for  brokerage  commissions,
finders'  fees or  similar  compensation  in  connection  with the  transactions
contemplated by this Agreement


                                      -25-





<PAGE>
 
<PAGE>



based on any arrangement or agreement binding upon the Investors.  The Investors
shall pay, and hold the Company and the Selling  Shareholder  harmless  against,
any  liability,  loss or  expense  (including,  without  limitation,  reasonable
attorneys' fees and out-of-pocket  expenses) arising in connection with any such
claim.

               8C. Governmental  Consent, etc. No permit,  consent,  approval or
authorization of, or declaration to or filing with any governmental authority is
required in  connection  with the  execution,  delivery and  performance  by the
Investors of this Agreement or the other agreements  contemplated hereby, or the
consummation by the Investors of any other transactions  contemplated  hereby or
thereby,  except as expressly contemplated herein or in the exhibits hereto, and
except for the  filings  required to be made  pursuant to the  Hart-Scott-Rodino
Act.

               8D.  Closing  Date.  The  representations  and  warranties of the
Investors herein shall be true and correct in all material  respects on the date
of the Closing as though then made.

               9.   Definitions.

               9A.  Definitions.   For  the  purposes  of  this  Agreement,  the
following terms have the meanings set forth below:

               "Affiliate"  of any  particular  Person  means any  other  Person
controlling,  controlled by or under common control with such particular Person,
where "control" means the  possession,  directly or indirectly,  of the power to
direct the management and policies of a Person whether  through the ownership of
voting securities, contract or otherwise.

               "Adverse Claims" shall have the meaning set  forth  in  paragraph
6B(iii).

               "Controlled  Group of  Companies"  has the  meaning set  forth in
Section 414 of the IRC.

               "Defined  Benefit  Plan"  shall  have the  meaning  set  forth in
Section 3(35) of ERISA.

               "Defined  Contribution  Plan" shall have the meaning set forth in
Section 3(34) of ERISA.

               "Employee  Benefit Plan" means any (a) qualified or  nonqualified
Employee  Pension Benefit Plan, (b) Employee Welfare Benefit Plan, or (c) fringe
benefit plan, policy,  program and arrangement,  whether or not subject to ERISA
and whether or not funded.

               "Employee  Pension Benefit Plan" shall have the meaning set forth
in Section 3(2) of ERISA.

               "Employee  Welfare Benefit Plan" shall have the meaning set forth
in Section 3(1) of ERISA.



                                      -26-





<PAGE>
 
<PAGE>



               "ERISA"  means the  Employee  Retirement  Income  Security Act of
1974, as amended.

               "Indebtedness"  means at a particular time, without  duplication,
(i) any  indebtedness  for  borrowed  money or  issued  in  substitution  for or
exchange of indebtedness for borrowed money, (ii) any indebtedness  evidenced by
any note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred  purchase  price of property or services with respect to which a Person
is liable,  contingently or otherwise, as obligor or otherwise (other than trade
payables  and other  current  liabilities  incurred  in the  ordinary  course of
business), (iv) any commitment by which a Person assures a creditor against loss
(including,  without  limitation,   contingent  reimbursement  obligations  with
respect to letters of credit), (v) any indebtedness  guaranteed in any manner by
a Person (including, without limitation,  guarantees in the form of an agreement
to repurchase or reimburse),  (vi) any obligations under capitalized leases with
respect to which a Person is liable,  contingently  or  otherwise,  as  obligor,
guarantor or otherwise,  or with respect to which obligations a Person assures a
creditor  against  loss,  and  (vii)  any  indebtedness  secured  by a Lien on a
Person's assets.

               "Intellectual  Property  Rights"  means all (i)  patents,  patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress,  trade  names,  logos and  corporate  names and  registrations  and
applications  for  registration  thereof  together  with  all  of  the  goodwill
associated  therewith,   (iii)  copyrights   (registered  or  unregistered)  and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer  software,  data,  data  bases and  documentation  thereof,  (vi) trade
secrets  and other  confidential  information  (including,  without  limitation,
ideas,  formulas,  compositions,  inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how,  manufacturing and production
processes  and  techniques,  research  and  development  information,  drawings,
specifications,  designs, plans, proposals, technical data, copyrightable works,
financial and marketing  plans and customer and supplier lists and  information,
(vii)  other  intellectual  property  rights  and  (viii)  copies  and  tangible
embodiments thereof (in whatever form or medium).

               "Investment"  as applied  to any  Person  means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments,  stock,  securities or ownership  interest  (including  partnership
interests and joint venture  interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.

               "IRC" means the Internal  Revenue Code of 1986,  as amended,  and
any reference to any  particular IRC section shall be interpreted to include any
revision  of or  successor  to  that  section  regardless  of  how  numbered  or
classified.

               "IRS" means the United States Internal Revenue Service.

               "Liens"   means  any   mortgage,   pledge,   security   interest,
encumbrance,  lien,  covenant,  condition,  restriction  or  charge  of any kind
(including,  without  limitation,  any conditional sale or other title retention
agreement or lease in the nature thereof), any sale of receivables with recourse
against the Company, any Subsidiary or any Affiliate, any filing or



                                      -27-





<PAGE>
 
<PAGE>



agreement to file a financing  statement as debtor under the Uniform  Commercial
Code or any similar statute other than to reflect  ownership by a third party of
property leased to the Company or any Subsidiaries under a lease which is not in
the  nature  of  a  conditional  sale  or  title  retention  agreement,  or  any
subordination   arrangement   in  favor  of  another   Person  (other  than  any
subordination arising in the ordinary course of business).

               "Multiemployer  Plan" shall have the meaning set forth in Section
3(37) of ERISA.

               "Officer's   Certificate"  means  a  certificate  signed  by  the
Company's  or the Selling  Shareholder's,  as the case may be,  president or its
chief financial officer on behalf of the Company or the Selling Shareholder,  as
the case may be, stating that (i) the officer signing such  certificate has made
or has caused to be made such investigations as are necessary in order to permit
him to verify the accuracy of the information set forth in such  certificate and
(ii) to such  officer's  knowledge,  such  certificate  does  not  misstate  any
material  fact  and  does not  omit to  state  any  fact  necessary  to make the
certificate not misleading.

               "Person" means an individual,  a  partnership,  a corporation,  a
limited liability  company,  an association,  a joint stock company,  a trust, a
joint venture,  an unincorporated  organization and a governmental entity or any
department, agency or political subdivision thereof.

               "Public Sale" means any sale of securities to the public pursuant
to an offering  registered  under the  Securities Act or to the public through a
broker,  dealer or market maker  pursuant to the  provisions of Rule 144 adopted
under the Securities Act.

               "Restricted  Securities"  means Common  Stock issued  pursuant to
this  Agreement.  As to any particular  Restricted  Securities,  such securities
shall  cease to be  Restricted  Securities  when they have (a) been  effectively
registered  under the  Securities  Act and  disposed of in  accordance  with the
registration statement covering them, (b) been distributed to the public through
a broker,  dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become  eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise  transferred  and new  certificates  for them not bearing the
Securities  Act  legend set forth in  paragraph  8A have been  delivered  by the
Company in accordance  with  paragraph 5B.  Whenever any  particular  securities
cease to be  Restricted  Securities,  the holder  thereof  shall be  entitled to
receive from the Company,  without  expense,  new  securities  of like tenor not
bearing a Securities Act legend of the character set forth in paragraph 8A.

               "Securities Act" means the Securities Act of 1933, as amended, or
any similar federal law then in force.

               "Securities and Exchange  Commission"  includes any  governmental
body or agency succeeding to the functions thereof.

               "Securities  Exchange Act" means the  Securities  Exchange Act of
1934, as amended, or any similar federal law then in force.



                                      -28-





<PAGE>
 
<PAGE>




               "Subsidiary"  means, with respect to any Person, any corporation,
limited liability company, partnership,  association or other business entity of
which (i) if a  corporation,  a majority of the total  voting power of shares of
stock entitled  (without regard to the occurrence of any contingency) to vote in
the election of directors,  managers or trustees thereof is at the time owned or
controlled,  directly or indirectly,  by that Person or one or more of the other
Subsidiaries  of that  Person  or a  combination  thereof,  or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar  ownership  interest  thereof is at the time
owned or  controlled,  directly  or  indirectly,  by any  Person  or one or more
Subsidiaries of that Person or a combination  thereof.  For purposes  hereof,  a
Person or Persons  shall be deemed to have a majority  ownership  interest  in a
limited liability company, partnership,  association or other business entity if
such  Person or  Persons  shall be  allocated  a majority  of limited  liability
company,  partnership,  association or other business  entity gains or losses or
shall be or control any  managing  director or general  partner of such  limited
liability company, partnership, association or other business entity.

               "Treasury   Regulations"   means  the  United   States   Treasury
Regulations  promulgated  under the IRC,  and any  reference  to any  particular
Treasury  Regulation  section  shall be  interpreted  to  include  any  final or
temporary revision of or successor to that section regardless of how numbered or
classified.

               Section 10. Termination.

               10A. Conditions of Termination.  This Agreement may be terminated
at any time prior to the Closing:

               (i) by the mutual  written  consent of the  Company,  the Selling
Shareholder and the Investors;

               (ii)   by   the   Investors   if  there   has  been  a   material
misrepresentation,  material breach of warranty or material breach of a covenant
by the Company or the Selling  Shareholder in the representations and warranties
or covenants set forth in this Agreement or the Schedules and Exhibits  attached
hereto,  which in the case of any breach of covenant  has not been cured  within
ten days after written  notification thereof by the Investors to the Company and
the Selling Shareholder; or

               (iii)  by the Investors,  the Selling  Shareholder or the Company
if the transactions  contemplated  hereby have not been consummated by April 30,
1997; provided that the party electing termination pursuant to this subparagraph
(iii) is not in breach of any of its representations,  warranties,  covenants or
agreements  contained in this  Agreement or the Schedules and Exhibits  attached
hereto.

        In the event of termination by either the Investors,  the Company or the
Selling  Shareholder  pursuant to this  paragraph  10A,  written  notice thereof
(describing  in  reasonable  detail  the  basis  therefor)  shall  forthwith  be
delivered to the other parties hereto.



                                      -29-





<PAGE>
 
<PAGE>



               10B.  Effect of  Termination.  In the  event  of  termination  of
this  Agreement by either the Investors,  the Company or the Selling Shareholder
as provided above, this Agreement shall forthwith become void  and of no further
force  and  effect,  except  that  the  covenants  and agreements  set  forth in
paragraphs  10B and  Section  11 shall  survive  such termination  indefinitely,
and  except  that  nothing  in  paragraph  10A  or this paragraph  10B shall  be
deemed to release any party from any  liability  for any breach by such party of
the terms and  provisions of this Agreement or to impair the right of any  party
to compel  specific  performance  by another party of its obligations under this
Agreement.

               11.   Miscellaneous.

               11A. Expenses.  The Company shall pay, and hold the Investors and
all holders of Common Stock  harmless  against  liability for the payment of (i)
the reasonable  fees and expenses of their special counsel arising in connection
with the negotiation and execution of this Agreement and the consummation of the
transactions  contemplated  by this  Agreement  which  shall be  payable  at the
Closing or, if the Closing  does not occur for any reason other than as a result
of material breach by the Investors of any of their representations,  warranties
or  covenants  contained  in  this  Agreement,  upon  the  termination  of  this
Agreement,  payable upon demand,  (ii) the reasonable fees and expenses incurred
with  respect to any  amendments  or  waivers  (whether  or not the same  become
effective)  under or in respect of this Agreement,  the agreements  contemplated
hereby and the Certificate of  Incorporation,  (iii) stamp and other taxes which
may be payable in respect of the execution and delivery of this Agreement or the
issuance,  delivery  or  acquisition  of any  shares of Common  Stock,  (iv) the
reasonable  fees and expenses  incurred with respect to the  enforcement  of the
rights granted under this Agreement, the agreements contemplated hereby, and the
Certificate of  Incorporation,  (v) the reasonable fees and expenses incurred by
each such Person in any filing with any governmental  agency with respect to its
investment  in the Company or in any other filing with any  governmental  agency
with  respect to the Company  which  mentions  such Person,  including,  but not
limited to, any filings required to be made under the  Hart-Scott-Rodino Act and
(vi) the  reasonable  fees and expenses  incurred by the Investors in connection
with their  business,  legal and accounting due diligence  review of the Company
and negotiation of all legal documents.

               11B.  Remedies.  The Investors shall have all rights and remedies
set forth in this Agreement, the Certificate of Incorporation and all rights and
remedies  which  holders of Common Stock have been granted at any time under any
other  agreement or contract and all of the rights which such holders have under
any law.  Any Person  having any rights under any  provision  of this  Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security),  to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.

               11C.  Consent  to  Amendments.   Except  as  otherwise  expressly
provided herein, the provisions of this Agreement may be amended and the Company
may take  any  action  herein  prohibited,  or omit to  perform  any act  herein
required to be  performed  by it, only if the Company has  obtained  the written
consent of the holders of a majority of the Shares purchased hereunder. No other
course of  dealing  between  the  Company  and the  holder of any of the  Shares
purchased 


                                      -30-





<PAGE>
 
<PAGE>



hereunder  or any  delay  in  exercising  any  rights  hereunder  or  under  the
Certificate of Incorporation shall operate as a waiver of any rights of any such
holders.  Notwithstanding  the  foregoing,  no waiver or  amendment  which would
adversely affect the Selling Shareholder shall be made without the prior written
consent of the Selling Shareholder.

               11D.  Successors  and  Assigns.  Except  as  otherwise  expressly
provided herein, all covenants and agreements  contained in this Agreement by or
on behalf of any of the  parties  hereto  shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so expressed
or not;  provided  that  prior to the  Closing,  no party  hereto may assign its
rights or delegate its duties hereunder without the prior written consent of the
other parties  hereto and no holder of Common Stock  purchased  hereunder  shall
assign its rights  hereunder  except in connection with a sale or other transfer
of the Common Stock (other than in a Public Sale);  provided further,  that such
rights are not  assignable  to more than five (5) assignees in total who are not
Affiliates of the Investors or the Selling Shareholder. In addition, and whether
or not any express  assignment  has been made,  the provisions of this Agreement
which are for the  Investors'  benefit as  purchasers or holders of Common Stock
are also for the benefit of, and enforceable  by, any subsequent  holder of such
Common Stock (other than in a Public Sale).

               11E.  Severability.  Whenever  possible,  each  provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law, but if any provision of this Agreement is held to be prohibited
by or invalid under  applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

               11F. Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such  counterparts  taken together shall constitute
one and the same Agreement.

               11G.  Descriptive  Headings;   Interpretation.   The  descriptive
headings  of  this  Agreement  are  inserted  for  convenience  only  and do not
constitute a substantive part of this Agreement. The use of the word "including"
in this Agreement shall be by way of example rather than by limitation.

               11H.  Governing  Law. The  corporate law of the State of Delaware
shall  govern  all issues  and  questions  concerning  the  relative  rights and
obligations of the Company and its stockholders.  All other issues and questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement  and the  exhibits  and  schedules  hereto  shall be governed  by, and
construed in accordance with, the laws of the State of New York,  without giving
effect to any choice of law or conflict of law rules or  provisions  (whether of
the  State  of  New  York  or any  other  jurisdiction)  that  would  cause  the
application of the laws of any jurisdiction other than the State of New York. In
furtherance  of the  foregoing,  the internal law of the State of New York shall
control the interpretation and construction of this Agreement (and all schedules
and exhibits  hereto),  even though under that  jurisdiction's  choice of law or
conflict of law analysis,  the substantive law of some other  jurisdiction would
ordinarily apply.



                                      -31-





<PAGE>
 
<PAGE>



               11I. Notices. All notices,  demands or other communications to be
given or delivered  under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when  delivered  personally
to the recipient,  sent to the recipient by reputable  overnight courier service
(charges  prepaid) or mailed to the recipient by certified or  registered  mail,
return receipt  requested and postage prepaid.  Such notices,  demands and other
communications  shall be sent to the Investors at the address and to the Company
at the addresses indicated below:

               Notices to the Company:

               Carrols Holdings Corporation
               James Street
               Syracuse, NY 13203
               Attn: Joseph A. Zirkman, Esq.

               With copies (which shall not constitute notice) to:

               Schulte Roth & Zabel LLP
               Third Avenue
               New York, NY 10022
               Attn: Andre Weiss, Esq.

               Notices to Investors:

               Madison Dearborn Capital Partners, L.P.
               Three First National Plaza
               Suite 1330
               Chicago, IL 60602
               Attn:  Benjamin D. Chereskin, Robin P. Selati
                      and William J. Hunckler III

               Madison Dearborn Capital Partners II, L.P.
               Three First National Plaza
               Suite 1330
               Chicago, IL 60602
               Attn:  Benjamin D. Chereskin, Robin P. Selati
                      and William J. Hunckler III



                                      -32-





<PAGE>
 
<PAGE>



               With copies (which shall not constitute notice) to:

               Kirkland & Ellis
               East Randolph Drive
               Suite 5700
               Chicago, IL 60601
               Attn: Edward T. Swan, Esq.

               Notices to Selling Shareholder:

               Atlantic Restaurants, Inc.
               c/o Dilmun Investments, Inc.
               Metro Center
               One Station Place
               Stamford, CT 06902
               Attn : Paul Durrant

               With copies (which shall not constitute notice) to:

               Pryor, Cashman, Sherman, and Flynn
               Park Avenue, 10th Floor
               New York, NY 10022
               Attn: Selig Sacks, Esq.

or to such  other  address  or to the  attention  of such  other  person  as the
recipient party has specified by prior written notice to the sending party.

               11J. No Strict Construction. The parties hereto have participated
jointly in the  negotiation  and  drafting  of this  Agreement.  In the event an
ambiguity or question of intent or interpretation  arises,  this Agreement shall
be construed as if drafted jointly by the parties hereto,  and no presumption or
burden of proof shall arise favoring or  disfavoring  any party by virtue of the
authorship of any of the provisions of this Agreement.

               11K.   Indemnification.   Subject  to  11K(iii)(h)   below,   all
representations  and warranties  contained  herein or made in any certificate or
other  writing by any party in connection  herewith  shall survive the execution
and  delivery  of  this  Agreement  and  the  consummation  of the  transactions
contemplated hereby, regardless of any investigation made by the Investors or on
their behalf.

               (i)    Company's   Indemnification  Obligation.  Subject  to  the
limitations  set  forth  in  paragraph  (iii)  below,  in  consideration  of the
Investors'  execution  and delivery of this  Agreement and acquiring the Company
Shares and the ARI Shares  hereunder,  and in addition  to all of the  Company's
other  obligations  under this  Agreement,  the Company shall  defend,  protect,
indemnify and hold harmless the Investors and all of their respective  officers,
directors,  employees and agents (including,  without limitation, those retained
in  connection   with  the   transactions   contemplated   by  this   Agreement)
(collectively,  the "Indemnitees") from and against


                                      -33-





<PAGE>
 
<PAGE>



any and all actions,  causes of action, suits, claims, losses, costs, penalties,
fees,   liabilities   and  damages,   and  expenses  in   connection   therewith
(irrespective  of whether any such Indemnitee is a party to the action for which
indemnification  hereunder is sought), and including reasonable  attorneys' fees
and disbursements (the "Indemnified  Liabilities"),  incurred by the Indemnitees
or any of them as a  result  of,  or  arising  out of,  or  relating  to (a) the
inaccuracy  of any  representation  or  warranty  made  by the  Company  in this
Agreement  or in  any  certificate  delivered  by  the  Company  to  any  of the
Indemnitees  pursuant  to this  Agreement,  or (b) the failure of the Company to
comply with any of its  covenants  under this  Agreement  or in any  certificate
delivered by the Company to any of the  Indemnities  pursuant to this Agreement.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason,  the Company shall make the maximum  contribution to the payment
and  satisfaction  of each of the Indemnified  Liabilities  which is permissible
under applicable law.

               (ii)   Selling Shareholder's Indemnification Obligation.  Subject
to the limitations set forth in paragraph (iii) below, in  consideration  of the
Investors'  execution  and delivery of this  Agreement and acquiring the Company
Shares  and the ARI  Shares  hereunder  and in  addition  to all of the  Selling
Shareholder's  other obligations under this Agreement,  the Selling  Shareholder
shall  defend,  protect,  indemnify  and hold  harmless the  Investors and their
respective  officers,  directors,   employees  and  agents  (including,  without
limitation,  those retained in connection with transactions contemplated by this
Agreement)  (collectively,  the  "Indemnitees")  from  and  against  any and all
actions,  causes of action,  suits,  claims,  losses,  costs,  penalties,  fees,
liabilities and damages, and expenses in connection  therewith  (irrespective of
whether any such  Indemnitee is a party to the action for which  indemnification
is sought),  and including  reasonable  attorneys' fees and  disbursements  (the
"Indemnified  Liabilities"),  incurred  by the  Indemnitees  or any of them as a
result  of,  or  arising  out  of,  or  relating  to  the   inaccuracy   of  any
representation or warranty made by the Selling  Shareholder in this Agreement or
in  any  certificate  delivered  by  the  Selling  Shareholder  to  any  of  the
Indemnitees  pursuant  to this  Agreement.  To the  extent  that  the  foregoing
undertaking by the Selling  Shareholder may be unenforceable for any reason, the
Selling  Shareholder  shall make the  maximum  contribution  to the  payment and
satisfaction of each of the Indemnified  Liabilities  which is permissible under
applicable law.

               (iii)  Conditions of Indemnification.

               (a)    Except  as set forth in paragraph  (c) below,  none of the
Company's  representations,  warranties or covenants in this Agreement  shall be
deemed to have been  breached  for purposes of paragraph 2A except to the extent
that (x) any individual  breach has resulted in or could  reasonably be expected
to result in an Indemnified Liability exceeding $20,000 and (y) the total amount
of Indemnified  Liabilities that have resulted, and could reasonably be expected
to result,  from all breaches  identified  in (x) would exceed $3 million in the
aggregate.

               (b) Except as set forth in paragraph (c) below, the Company shall
only be liable to the Investors for any  Indemnified  Liabilities  arising under
paragraph 11K(i) to the extent that (x) the amount of any individual Indemnified
Liability   exceeds  $20,000  and  (y)  the  total  amount  of  all  Indemnified
Liabilities identified in (x) exceeds $3 million in the aggregate, in




                                      -34-





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<PAGE>




which case the  Company  shall be liable to the  Investors  for all  Indemnified
Liabilities from the first dollar.

               (c)    The foregoing limitations set forth in clauses (a) and (b)
shall  not  apply  to (x)  any  inaccuracy  of any  representation  or  warranty
contained  in  paragraphs  6A,  6B, 6D and 6P or (y) any  Indemnified  Liability
resulting  from any  Adverse  Claim with  respect  to the  record or  beneficial
ownership of ARI Shares,  the Company  Shares or any other shares of the Company
held by the Selling Shareholder.

               (d)    Except  as set forth in paragraph  (f) below,  none of the
Selling  Shareholder's  representations  or warranties set forth in paragraph 7C
shall be deemed to have been  breached for purposes of paragraph  2A,  except to
the extent that (x) any individual breach has resulted in or could reasonably be
expected to result in an  Indemnified  Liability  exceeding  $20,000 and (y) the
total amount of Indemnified Liabilities that have resulted, and could reasonably
be expected  to result,  from all  breaches  identified  in (x) would  exceed $3
million in the aggregate.

               (e)    Except  as set forth in paragraph  (f) below,  the Selling
Shareholder   shall  only  be  liable  to  the  Investors  for  any  Indemnified
Liabilities  arising  under  paragraph  11K(ii)  with  respect  to a  breach  of
paragraph  7C  hereof  to the  extent  that  (x) the  amount  of any  individual
Indemnified   Liability  exceeds  $20,000  and  (y)  the  total  amount  of  all
Indemnified  Liabilities  identified in (x) exceeds $3 million in the aggregate,
in which case the Selling  Shareholder  shall be liable to the Investors for all
Indemnified Liabilities from the first dollar.

               (f)    The  foregoing  limitation set forth in clause (d) and (e)
shall not apply to (x) a breach of paragraph  7C that relates to any  inaccuracy
of any  representation or warranty  contained in paragraphs 6A, 6B, 6D and 6P or
(y) any Indemnified  Liability  resulting from any Adverse Claim with respect to
the  ownership  of ARI  Shares,  the Company  Shares or any other  shares of the
Company held by the Selling Shareholder.

               (g)    Notwithstanding  any  other  provision  contained  in this
paragraph 11K, in the event that the representations and warranties contained in
paragraph 7C (other than with respect to the inaccuracy of any representation or
warranty  contained in paragraph 6B, 6D or 6P) hereof are breached,  the Selling
Shareholder  shall only be required to  indemnify  the  Investors  and the other
Indemnitees  for  one-half  (1/2) of the total  Indemnified  Liabilities  of the
Indemnitees  as a result  of such  breach  and the  corresponding  breach  under
Section 6 pursuant to  paragraphs  11K(i) and (ii) above subject to an aggregate
cap of  $30,666,632.25  on the  Selling  Shareholder's  overall  indemnification
obligation  pursuant to  paragraph  11K(ii)  with respect to paragraph 7C (other
than with respect to the breach or inaccuracy of any  representation or warranty
contained in paragraph 6B, 6D (to the extent that such breach or inaccuracy  (i)
pertains to the title to,  ownership  of, or other  rights with  respect to, the
Company's  capital stock or other equity securities  including,  but not limited
to, the ARI Shares and the Company Shares, and (ii) impairs or affects the value
thereof  or the right to realize  the value  thereof)  or 6P)  above;  provided,
however,  that nothing contained in this paragraph  11K(iii)(g) shall in any way
limit the Company's  liability or  indemnification  obligations  under paragraph
11K(i) except to the extent 



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<PAGE>



that the Investors have recovered any amounts from the Selling  Shareholder as a
result of such breach and the corresponding breach under Section 6.

               (h)    Any claim based upon the breach of any  representation  or
warranty  contained in Section 6, 7 or 8 must be made to the breaching  party in
writing  prior to the later of (i) April 1, 1998 or (ii) fifteen (15) days after
delivery  to  the  Investors  by  the  Company  of its  1997  audited  financial
statements  pursuant to Section 5 of the Stockholders  Agreement;  provided that
(A) any claim based upon the breach of any  representation or warranty contained
in  paragraphs  6L,  6U,  6V or 7C  (with  respect  to  the  inaccuracy  of  any
representation  or warranty  contained in paragraphs 6L, 6U and 6V) must be made
to the Company or the Selling  Shareholder (as the case may be) in writing prior
to the third anniversary of the Closing and (B) there shall be no time limit for
claims made for a breach of the  representations  and  warranties  contained  in
paragraphs  6A,  6B,  6P, 7A,  7B, 7C (with  respect  to the  inaccuracy  of any
representation or warranty  contained in paragraph 6B), 7D, 7E, 7F and the first
two sentences of 6D.

               (i)    Notwithstanding anything to the contrary contained in this
paragraph 11K, each of the Company and the Selling  Shareholder shall be jointly
and severally liable to the Investors with respect to any Indemnified  Liability
arising  out  of,  or  as  a  result  of,  the  breach  or   inaccuracy  of  any
representation  or warranty  contained in  paragraph  6B, 6D (to the extent that
such breach or inaccuracy  (i) pertains to the title to,  ownership of, or other
rights with respect to, the Company's  capital stock or other equity  securities
including,  but not limited to, the ARI Shares and the Company Shares,  and (ii)
impairs or affects the value thereof or the right to realize the value  thereof)
or 6P hereof.

               (iv)   Adjustment  to Purchase Price. If the Indemnitees  recover
Indemnified  Liabilities from the Company under paragraph 11K(i) with respect to
a breach of any  representations or warranties  contained in Section 6 hereof or
in any certificate  delivered by the Company to any Indemnitee  pursuant to this
Agreement and the  Indemnitees do not have any right to recover any  Indemnified
Liabilities  with  respect  to such  breach  from the  Selling  Shareholder  (or
indirectly the Bank) under paragraphs  11K(ii) and (iii),  then  notwithstanding
anything to the contrary  contained in this  paragraph  11K, the purchase  price
paid by the Investors to the Selling  Shareholder  for the ARI Shares  hereunder
shall be  adjusted  to reflect  the  reduction  in the value of the Company as a
result of the  payment of such  Indemnified  Liabilities  by the  Company to the
Indemnitees,  and the Selling Shareholder shall be liable to the Indemnitees for
and shall promptly pay to the Indemnitees (as an adjustment to the consideration
paid by the Investors to the Selling  Shareholder  for the ARI Shares) an amount
in cash equal to (i) $30,666,632.25 (the purchase price paid by the Investors to
the Selling Shareholder for the ARI Shares hereunder),  minus (ii) 22.0867% (the
percentage  of  the  Company's  fully-diluted  Common  Stock  purchased  by  the
Investors from the Selling Shareholder) multiplied by the post-Closing valuation
of the Company's Common Stock on a fully-diluted  basis (not adjusted to reflect
the  reduction  in  value  of the  Company  as a result  of such  breach  of its
representations and warranties but reduced by any actual recovery of Indemnified
Liabilities from the Company by the Indemnitees).


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<PAGE>
 
<PAGE>




               (v)    Failure  to Recover.  If any breach or  inaccuracy  of any
representations  and  warranties  in  paragraph  6B, 6D (to the extent that such
breach or inaccuracy (i) pertains to the title to, ownership of, or other rights
with  respect  to,  the  Company's  capital  stock  or other  equity  securities
including,  but not limited to, the ARI Shares and the Company Shares,  and (ii)
impairs or affects the value thereof or the right to realize the value thereof),
6P or 7A results in a claim  against the Company for which the  Indemnitees  are
entitled  to recover  Indemnified  Liabilities  from  either the  Company or the
Selling Shareholder or both of them and the Indemnitees fail to recover the full
amount  thereof  from either the Company or the Selling  Shareholder  or both of
them (after final determination of the judicial authority or alternative dispute
resolution  authority  selected  by the  parties,  as the  case  may  be,  which
determination  is either not appealable or all applicable time periods to appeal
have lapsed and thereafter,  following five (5) days prior written notice by the
Indemnitees to the Company and the Selling  Shareholder),  the Company shall (a)
issue that number of additional  shares of Common Stock to the Investors (for no
additional consideration and as an adjustment to the purchase price paid for the
Company Shares and the ARI Shares hereunder) such that the Investors'  aggregate
fully-diluted ownership of the Common Stock at the Closing would have been equal
to (i) the  aggregate  amount  invested  by the  Investors  at Closing  (for the
purchase of both the Company Shares and ARI Shares) less any amounts received by
the  Indemnitees  for  Indemnified  Liabilities  from  either the Company or the
Selling Shareholder, divided by (ii) the fully-diluted post-closing value of the
Common Stock immediately after the Closing (as adjusted to reflect any reduction
in value of the  Company  resulting  from any  breaches of  representations  and
warranties  by the Company  hereunder  and any actual  recovery  of  Indemnified
Liabilities  from the  Company by the  Indemnitees)  and (b) issue or grant that
number of additional  shares of Common Stock or options to acquire  Common Stock
to management  shareholders and  optionholders as of the Closing,  respectively,
such that their aggregate fully diluted  ownership of the Common Stock as of the
Closing  would have  remained  the same as it was prior to the  Company  issuing
additional shares to the Investors hereunder.

               (vi)   Claims Against the Investors.  If any breach or inaccuracy
of any  representations  and  warranties in paragraph 6B, 6D (to the extent that
such breach or inaccuracy  (i) pertains to the title to,  ownership of, or other
rights with respect to, the Company's  capital stock or other equity  securities
including,  but not limited to, the ARI Shares and the Company Shares,  and (ii)
impairs or affects the value thereof or the right to realize the value thereof),
6P or 7A results in a direct claim (a "Direct  Claim") against the Investors for
which the Investors are entitled to recover Indemnified  Liabilities from either
the Company or the Selling  Shareholder or both of them and the Indemnitees fail
to recover  the full  amount  thereof  from  either the  Company or the  Selling
Shareholder  or both of them,  the  Company  shall  (a)  issue  that  number  of
additional  shares of Common Stock to the  Investors  so that the  fully-diluted
percentage ownership of the Investors as of the Closing would have been equal to
(i) the aggregate  amount invested by the Investors at Closing (for the purchase
of both the Company  Shares and ARI Shares) plus the amount of the Direct Claim,
less any amounts  received by the Indemnitees for Indemnified  Liabilities  from
either the Company or the Selling Shareholder, divided by (ii) the fully-diluted
post-closing  value of the  Common  Stock  immediately  after  the  Closing  (as
adjusted to reflect any  reduction  in value of the Company  resulting  from any
breaches of  representations  and  warranties  by the Company  hereunder and any
actual recovery of Indemnified  Liabilities from 



                                      -37-





<PAGE>
 
<PAGE>




the Company by the Indemnitees) and (b) issue or grant that number of additional
shares  of  Common  Stock or  options  to  acquire  Common  Stock to  management
shareholders and optionholders as of the Closing, respectively,  such that their
aggregate  fully  diluted  ownership of the Common Stock as of the Closing would
have remained the same as it was prior to the Company issuing  additional shares
to the Investors hereunder.

        Examples  illustrating the operation of paragraphs  11K(iv),  11K(v) and
11K(vi) are set forth in Exhibit F attached hereto.

               11L. Further  Assurances.  The Selling Shareholder agrees that at
any time and from time to time upon the  request of the  Investors,  the Selling
Shareholder shall execute and deliver such further documents and do such further
acts and things as the Investors may reasonably  request in connection  with the
sale and transfer of the ARI Shares to the Investors under this Agreement.

               11M.  Consent  to  Jurisdiction.   Any  legal  action,   suit  or
proceeding  arising out of or relating to this Agreement or the  consummation of
the transactions  contemplated hereby may only be instituted in any court of the
State of New York or State of Delaware, as determined by paragraph 11H, and each
party (including the Bank) agrees not to assert,  by way of motion, as a defense
or otherwise,  in any such action, suit or proceeding,  any claim that it is not
subject personally to the jurisdiction of such courts,  that the action, suit or
proceeding if brought in such courts,  would be in an inconvenient  forum,  that
the venue of the action,  suit or proceeding,  if brought in any of such courts,
is  improper or that this  Agreement  or the  subject  matter  hereof may not be
enforced  in or by such  courts  on  jurisdictional  grounds.  The  Bank  hereby
designates and appoints Pryor, Cashman, Sherman & Flynn (the "Authorized Agent")
as its agent to accept  and  acknowledge  on its behalf  service of any  process
which may be served in any suit,  action or  proceeding  and agrees that service
upon such  Authorized  Agent shall be deemed in every respect service of process
on the Bank and, to the extent  permitted by applicable  law, shall be taken and
held to be valid and personal  service and shall constitute an appearance by the
Bank  for all  purposes  in any  such  suit,  action  or  proceeding.  The  Bank
represents and warrants to the Investors that the Authorized Agent has agreed to
act as such agent for service of process.

                                          * * * * *


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<PAGE>
 
<PAGE>


               IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this
Agreement on the date first written above.

                                     CARROLS HOLDINGS CORPORATION

                                     By:/s/  Alan Vituli
                                        ---------------------------------------

                                     Its:  Chairman and Chief Executive Officer

                                     MADISON DEARBORN CAPITAL
                                     PARTNERS, L.P.

                                     By:    Madison Dearborn Partners, L.P.
                                     Its:   General Partner

                                        By:      Madison Dearborn Partners, Inc.
                                        Its:     General Partner

                                              By:  /s/ Benjamin D. Chereskin
                                                 -------------------------------

                                                 Benjamin D. Chereskin

                                              Its: Vice President
                                                  ------------------------------

                                      MADISON DEARBORN CAPITAL PARTNERS II, L.P.

                                          By:    Madison Dearborn Partners, L.P.
                                          Its:   General Partner

                                        By:      Madison Dearborn Partners, Inc.
                                        Its:     General Partner

                                                    By:/s/ Benjamin D. Chereskin
                                                       -------------------------
                                                           Benjamin D. Chereskin

                                                    Its: Vice President
                                                        ------------------------

                                       ATLANTIC RESTAURANTS, INC.

                                       By: /s/ David J. Mathies
                                          --------------------------------------

                                      Its: President
                                          --------------------------------------








<PAGE>
 
<PAGE>


        The undersigned,  as the indirect owner of all or  substantially  all of
the  outstanding  capital  stock of  Atlantic  Restaurants,  Inc.,  does  hereby
guarantee  the  obligations  of  Atlantic  Restaurants,  Inc.  under  this Stock
Purchase Agreement and shall cause Atlantic Restaurants, Inc. to comply with the
provisions of this Stock Purchase Agreement.

                                       BAHRAIN INTERNATIONAL BANK, E.C.

                                       By /s/ Robin McIlvenny
                                         ---------------------------------------

                                       Its Chief Executive Officer
                                         ---------------------------------------







<PAGE>
 
<PAGE>


                                LIST OF EXHIBITS

Exhibit A       -     Registration Agreement

Exhibit B1      -     Alan Vituli Unvested Stock Option Agreement

Exhibit B2      -     Daniel Accordino Unvested Stock Option Agreement

Exhibit B3      -     Joseph Zirkman Unvested Stock Option Agreement

Exhibit B4      -     Amended 1996 Long-Term Incentive Plan

Exhibit B5      -     Options  granted to Alan  Vituli  pursuant  to the Carrols
                      Corporation 1996 Long-Term Incentive Plan

Exhibit B6      -     Options  granted  to  Daniel  Accordino  pursuant  to  the
                      Carrols Corporation

                      1996 Long-Term Incentive Plan

Exhibit C       -     Stockholders Agreement

Exhibit D1      -     Alan Vituli Employment Agreement

Exhibit D2      -     Daniel Accordino Employment Agreement

Exhibit E1      -     Form of Opinion of Schulte Roth & Zabel LLP

Exhibit E2      -     Form of Opinion of Joseph A. Zirkman, Esq.

Exhibit E3      -     Form of Opinion of Pryor, Cashman, Sherman & Flynn

Exhibit F       -     Operation of Paragraphs 11K(iv), 11K(v) and 11K(vi)


                                      -41-




<PAGE>
 
<PAGE>


                          LIST OF DISCLOSURE SCHEDULES

                          Third Party Approval  Schedule
                          Governmental  Approval Schedule
                          Capitalization  Schedule 
                          Subsidiary Schedule
                          Restrictions  Schedule 
                          Financial  Statements  Schedule
                          Liabilities Schedule 
                          Affiliated  Transactions Schedule
                          Developments  Schedule  
                          Assets Schedule Taxes Schedule
                          Contracts  Schedule   
                          Intellectual  Property  Schedule
                          Litigation   Schedule   
                          Insurance   Schedule  
                          Employee Schedule   
                          Employee   Benefits   Schedule
                          Compliance Schedule 
                          Environmental Schedule
                          Jurisdiction of Organization and  Qualification
                            for the Company and its Subsidiaries Schedule


                                      -42-




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