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                                                                       EXHIBIT C

                          CARROLS HOLDINGS CORPORATION

                             STOCKHOLDERS AGREEMENT

               THIS  STOCKHOLDERS  AGREEMENT  (this  "Agreement")  is made as of
_______, 1997 by and among Carrols Holdings Corporation,  a Delaware corporation
(the  "Company"),  Madison  Dearborn Capital  Partners,  L.P.,  Madison Dearborn
Capital  Partners II, L.P.  (together with Madison  Dearborn  Capital  Partners,
L.P.,  the  "Investors"),   Atlantic  Restaurants,  Inc.  ("ARI"),  Alan  Vituli
("Vituli") and the  Management  Investors (as defined  herein).  For purposes of
this Agreement,  the Management Holders (as defined herein),  ARI, the Investors
and Vituli are  collectively  referred  to as the  "Stockholders").  Capitalized
terms used herein are defined in paragraph 11 hereof.

               The  Investors  shall  purchase  certain  shares of the Company's
Common Stock  pursuant to a stock  purchase  agreement  among the  Company,  the
Investors and ARI (the "Purchase Agreement") dated as of February 25, 1997.

               The  Company  and the  Stockholders  desire  to enter  into  this
Agreement for the purposes, among others, of (i) establishing the composition of
the Company's Board of Directors (the "Board"),  (ii) assuring continuity in the
management  and ownership of the Company and (iii) limiting the manner and terms
by which the  Stockholders'  Common Stock may be transferred.  The execution and
delivery of this  Agreement  is a condition  to the  Investors'  purchase of the
Company's and ARI's stock pursuant to the Purchase Agreement.

               NOW,   THEREFORE,   in  consideration  of  the  mutual  covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which are hereby  acknowledged,  the  parties to this  Agreement
hereby agree as follows:

               1.     Board of Directors.

               (a)    From  and after the Closing  (as  defined in the  Purchase
Agreement)  and until the  provisions of this paragraph 1 cease to be effective,
each holder of  Stockholder  Shares shall vote all of such holder's  Stockholder
Shares which are voting  shares and any other voting  securities  of the Company
over which such holder has voting control and shall take all other  necessary or
desirable  actions  within such holder's  control  (whether in his capacity as a
stockholder,  director, member of a board committee or officer of the Company or
otherwise, and including,  without limitation,  attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of  meetings),  and the Company  shall take all  necessary  or desirable
actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:





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                      (i) the authorized  number of directors on the Board shall
        be established at eight  directors,  or, as provided in subparagraph (e)
        below, six directors;

                      (ii) the  following  individuals  shall be  elected to the
        Board:

                             (A)  subject  to   paragraph   1(c)  below,   three
               representatives   designated  by  the  Investors  (the  "Investor
               Directors");  provided that so long as the Investors are entitled
               to three Investor Directors,  one of the Investor Directors shall
               not be an employee or officer of either of the  Investors  or any
               of their  Affiliates and such director shall not be elected to or
               remain on the Board unless there are three ARI Directors  serving
               on the Board at such time but if and only if ARI is  entitled  to
               three ARI Directors at such time;

                             (B)  subject  to   paragraph   1(d)  below,   three
               representatives designated by ARI (the "ARI Directors"); provided
               that so long as ARI is  entitled to three ARI  Directors,  one of
               the ARI  Directors  shall not be an employee or officer of ARI or
               any of its  Affiliates  and such director shall not be elected to
               or remain on the Board unless there are three Investor  Directors
               serving  on the  Board  at  such  time  but if  and  only  if the
               Investors are entitled to three Investor  Directors at such time;
               and

                             (C)  so  long  as  Vituli  is the  Chief  Executive
               Officer of Carrols Corporation  ("Carrols"),  two representatives
               designated  by Vituli who shall be executive  officers of Carrols
               (the "Management Directors");

                      (iii) the composition of the board of directors of each of
        the Company's  Subsidiaries (a "Sub Board") shall be the same as that of
        the Board;

                      (iv) any  committees  of the Board or a Sub Board shall be
        created, and the members thereof determined, only with the approval of a
        majority of the Investor  Directors  and a majority of the ARI Directors
        (it being  understood that (x) the audit committee and the  compensation
        committee,  which committees shall be created on the date hereof,  shall
        not  include  any  Management  Directors  and  (y) at  least  one of the
        Management Directors shall serve on all other committees (if any) of the
        Board);

                      (v) the  removal  from the Board or a Sub  Board  (with or
        without  cause)  of  any  representative  designated  hereunder  by  the
        Investors,  ARI or Vituli shall be at the Investors',  ARI's or Vituli's
        written  request,  respectively,  but only upon such written request and
        under no other  circumstances,  and if any Management Director ceases to
        be an employee of the Company and its Subsidiaries,  he shall be removed
        as a director promptly after his employment ceases; and

                      (vi) (A) in the event that any Investor Director ceases to
        serve as a member of the Board or a Sub Board during his term of office,
        the  resulting  vacancy  on the Board or Sub Board  shall be filled by a
        representative designated as provided in subparagraph (ii)(A) above, (B)
        in the event  that any ARI  Director  ceases to serve as a


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        member  of the  Board or a Sub  Board  during  his term of  office,  the
        resulting  vacancy  on the  Board  or Sub  Board  shall be  filled  by a
        representative designated as provided in subparagraph (ii)(B) above, and
        (C) in the  event  that any  Management  Director  ceases  to serve as a
        member  of the  Board or a Sub  Board  during  his term of  office,  the
        resulting  vacancy  on the  Board  or Sub  Board  shall be  filled  by a
        representative designated as provided in subparagraph (ii)(C) above.

               (b)  The Company shall pay the reasonable  out-of-pocket expenses
incurred by each  director in  connection  with  attending  the  meetings of the
Board, any Sub Board and any committee thereof.  In addition,  the Company shall
pay to each  Investor  Director and each ARI Director an annual fee in an amount
determined  by the  Board  from time to time to be paid by the  Company  to each
non-employee  director  as and  when  determined  by the  Board.  So long as any
Investor Director,  ARI Director or Management Director serves on the Board or a
Sub Board, and for five years thereafter,  the Company's Restated Certificate of
Incorporation and Bylaws shall provide for the  indemnification  and exculpation
or directors to the fullest extent permitted under applicable law.

               (c)  Subject to paragraph (h) below, at such time as the Investor
Holders hold in the aggregate less than (i) 80% of the  Stockholder  Shares held
by the Investors on the date hereof,  the number of Investor  Directors shall be
reduced to two  directors  and ARI, if the number of the ARI  Directors  has not
been  reduced  pursuant  to  paragraph  (d) below,  shall then have the right to
designate an additional  ARI Director,  which  individual  shall serve as an ARI
Director  pursuant  to the  provisions  of this  paragraph  1;  (ii)  65% of the
Stockholder  Shares  held by the  Investors  on the date  hereof,  the number of
Investor  Directors  shall be reduced to one  director and ARI, if the number of
the ARI  Directors has not been reduced  pursuant to paragraph (d) below,  shall
then have the right to designate two additional ARI Directors, which individuals
shall serve as ARI Directors pursuant to the provisions of this paragraph 1; and
(iii) 33% of the  Stockholder  Shares held by the  Investors on the date hereof,
the number of Investor Directors shall be reduced to zero and ARI, if the number
of the ARI Directors has not been reduced pursuant to paragraph (d) below, shall
then have the right to  designate  an  additional  three  ARI  Directors,  which
individuals  shall serve as ARI  Directors  pursuant to the  provisions  of this
paragraph 1.

               (d)  Subject  to  paragraph  (h) below, at  such  time as the ARI
Holders hold in the aggregate less than (i) 80% of the  Stockholder  Shares held
by ARI on the date hereof,  the number of ARI Directors  shall be reduced to two
directors  and the  Investors,  if the number of the Investor  Directors has not
been  reduced  pursuant  to  paragraph  (c) above,  shall then have the right to
designate an additional  Investor  Director,  which individual shall serve as an
Investor  Director  pursuant to the  provisions of this paragraph 1; (ii) 65% of
the  Stockholder  Shares  held by ARI on the  date  hereof,  the  number  of ARI
Directors  shall be reduced to one director and the Investors,  if the number of
the Investor  Directors  has not been reduced  pursuant to paragraph  (c) above,
shall then have the right to designate two additional Investor Directors,  which
individuals shall serve as Investor Directors pursuant to the provisions of this
paragraph  1; and (iii) 33% of the  Stockholder  Shares  held by ARI on the date
hereof,  the number of ARI Directors shall be reduced to zero and the Investors,
if the  number  of the  Investor  Directors  has not been  reduced 



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pursuant  to  paragraph  (c) above,  shall then have the right to  designate  an
additional three Investor  Directors,  which individuals shall serve as Investor
Directors pursuant to the provisions of this paragraph 1.

               (e)  If Vituli ceases to be Chief  Executive  Officer of Carrols,
his right to designate any  Management  Directors  under this  paragraph 1 shall
cease immediately,  the Management Directors shall resign or be removed from the
Board hereunder and the size of the Board shall be reduced to six directors.

               (f)  If any party fails to designate a  representative  to fill a
directorship  pursuant  to  the  terms  of  this  paragraph  1,  the  individual
previously  holding such directorship  shall be elected to such position,  or if
such  individual  fails or declines to serve,  the election of an  individual to
such directorship  shall be accomplished in accordance with the Company's Bylaws
and applicable  law;  provided that the  Stockholders  shall vote to remove such
individual if the party which failed to designate such directorship so directs.

               (g)  Each of (i) the  Investors and (ii) ARI shall be entitled to
appoint  up to two  individuals  (who  shall be  officers  or  employees  of the
Investors or their Affiliates or of ARI or its Affiliates, respectively) who may
attend as an  observer  all  meetings  of the  Board  (the  "Board  Attendees");
provided  that  only one  appointee  of each of the  Investors  and ARI shall be
entitled  to attend  any given  meeting  of the Board.  The  Company  shall give
written notice of each meeting of the Board to such individuals at the same time
and in the same manner as notice is given to the  directors  (which notice shall
be promptly  confirmed in writing to such Person).  The Board Attendees shall be
entitled to receive  all written  materials  and other  information  (including,
without limitation,  copies of meeting minutes) given to directors in connection
with such meetings at the time such materials and  information  are given to the
directors. If the Company proposes to take any action by written consent in lieu
of a meeting of the Board, the Company shall give written notice thereof to each
Board  Attendee  prior  to the  effective  date of such  consent  describing  in
reasonable  detail the nature and substance of such action.  At such time as the
Investors or ARI appoint a new Board Attendee, the Investors or ARI, as the case
may be,  shall  promptly  provide  notice to the  Company of such action and the
identity of such new Board Attendee.

               (h)  The  provisions of this  paragraph 1 shall continue to be in
effect  following the  consummation  of the Company's  initial Public  Offering,
except  that  thereafter,  neither  ARI nor the  Investors  shall be entitled to
designate  any  additional   directors  under   paragraphs   (1)(c)  or  (1)(d),
respectively.

               2.  Representations and Warranties.  Each Stockholder  represents
and  warrants  that (i) such  Stockholder  is the record  owner of the number of
Stockholder  Shares set forth opposite its name on the Schedule of  Stockholders
attached  hereto,  (ii) this  Agreement has been duly  authorized,  executed and
delivered by such  Stockholder and constitutes the valid and binding  obligation
of such  Stockholder,  enforceable in accordance with its terms,  and (iii) such
Stockholder  has not  granted and is not a party to any proxy,  voting  trust or
other  agreement  which is  inconsistent  with,  conflicts  with or violates any
provision of this  Agreement.  No holder



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of Stockholder  Shares shall grant any proxy or become party to any voting trust
or other agreement which is  inconsistent  with,  conflicts with or violates any
provision of this Agreement.

               3. Retention of Stockholder Shares.  Until the fourth anniversary
of the date of this Agreement,  neither Vituli nor any Management Investor shall
sell,  transfer,  assign,  pledge or otherwise dispose of any Stockholder Shares
held by him on the date  hereof or  hereafter  acquired,  except  pursuant to an
Approved  Sale  or a  Public  Sale;  provided  that  nothing  contained  in this
paragraph 3 shall prohibit Vituli or any Management  Investor from  transferring
Stockholder Shares as permitted by paragraphs 4(d) and 4(e) hereof; and provided
further that the provisions of this paragraph 3 shall  terminate and cease to be
effective  (i)  upon the  consummation  of a  Qualified  Public  Offering  or an
Approved Sale,  (ii) upon the termination of such  individual's  employment with
the  Company  or any of its  Subsidiaries  because of such  individual's  death,
Permanent Disability,  termination for Good Reason or termination without Cause,
or (iii) upon a Change in Control.  For purposes of this  paragraph 3, the terms
"Permanent  Disability",  "Good  Reason",  "Cause" and "Change of Control" shall
have the definitions ascribed to them in the Executive Option Agreements.

               4. Restrictions on Transfer of Stockholder Shares.

               (a) Transfer  of  Stockholder  Shares.  No holder  of Stockholder
Shares shall sell,  transfer,  assign,  pledge or otherwise  dispose of (whether
with or without  consideration  and whether  voluntarily or  involuntarily or by
operation  of law) any interest in  Stockholder  Shares (a  "Transfer"),  except
pursuant to a Public Sale or an Approved Sale (an "Exempt Transfer") or pursuant
to this paragraph 4; provided that in no event shall any Transfer of Stockholder
Shares  pursuant to this  paragraph 4 be made for any  consideration  other than
cash payable upon consummation of such Transfer or in installments over time.

               (b)  Sale  Notice.  Prior to making  any  Transfer  other than an
Exempt  Transfer,  any holder of  Stockholder  Shares  intending  to make such a
Transfer (the  "Transferring  Stockholder")  shall deliver  written  notice (the
"Sale Notice") to the Company and to each Investor  Holder,  each ARI Holder and
each  Management  Holder  other than the  Transferring  Stockholder  (the "Other
Holders").  The Sale Notice shall disclose in reasonable  detail the identity of
the  prospective  transferee(s),  the  number of shares to be  transferred  (the
"Specified  Shares") and the terms and conditions of the proposed  Transfer.  No
Transferring  Stockholder shall consummate any such Transfer until 45 days after
the Sale Notice has been  delivered  to the  Company  and to the Other  Holders,
unless the parties to the Transfer have been finally determined pursuant to this
paragraph 4 prior to the expiration of such 45-day period.

               (c)  First Refusal Rights.  The Company may elect to purchase all
(but not less  than  all) of the  Specified  Shares  upon  the  same  terms  and
conditions as those set forth in the Sale Notice by delivering a written  notice
of such election to the Transferring Stockholder and the Other Holders within 30
days after the Sale Notice has been delivered to the Company. If the Company has
not elected to purchase all of the Specified  Shares within such 30-day  period,
each of the Other  Holders  may elect to  purchase  any or all of the  Specified
Shares  set forth in the Sale  Notice  at the  price and on the terms  specified
therein  by  delivering  written  notice of such  election



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to the  Transferring  Stockholder and the Other Holders as soon as practical but
in any event  within 45 days after  delivery  of the Sale  Notice.  If the Other
Holders  have in the  aggregate  elected  to  purchase  more than the  Specified
Shares, the Specified Shares shall be allocated among the Other Holders electing
to purchase  shares pro rata based on the number of Stockholder  Shares owned by
such Other Holder.  If the Company or the Other Holders have elected to purchase
Specified  Shares,  the purchase of such shares shall be  consummated as soon as
practical  after the  delivery of the  election  notice(s)  to the  Transferring
Stockholder,  but in any event within 15 days after the delivery of the election
notice to the  Transferring  Stockholder.  If the Company and the Other  Holders
have not elected to  purchase  all of the  Specified  Shares,  the  Transferring
Stockholder may transfer the remaining  Specified Shares at a price and on terms
no more favorable to the transferee(s)  thereof than those specified in the Sale
Notice. Any Specified Shares not so transferred by the Transferring  Stockholder
within 30 days shall be reoffered to the Company and the Other Holders  pursuant
to this paragraph 4(c) prior to any subsequent Transfer.

               (d)  Co-Sale  Rights.  Any Other  Holders who have not elected to
purchase  Specified  Shares  from  the  Transferring   Stockholder  pursuant  to
paragraph 4(c) may elect to  participate in the proposed  Transfer by delivering
written notice to the  Transferring  Stockholder  and the Company within 45 days
after the Sale Notice has been delivered by the Transferring Stockholder. If any
such Other  Holder  elects to  participate  in such  Transfer (a  "Participating
Stockholder"),  the Transferring Stockholder and each Participating  Stockholder
shall be entitled to sell in the  contemplated  Transfer,  on the same terms,  a
number of Stockholder Shares equal to the product of (i) the quotient determined
by dividing the  percentage  of  Stockholder  Shares owned by the  Participating
Stockholder  by the  aggregate  percentage  of  Stockholder  Shares owned by the
Transferring Stockholder and all Participating  Stockholders and (ii) the number
of Stockholder Shares to be sold in the contemplated Transfer.

        For  example,  if the  Sale  Notice  contemplated  a sale of 100
        Stockholder Shares by the Transferring  Stockholder,  and if the
        Transferring   Stockholder   at  such   time  owns  30%  of  all
        Stockholder Shares and if the Participating Stockholder owns 20%
        of all Stockholder Shares, the Transferring Stockholder would be
        entitled  to sell 60  shares  (30%[div]50% x 100  shares)  and the
        Participating  Stockholder  would be  entitled to sell 40 shares
        (20%[div]50% x 100 shares).

Each Transferring  Stockholder shall use best efforts to obtain the agreement of
the  prospective   transferee(s)  to  the  participation  of  the  Participating
Stockholder in any such contemplated Transfer,  and no Transferring  Stockholder
shall transfer any of its Stockholder  Shares to any  prospective  transferee if
such  prospective  transferee(s)  declines  to allow  the  participation  of the
Participating Stockholder.  Each Person transferring Stockholder Shares pursuant
to this  paragraph  4(d)  shall pay its pro rata  share  (based on the number of
Stockholder  Shares to be sold) of any expenses incurred in connection with such
Transfer   and  shall  be  obligated  to  join  on  a  pro  rata  basis  in  any
indemnification or other obligations that the Transferring Stockholder agrees to
provide in connection with such Transfer (other than any such  obligations  that
relate  specifically to a particular  Stockholder such as  indemnification  with
respect to representations and warranties given by a Stockholder  regarding such
Stockholder's  title to and ownership of Stockholder  Shares);  provided that no
holder shall be obligated in connection with such Transfer to agree to


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indemnify or hold harmless the  transferees  with respect to an amount in excess
of the net cash proceeds paid to such holder in connection  with such  Transfer.
In the event that any Management Holder elects neither to purchase any Specified
Shares pursuant to paragraph 4(c) nor to participate in any Transfer pursuant to
the terms of this  paragraph  4(d),  those shares which such  Management  Holder
would have been entitled to sell in such Transfer (the "Management Participating
Shares") shall cease to be subject to the  restrictions set forth in paragraph 3
hereof,  but shall continue to be subject to the  restrictions set forth in this
paragraph 4. Notwithstanding the foregoing,  in the event that the participation
of any  Management  Holder  pursuant to this  paragraph  4(d) would  result in a
Change  of  Control,  the  prior  written  consent  of ARI (if the  Transferring
Stockholder  is one of the  Investors)  or the  Investors  (if the  Transferring
Stockholder  is ARI), as the case may be, shall be required for such  Management
Holder to participate in such Transfer.

               (e)  Permitted  Transfers.  The  restrictions  set  forth in this
paragraph 4 shall not apply with respect to any Transfer of  Stockholder  Shares
by any Person (i) in the case of an individual,  pursuant to applicable  laws of
descent and distribution or among such individual's  Family Group or (ii) in the
case of a Person other than an individual,  among its  Affiliates  (collectively
referred to herein as "Permitted  Transferees");  provided that the restrictions
contained in this paragraph 4 shall continue to be applicable to the Stockholder
Shares after any such Transfer and provided further that the transferees of such
Stockholder Shares shall have agreed in writing to be bound by the provisions of
this Agreement affecting the Stockholder Shares so transferred.  For purposes of
this  Agreement,  "Family Group" means an  individual's  spouse and  descendants
(whether  natural  or  adopted)  and any trust  solely  for the  benefit  of the
individual and/or the individual's spouse and/or descendants, and "Affiliate" of
a Person other than an individual means any other Person, directly or indirectly
controlling,  controlled  by or under  common  control with such Person or, with
respect to any partnership, any partner thereof.  Notwithstanding the foregoing,
no party hereto shall avoid the  provisions  of this  Agreement by making one or
more transfers to one or more Permitted Transferees and then disposing of all of
any portion of such party's interest in any such Permitted Transferee.

               (f)  Termination   of  Restrictions.   The  restrictions  on  the
Transfer of Stockholder Shares set forth in this paragraph 4 shall continue with
respect to each Stockholder Share until the date on which such Stockholder Share
has been transferred in a Public Sale or an Approved Sale.

               5.  Company Covenants.

               (a)  Financial  Statements  and Other  Information.  The  Company
shall  deliver  to (x)  the  Investors  (so  long  as the  Investors  and  their
Affiliates hold in the aggregate at least 5% of the  outstanding  Common Stock),
(y) ARI (so long as ARI and its Affiliates  hold in the aggregate at least 5% of
the  outstanding  Common  Stock) and (z) Vituli (so long as Vituli and Daniel T.
Accordino  hold in the  aggregate  at least 2% of the  outstanding  Common Stock
(including shares of Common Stock into which their options may be exercised) and
Vituli holds some amount of such Common Stock):

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                      (i) as soon as  available  but in any event within 30 days
        after the end of each  monthly  accounting  period in each fiscal  year,
        unaudited  consolidating and consolidated  statements of income and cash
        flows of the Company and its  Subsidiaries  for such monthly  period and
        for the period from the  beginning of the fiscal year to the end of such
        month,  and,  unless the Company,  the Investors and ARI mutually  agree
        otherwise,  unaudited  consolidating and consolidated  balance sheets of
        the Company and its  Subsidiaries  as of the end of such monthly period,
        setting forth in each case  comparisons  to the Company's  annual budget
        and to the  corresponding  period in the preceding  fiscal year, and all
        such statements shall be prepared in accordance with generally  accepted
        accounting  principles,  consistently  applied and shall be certified by
        the Company's chief financial officer;

                      (ii) accompanying the financial  statements referred to in
        subparagraph (i), (a) an officer's  certificate on behalf of the Company
        stating  that  neither  the Company  nor any of its  Subsidiaries  is in
        default  under  any of its  other  material  agreements  or, if any such
        default  exists,  specifying the nature and period of existence  thereof
        and what actions the Company and its Subsidiaries have taken and propose
        to take with respect  thereto,  and (b) a summary prepared by management
        of the Company describing  significant  aspects of the Company's and its
        Subsidiaries'  operations  and  financial  affairs  (including,  but not
        limited  to,  material  deviations  from the  Company's  annual or other
        budgets,  material breaches or defaults under material agreements or any
        other  material  adverse  change,  event or  circumstance  affecting the
        Company or any Subsidiary (including,  without limitation, the filing of
        any material litigation against the Company or any Subsidiary));

                      (iii) upon the completion  thereof,  but in no event later
        than  90 days  after  the end of each  fiscal  year,  consolidating  and
        consolidated  statements of income and cash flows of the Company and its
        Subsidiaries  for such fiscal year, and  consolidating  and consolidated
        balance sheets of the Company and its Subsidiaries as of the end of such
        fiscal year,  setting  forth in each case  comparisons  to the Company's
        annual  budget  and  to the  preceding  fiscal  year,  all  prepared  in
        accordance with generally accepted accounting  principles,  consistently
        applied,  and  accompanied  by (a)  with  respect  to  the  consolidated
        portions of such  statements,  an opinion of an  independent  accounting
        firm of  recognized  national  standing  acceptable  to the holders of a
        majority  of the  outstanding  Common  Stock  that is  unqualified  with
        respect to the scope of such firm's examination,  (b) a certificate from
        such accounting firm, addressed to the Board, stating that in the course
        of its  examination  nothing  came to its  attention  that  caused it to
        believe that there was any default by the Company or any  Subsidiary  in
        the fulfillment of or compliance with any of the financial provisions of
        any other material agreement to which the Company or any Subsidiary is a
        party or, if such  accountants have reason to believe any default by the
        Company or any Subsidiary  exists,  a certificate  specifying the nature
        and period of existence  thereof,  and (c) a copy of such firm's  annual
        management letter to the board of directors;

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                      (iv)  promptly  upon  receipt   thereof,   any  additional
        reports,  management  letters or other detailed  information  concerning
        significant aspects of the Company's and its Subsidiaries' operations or
        financial  affairs given to the Company by its  independent  accountants
        (and not otherwise contained in other materials provided hereunder);

                      (v) at least 30 days  but not more  than 90 days  prior to
        the  beginning  of each  fiscal  year,  an annual  budget  prepared on a
        monthly basis for the Company and its  Subsidiaries for such fiscal year
        (displaying  anticipated statements of income and cash flows and balance
        sheets),  and promptly upon  preparation  thereof any other  significant
        budgets  prepared  by the Company  and any  revisions  of such annual or
        other budgets;

                      (vi) within ten days after transmission thereof, copies of
        all registration statements and all regular, special or periodic reports
        which it files, or any of its officers or directors file with respect to
        the Company,  with the  Securities  and Exchange  Commission or with any
        securities  exchange on which any of its securities are then listed, and
        copies  of all  press  releases  and  other  statements  made  available
        generally by the Company to the public concerning material  developments
        in the Company's and its Subsidiaries' businesses; and

                      (vii) with reasonable  promptness,  such other information
        and financial data  concerning the Company and its  Subsidiaries  as any
        Person  entitled to receive  information  under this  paragraph 5(a) may
        reasonably request.

               (b) Inspection  of  Property.   The  Company   shall  permit  any
representatives  designated  by (x) the  Investors (so long as the Investors and
their  Affiliates  hold in the aggregate at least 5% of the  outstanding  Common
Stock),  (y) ARI (so long as ARI and its  Affiliates  hold in the  aggregate  at
least 5% of the  Common  Stock),  or (z) Vituli (so long as Vituli and Daniel T.
Accordino  hold in the  aggregate  at least 2% of the  outstanding  Common Stock
(including shares of Common Stock into which their options may be exercised) and
Vituli  holds some amount of such  Common  Stock) , upon  reasonable  notice and
during  normal  business  hours and at such other  times as any such  holder may
reasonably  request,  to (i)  visit and  inspect  any of the  properties  of the
Company and its  Subsidiaries,  (ii) examine the corporate and financial records
of the  Company  and its  Subsidiaries  and  make  copies  thereof  or  extracts
therefrom  and (iii)  discuss the  affairs,  finances  and  accounts of any such
corporations  with  the  directors,  officers,  key  employees  and  independent
accountants of the Company and its Subsidiaries. The presentation of an executed
copy of this  Agreement  by the  Investors or ARI to the  Company's  independent
accountants  shall  constitute  the  Company's  permission  to  its  independent
accountants to participate in discussions with such Persons.

               (c)  Restrictions.  The  Company  shall  not,  without  the prior
written consent of the Investors (so long as the Investors and their  Affiliates
hold at least 50% of the Common Stock owned by the Investors on the date hereof)
and of ARI (so long as ARI and its  Affiliates  hold at least 50% of the  Common
Stock owned by ARI on the date hereof):

                      (i) directly or indirectly  redeem,  purchase or otherwise
        acquire,  or permit any  Subsidiary  to redeem,  purchase  or  otherwise
        acquire, any of the Company's or


                                      -9-




<PAGE>
 
<PAGE>

        any Subsidiary's  capital stock or other equity  securities,  except for
        (A) the redemption of any preferred  stock issued and  outstanding as of
        the date hereof in  accordance  with and as permitted  by the  Company's
        Restated Certificate of Incorporation and senior notes and other lending
        arrangements  and (B) the  repurchase  of shares of  Common  Stock  from
        former  employees of the Company and its Subsidiaries in connection with
        the termination of their employment in an aggregate amount not exceeding
        $1,000,000;

                      (ii) directly or  indirectly  declare or pay any dividends
        or make any distributions  upon any of its capital stock or other equity
        securities,  except for  dividends  on the  Company's  Class A Preferred
        Stock issued and  outstanding  as of the date hereof in accordance  with
        and as permitted by the Company's Restated Certificate of Incorporation,
        dividends  payable in shares of Common Stock issued upon the outstanding
        shares  of  Common  Stock  and  repurchases  permitted  under  paragraph
        5(c)(i);

                      (iii) liquidate,  dissolve or effect a recapitalization or
        reorganization   in  any  form  of   transaction   (including,   without
        limitation,  any  reorganization  into a limited  liability  company,  a
        partnership  or any other  non-corporate  entity  which is  treated as a
        partnership for federal income tax purposes);

                      (iv)   authorize,   issue  or  enter  into  any  agreement
        providing  for the issuance  (contingent  or  otherwise)  of any capital
        stock or other equity securities (or any securities  convertible into or
        exchangeable  for any  capital  stock  or  other  equity  securities  or
        containing  any profit  participation  features),  or any stock options,
        stock  appreciation  rights,  phantom  stock  rights or similar  rights,
        except for shares of Common  Stock  issued upon  exercise of the options
        pursuant to the Executive  Option  Agreements and options that have been
        or may, from time to time, be approved by the compensation  committee of
        the Board;

                      (v) merge or  consolidate  with any Person  or,  except as
        permitted by subparagraph (vii) below, permit any Subsidiary to merge or
        consolidate with any Person (other than a Wholly-Owned Subsidiary);

                      (vi) other than sale/leaseback  transactions  entered into
        in the ordinary course of business, sell, lease (as lessor) or otherwise
        dispose  of, or permit  any  Subsidiary  to sell,  lease (as  lessor) or
        otherwise  dispose of, more than $3,000,000 of assets of the Company and
        its  Subsidiaries  (computed on the basis of book value,  determined  in
        accordance with generally accepted  accounting  principles  consistently
        applied, or fair market value, determined by the Board in its reasonable
        good  faith   judgment)  in  any   transaction   or  series  of  related
        transactions;

                      (vii) acquire or enter into,  or permit any  Subsidiary to
        acquire or enter into, any interest in any company or business  (whether
        by a purchase of assets, purchase of stock, merger or otherwise), or any
        joint venture, guarantee of any obligation, or make any Investment, loan
        or advance in each case involving an aggregate consideration (including,
        without  limitation,  the  assumption of  liabilities  whether direct or
        indirect)  exceeding  $10,000,000  in any one  transaction  or series of
        related  transactions  or


                                      -10-




<PAGE>
 
<PAGE>

        exceeding  $25,000,000 in the aggregate (the "Threshold Amount") for all
        such  transactions   consummated  after  the  date  of  this  Agreement.
        Notwithstanding  the foregoing,  to the extent that such  transaction or
        series  of  related  transactions  was  approved  by  the  Board  or was
        otherwise  consummated,  but the prior written  consent of the Investors
        and ARI was not obtained  pursuant to this paragraph 5(c), the aggregate
        consideration   involved  in  such  transaction  or  series  of  related
        transactions  shall  be  included  in  calculating  whether  or not  the
        Threshold  Amount has been met. At such time as the Threshold Amount has
        been met, all such transactions or series of related  transactions which
        follow shall require the prior written  consent of the Investors and ARI
        in accordance with this paragraph 5(c);

                      (viii) other than any  Indebtedness  outstanding from time
        to time under the Loan  Agreement  and other than  Indebtedness  arising
        from sale/leaseback  transactions  entered into by the Company or any of
        its  Subsidiaries in the ordinary course of business,  create,  incur or
        assume,  or  permit  any  Subsidiary  to  create,  incur or  assume  any
        Indebtedness  exceeding an  aggregate  principal  amount of  $10,000,000
        outstanding at any time on a consolidated basis;

                      (ix) amend or modify any  provision of the Loan  Agreement
        which  would  increase  the  aggregate   maximum   principal  amount  of
        Indebtedness  permitted to be  outstanding  at any time  pursuant to the
        terms   thereof  or  which  would  extend  the  maturity  date  of  such
        Indebtedness by more than one year;

                      (x)  make any  capital  expenditures  (including,  without
        limitation,  payments with respect to capitalized  leases, as determined
        in accordance with generally accepted accounting principles consistently
        applied,  but excluding capital  expenditures arising from damage to the
        Company's property to the extent such damage is covered by the Company's
        insurance) on a  consolidated  basis during any fiscal year exceeding by
        more than $1,000,000 the Company's  capital budget approved by the Board
        for such year, as modified by the Board at any time;

                      (xi)  make  any  amendment  to  the   Company's   Restated
        Certificate  of  Incorporation  or the  Company's  Bylaws  or  file  any
        certificate of designations with the Delaware Secretary of State;

                      (xii) enter into, amend,  modify or supplement,  or permit
        any  Subsidiary  to  enter  into,  amend,  modify  or  supplement,   any
        agreement, transaction, commitment or arrangement with any of its or any
        Subsidiary's officers, directors, employees,  stockholders or Affiliates
        or with any  individual  related by blood,  marriage  or adoption to any
        such  individual  or with  any  entity  in  which  any  such  Person  or
        individual  owns a material  beneficial  interest,  except for customary
        employment  arrangements  and benefit  programs on reasonable  terms and
        except as otherwise expressly contemplated by this Agreement;

                                      -11-




<PAGE>
 
<PAGE>

                      (xiii) enter into, or permit any Subsidiary to enter into,
        the ownership, active management or operation of any business other than
        Burger King franchise restaurants;

                      (xiv)  amend,  modify or waive any  provision  of the 1996
        Plan  or any  other  stock  option  plan  other  than by  action  of the
        compensation committee of the Board; or

                      (xv) approve or consummate a sale of all or  substantially
        all of the Company's assets determined on a consolidated basis or a sale
        of all or substantially all of the Company's  outstanding  capital stock
        (whether by merger, consolidation or otherwise) to any Independent Third
        Party or group of Independent  Third Parties (any of the foregoing which
        have been so approved, being referred to herein as an "Approved Sale").

In the event of an Approved Sale,  the holders of Stockholder  Shares shall bear
their pro rata share  (based upon the  proceeds to be received by the holders of
Stockholder Shares) of the costs of any sale of Stockholder Shares in connection
therewith  to the extent such costs are  incurred for the benefit of all holders
of Stockholder Shares and are not otherwise paid by the Company or the acquiring
party.  Costs  incurred in exercising  reasonable  efforts to take all necessary
actions in connection  with the  consummation  of an Approved Sale in accordance
with this  paragraph  shall be deemed to be for the  benefit  of all  holders of
Stockholder Shares. Costs incurred by holders of Stockholder Shares on their own
behalf will not be considered costs of the transaction hereunder. The provisions
of this paragraph shall terminate upon a Qualified Public Offering.

               Notwithstanding the foregoing,  the Company shall not be required
to obtain the prior  written  consent of the  Investors,  following  an Investor
Material Change, or ARI,  following an ARI Material Change,  with respect to any
of the actions set forth in subparagraphs (ii), (iv), (v), (vi), (vii),  (viii),
(ix), (x), (xiv) and (xv) of this paragraph 5(c).

               (d)  Affirmative  Covenants.  Prior  to  the  consummation  of  a
Qualified  Public  Offering,  the Company shall, and shall cause each Subsidiary
to,  unless  otherwise  approved by the  Investors (so long as the Investors and
their Affiliates hold at least 50% of the Common Stock owned by Investors on the
date hereof) and by ARI (so long as ARI and its Affiliates  hold at least 50% of
the Common Stock owned by ARI on the date hereof):

                      (i) at all times cause to be done all things  necessary to
        maintain,  preserve and renew its  corporate  existence and all material
        licenses,  authorizations  and permits  necessary  to the conduct of its
        businesses;

                      (ii)  maintain  and keep its  properties  in good  repair,
        working order and condition, and from time to time make all necessary or
        desirable repairs, renewals and replacements, so that its businesses may
        be properly and advantageously conducted at all times;

                      (iii)  pay  and   discharge   when   payable   all  taxes,
        assessments and governmental charges imposed upon its properties or upon
        the income or profits


                                      -12-




<PAGE>
 
<PAGE>

        therefrom  (in each case before the same becomes  delinquent  and before
        penalties  accrue  thereon)  and all  claims  for  labor,  materials  or
        supplies  which if  unpaid  would by law  become a Lien  upon any of its
        property,  unless and to the extent that the same are being contested in
        good faith and by  appropriate  proceedings  and  adequate  reserves (as
        determined in accordance with generally accepted accounting  principles,
        consistently  applied) have been  established  on its books with respect
        thereto;

                      (iv)  comply  with all other  obligations  which it incurs
        pursuant to any contract or agreement,  whether oral or written, express
        or implied,  as such  obligations  become due,  unless and to the extent
        that the same are  being  contested  in good  faith  and by  appropriate
        proceedings  and adequate  reserves (as  determined in  accordance  with
        generally accepted  accounting  principles,  consistently  applied) have
        been established on its books with respect thereto;

                      (v) comply with all applicable laws, rules and regulations
        of all governmental authorities, the violation of which would reasonably
        be  expected  to have a  material  adverse  effect  upon  the  financial
        condition,  operating results, assets,  operations or business prospects
        of the Company and its Subsidiaries taken as a whole;

                      (vi)  apply  for and  continue  in  force  with  good  and
        responsible  insurance  companies  adequate  insurance covering risks of
        such types and in such  amounts as are  customary  for  corporations  of
        similar size engaged in similar lines of business;

                      (vii)  maintain  and continue in effect the key man policy
        on the life of Alan Vituli  referred to in  paragraph 2K of the Purchase
        Agreement;

                      (viii)  maintain  proper books of record and account which
        present  fairly in all material  respects its  financial  condition  and
        results of operations  and make  provisions on its financial  statements
        for all such proper  reserves as in each case are required in accordance
        with generally accepted accounting principles, consistently applied; and

                      (ix) until the aggregate  principal  amount,  premium,  if
        any, and all interest is paid in full,  comply in all respects  with the
        terms and provisions of that certain  Indenture,  dated as of August 17,
        1993 (the "Indenture"),  as in effect from time to time, including,  but
        not limited to,  providing  the required  notices to the trustee and all
        holders of securities  issued under the Indenture in connection with the
        transactions contemplated by the Purchase Agreement.

              (e) Current Public Information. At all times after the Company has
filed a  registration  statement  with the  Securities  and Exchange  Commission
pursuant to the  requirements  of either the  Securities  Act or the  Securities
Exchange  Act,  the Company  shall file all  reports  required to be filed by it
under  the  Securities  Act and the  Securities  Exchange  Act and the rules and
regulations  adopted by the  Securities and Exchange  Commission  thereunder and
shall take such further action as any holder or holders of Restricted Securities
may  reasonably


                                      -13-




<PAGE>
 
<PAGE>

request,  all to the extent  required to enable such holders to sell  Restricted
Securities  pursuant  to (i) Rule 144  adopted by the  Securities  and  Exchange
Commission  under the  Securities  Act (as such rule may be amended from time to
time) or any similar rule or regulation  hereafter adopted by the Securities and
Exchange  Commission or (ii) a registration  statement on Form S-2 or S-3 or any
similar  registration  form  hereafter  adopted by the  Securities  and Exchange
Commission.  Upon request, the Company shall deliver to any holder of Restricted
Securities  a  written  statement  as to  whether  it  has  complied  with  such
requirements.

               (f)  Unrelated   Business   Taxable   Income.   Except  with  the
Investors' prior written consent,  the Company shall not knowingly  engage,  and
shall not knowingly permit any Subsidiary to engage, in any transaction which is
reasonably  likely to cause any holder of Common  Stock or any of such  holder's
limited  partners which are exempt from income  taxation under Section 501(a) of
the Code and, if applicable,  any pension plan that any such limited partner may
be a part of, to  recognize  unrelated  business  taxable  income as  defined in
Section 512 and Section 514 of the Code.

               6. Legend.  Each certificate  evidencing  Stockholder  Shares and
each certificate  issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain  Stockholder  Shares after such transfer) shall be
stamped or otherwise  imprinted  with a legend in  substantially  the  following
form:

      "THE SECURITIES  REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
      STOCKHOLDERS  AGREEMENT  DATED AS OF  ________,  1997  AMONG  THE
      ISSUER OF SUCH  SECURITIES  (THE  "COMPANY")  AND  CERTAIN OF THE
      COMPANY'S  STOCKHOLDERS,  AS AMENDED  AND  MODIFIED  FROM TIME TO
      TIME. A COPY OF SUCH  STOCKHOLDERS  AGREEMENT  SHALL BE FURNISHED
      WITHOUT  CHARGE BY THE COMPANY TO THE HOLDER  HEREOF UPON WRITTEN
      REQUEST."

The Company shall  imprint such legend on  certificates  evidencing  Stockholder
Shares  outstanding  as of the date hereof.  The legend set forth above shall be
removed  from  the  certificates   evidencing  any  shares  which  cease  to  be
Stockholder Shares in accordance with paragraph 11 hereof.

               7.     Preemptive Rights.

               (a)  Except  for issuance of equity  securities of the Company or
options or other rights to acquire equity securities of the Company:

                      (i)  in  connection  with  a  registered   primary  public
        offering;

                      (ii) to employees of the Company or its Subsidiaries;

                      (iii) to any lender in connection  with the  incurrence of
        Indebtedness by the Company or any of its Subsidiaries;

                                      -14-




<PAGE>
 
<PAGE>

                      (iv) as payment of all or a portion of the purchase  price
        of any business or assets thereof  acquired by the Company or any of its
        Subsidiaries; or

                      (v) upon  exercise of any option or other right  described
        in any of clauses (i) through (iv) above or any other option or right to
        acquire equity securities issued by the Company;

if the Company  authorizes the issuance or sale of any equity  securities of the
Company or any  securities  containing  options or rights to acquire  any equity
securities of the Company  (other than as a dividend on the  outstanding  Common
Stock), the Company shall first offer to sell to each Investor Holder,  each ARI
Holder and each Management Holder a portion of such stock or securities equal to
the percentage of Stockholder Shares owned by such Person.  Each Person shall be
entitled to purchase such stock or securities at the most favorable price and on
the most  favorable  terms as such stock or securities  are to be offered to any
other Persons.

               (b)  In  order to  exercise  its  purchase  rights  hereunder,  a
Stockholder must within 15 days after receipt of written notice from the Company
describing  in  reasonable  detail the stock or securities  being  offered,  the
purchase  price  thereof,   the  payment  terms  and  such  holder's  percentage
allotment,  deliver a written  notice to the  Company  describing  its  election
hereunder. If all of the stock and securities offered to the Stockholders is not
fully  subscribed by such holders,  the remaining stock and securities  shall be
reoffered by the Company to the holders purchasing their full allotment pro rata
(based on the number of Stockholder Shares owned by such holders) upon the terms
set forth in this  paragraph,  except that such holders must give written notice
of its election to purchase such reoffered  stock and securities  within 10 days
after receipt of such reoffer.

               (c)  Upon the expiration of the offering periods described above,
the  Company  shall be  entitled  to sell  such  stock or  securities  which the
Stockholders  have not elected to  purchase  during the 90 days  following  such
expiration on terms and conditions no more  favorable to the purchasers  thereof
than those offered to such holders.  Any stock or securities  offered or sold by
the Company after such 90-day period must be reoffered to the  Stockholders  who
have purchased  their full allotment  pursuant to paragraph 7(b) pro rata (based
on the number of Stockholder Shares owned by such Stockholders).

               (d)  The rights pursuant to this paragraph 7 shall terminate upon
the consummation of a Public Offering.

               8.   Repurchase Option.

               (a)  In the event that Vituli or any Management  Investor  ceases
to be employed by the Company or any of its Subsidiaries as a result of Vituli's
or such  Management  Investor's (as the case may be)  termination  for Cause (as
such term is defined in the Executive Option  Agreements)  (the  "Termination"),
any and all Stockholder Shares which Vituli or such Management  Investor (as the
case may be) has  acquired  upon  the  exercise  of the  option  granted  to him
pursuant to those certain Unvested Stock Option Agreements, dated as of the date
of the Closing (whether held by Vituli,  such Management Investor or one or more
of their respective


                                      -15-




<PAGE>
 
<PAGE>

Permitted Transferees) (the "Repurchase Shares"), shall be subject to repurchase
by the Company  pursuant to the terms and conditions set forth in this paragraph
8 (the "Repurchase Option").

               (b)  The  purchase price for each  Repurchase  Share shall be the
lesser of (i)  Vituli's or such  Management  Investor's  Original  Cost for such
Repurchase Share, and (ii) the Fair Market Value for such Repurchase Share.

               (c)  The  Board may elect to  purchase  all or any portion of the
Repurchase Shares by delivering written notice (the "Repurchase  Notice") to the
holder or holders of the Repurchase Shares within 90 days after the Termination.
The  Repurchase  Notice  shall set forth the number of  Repurchase  Shares to be
acquired from such holder of Repurchase Shares,  the aggregate  consideration to
be paid therefor and the time and place for the closing of the transaction.

               (d)  The  closing  of  the  purchase  of  the  Repurchase  Shares
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice,  which date shall not be more than 60 days nor
less than five days after the delivery of such notice. The Company shall pay for
the  Repurchase  Shares to be  purchased  pursuant to the  Repurchase  Option by
delivery of a check or wire transfer of funds.  The Company shall be entitled to
receive from Vituli or the  Management  Investors (as the case may be) customary
representations  and  warranties  regarding  the sale of the  Repurchase  Shares
(including  representations and warranties  regarding good title to such shares,
free and clear of any liens or encumbrances).

               (e)  Notwithstanding  anything to the contrary  contained in this
Agreement,  all repurchases of Repurchase Shares by the Company shall be subject
to applicable restrictions contained in the Delaware General Corporation Law and
in the Company's and its Subsidiaries debt and equity financing  agreements.  If
any such  restrictions  prohibit the repurchase of Repurchase  Shares  hereunder
which the Company is  otherwise  entitled or required to make,  the time periods
provided in this  paragraph 8 shall be suspended,  and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.

               9. Sale of the Company.

               (a)  If the Board and the  holders of a majority  of  Stockholder
Shares  (including the Investors and ARI, to the extent that the approval of the
Investors  and/or ARI is required  pursuant to the terms of  paragraph  5(c)(xv)
herein) shall approve a Sale of the Company,  the holders of Stockholder  Shares
shall consent to and raise no objections against the Sale of the Company, and if
the Sale of the Company is structured as a sale of capital stock, the holders of
Stockholder Shares shall agree to sell their Stockholder Shares on the terms and
conditions  approved by the Board,  the holders of a majority of the Stockholder
Shares  and the  Investors  and ARI  (as  the  case  may  be).  The  holders  of
Stockholder  Shares shall take all necessary and desirable actions in connection
with the consummation of the Sale of the Company.

                                      -16-




<PAGE>
 
<PAGE>

               (b)  The  obligations of the holders of  Stockholder  Shares with
respect  to the  Sale of the  Company  is  subject  to the  satisfaction  of the
condition  that, upon the  consummation  of the Sale of the Company,  all of the
holders of Stockholder  Shares receive the same form and amount of consideration
per  Stockholder  Share,  or if any holders of  Stockholder  Shares are given an
option as to the form and amount of consideration to be received, all holders be
given the same option.

               (c)  If the Company or the  holders of the  Company's  securities
enter into any  negotiation  or  transaction  for which Rule 506 (or any similar
rule then in effect)  promulgated by the Securities  Exchange  Commission may be
available with respect to such  negotiation or transaction  (including a merger,
consolidation or other reorganization),  the holders of Stockholder Shares shall
at the request of the  Company,  appoint a "purchaser  representative"  (as such
term is defined in Rule 501) reasonably acceptable to the Company. If any holder
of  Stockholder  Shares  appoints a purchaser  representative  designated by the
Company,  the  Company  shall  pay the  fees of such  purchaser  representative.
However,  if any holder of Stockholder  Shares declines to appoint the purchaser
representative  designated  by the Company,  such holder shall  appoint  another
purchaser representative (reasonably acceptable to the Company), and such holder
shall be responsible for the fees of the purchaser representative so appointed.

               (d)  Holders  of  Stockholder  Shares  shall bear their  pro-rata
share  (based  upon the  number  of  shares  sold)  of the  costs of any sale of
Stockholder  Shares  pursuant  to a Sale of the Company to the extent such costs
are  incurred for the benefit of all holders of  Stockholder  Shares and are not
otherwise paid by the Company or the acquiring party.  Costs incurred by holders
of Stockholder  Shares on their own behalf shall not be considered  costs of the
transaction hereunder.

               (e)  The  provisions of this paragraph 9 shall terminate upon the
completion of a Qualified Public Offering.

               (f)  "Sale of the Company"  shall mean the sale of the Company to
an  Independent  Third Party or affiliated  group of  Independent  Third Parties
pursuant to which such party or parties acquire (i) capital stock of the Company
possessing the voting power to elect a majority of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.

               10.  Transfers;  Future Sales. Prior to any holder of Stockholder
Shares  Transferring  any  Stockholder  Shares (other than pursuant to an Exempt
Transfer) to any Person and prior to the Company issuing any Common Stock (other
than  pursuant to a Public  Offering)  or any options or other rights to acquire
Common Stock or any securities  convertible into or exchangeable for such Common
Stock to any Person, such holder or the Company, as the case may be, shall cause
the  prospective  transferee  to be  bound  by this  Agreement  as a  holder  of
Stockholder  Shares and to execute  and  deliver  to the  Company  and the other
Stockholders a counterpart to this Agreement.

                                      -17-




<PAGE>
 
<PAGE>

               11.  Definitions.

               "Affiliate" has the meaning set forth in paragraph 4(e).

               "Approved  Sale"  has  the  meaning  set  forth  in  subparagraph
5(c)(xv).

               "ARI" has the meaning set forth in the preamble.

               "ARI Holders"  means ARI and its  Affiliates so long as they hold
any Stockholder Shares.

               "ARI  Material  Change"  shall have occurred if (i) either of the
two ARI  Directors as of the date hereof who are officers or employees of ARI or
its  Affiliates  cease to serve as a director on the Board;  provided,  however,
that ARI shall have one  opportunity,  which shall not be deemed an ARI Material
Change,  to replace such ARI Director with a new ARI  Director,  so long as such
individual is reasonably  acceptable to the Investors,  it being understood that
Robin  McIlvenny,  Victor  Kiarsis and James Conlon  shall be deemed  reasonably
acceptable  to the  Investors,  (ii) any Person or group of  affiliated  Persons
acquires (x) more than 51% of the issued and outstanding  capital stock or other
equity ownership interests of Bahrain International Bank (E.C.) or (y) the right
to elect a majority of the members of its board of directors or other  governing
body,  (iii)  Bahrain  International  Bank  (E.C.)  ceases  to own  directly  or
indirectly through one or more Wholly-Owned Subsidiaries (x) at least 51% of the
issued and outstanding capital stock of ARI or (y) the right to elect a majority
of the members of the board of  directors  of ARI or (iv) there occurs any event
which affects the control of Bahrain International Bank (E.C.) or its ability to
exercise  its  rights  or to  perform  its  obligations  under  this  Agreement,
regardless of whether such event results in the  occurrence of any of the events
set forth in (i), (ii) or (iii) above.

               "Board" has the meaning set forth in the preamble.

               "Change  of  Control"  shall  have the  meaning  set forth in the
Executive Option Agreements.

               "Closing" has the meaning set forth in the Purchase Agreement.

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

               "Common Stock" means the Company's  Common Stock, par value $0.01
per share.

               "Company" has the meaning set forth in the preamble.

               "Executive Option Agreements" shall have the meaning set forth in
the Stock Purchase Agreement.

                                      -18-




<PAGE>
 
<PAGE>

               "Fair Market Value" of each Repurchase Share means the average of
the closing prices of the sales of the Company's  Common Stock on all securities
exchanges on which the Common Stock may at the time be listed, or, if there have
been no sales on any such  exchange  on any day,  the average of the highest bid
and lowest asked prices on all such  exchanges at the end of such day, or, if on
any day the Common Stock is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day the Common Stock is not quoted in the NASDAQ  System,  the average
of the  highest  bid  and  lowest  asked  prices  on  such  day in the  domestic
over-the-counter   market  as  reported  by  the   National   Quotation   Bureau
Incorporated,  or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being  determined and the 20 consecutive  business days prior to such day. If
at any time the Common Stock is not listed on any securities  exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value shall
be the fair  value of the  Common  Stock  determined  in good faith by the Board
(without  taking into account the effect of any  contemporaneous  repurchase  of
Repurchase Shares under paragraph 8 hereof).

               "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,  (vii) any  indebtedness  secured by a Lien on a Person's
assets and (viii) any  unsatisfied  obligation for  "withdrawal  liability" to a
"multiemployer  plan" as such terms are defined  under the  Employee  Retirement
Income Security Act of 1974, as amended.

               "Independent Third Party" means any Person who, immediately prior
to the contemplated  transaction,  does not own in excess of 5% of the Company's
Common Stock on a fully-diluted  basis (a "5% Owner"),  who is not  controlling,
controlled by or under common  control with any such 5% Owner and who is not the
spouse or descendent  (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.

               "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.

               "Investor Directors" has the meaning set forth in paragraph 1(a).

                                      -19-




<PAGE>
 
<PAGE>

               "Investor  Holder" means the  Investors  and their  Affiliates so
long as they hold any Stockholder Shares.

               "Investor  Material  Change" shall have occurred if a majority of
the principals of the general  partner (the "GP") of the general  partner of the
Investors  cease  to be  officers  of the GP and  two or  more  of  Benjamin  D.
Chereskin, Robin P. Selati and William J. Hunckler III cease to be  officers  of
the GP.

               "Investors" has the meaning set forth in the preamble.

               "Lien" has the meaning set forth in the Stock Purchase Agreement.

               "Loan  Agreement" has the meaning set forth in the Stock Purchase
Agreement.

               "Management Director" has the  meaning  set  forth  in  paragraph
1(a).

               "Management  Holder" means Vituli and each Management Investor so
long as such individual holds any Stockholder Shares.

               "Management  Investor"  means Daniel T.  Accordino  and Joseph A.
Zirkman.

               "1996 Plan" has the meaning set forth in the Purchase Agreement.

               "Original  Cost"  of each  Repurchase  Share  shall  be  equal to
$101.7646 (as  proportionately  adjusted for all subsequent stock splits,  stock
dividends and other recapitalizations).

               "Permitted  Transferee"  has the meaning  set forth in  paragraph
4(e) hereof.

               "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  Offering"  means  the sale of  shares  of the  Company's
Common Stock in a public offering registered under the Securities Act.

               "Public Sale" means any sale of Stockholder  Shares 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.

               "Purchase Agreement" has the meaning set forth in the preamble.

               "Qualified  Public  Offering"  means the sale in an  underwritten
public offering  registered  under the Securities Act of shares of the Company's
Common Stock  resulting in aggregate  gross  proceeds to the Company of at least
$50 million and a price per share of not less


                                      -20-




<PAGE>
 
<PAGE>

than  $108.2353  (as such amount is  equitably  adjusted  for  subsequent  stock
splits, stock dividends and recapitalizations).

               "Restricted Securities" has the meaning set forth in the Purchase
Agreement.

               "Securities  Act" means the  Securities  Act of 1933,  as amended
from time to time, or any similar federal law then in place.

               "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.

               "Stockholder  Shares"  means  (i)  any  Common  Stock  held  by a
Stockholder as of the date hereof, (ii) any Common Stock issued or issuable to a
Stockholder  under any options held by such  Stockholder  as of the date hereof,
(iii) any other  shares of any class or series of capital  stock of the  Company
held by a  Stockholder,  and (iv) any capital  stock or other equity  securities
issued or  issuable  directly or  indirectly  with  respect to the Common  Stock
referred to in clauses  (i),  (ii),  or (iii) above by way of stock  dividend or
stock split or in  connection  with a combination  of shares,  recapitalization,
merger, consolidation or other reorganization,  and after any Transfer permitted
by this Agreement,  any such shares owned by the transferee  thereof.  As to any
particular shares constituting Stockholder Shares, such shares shall cease to be
Stockholder  Shares  when they have been (x)  effectively  registered  under the
Securities  Act and disposed of in accordance  with the  registration  statement
covering them or (y) sold 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.  Notwithstanding  the foregoing,  for purposes of paragraph 4(d)
hereof,  any unvested  options held by any Stockholder  shall be included in the
calculation of the percentage of Stockholder  Shares owned by such  Stockholder,
but shall not be included as Specified Shares.

               "Stockholders" has the meaning set forth in the preamble.

               "Sub Board" has the meaning set forth in paragraph 1(a).

               "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  limited  liability  company,  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


                                      -21-




<PAGE>
 
<PAGE>

Persons shall be allocated a majority of limited liability company, partnership,
association or other business  entity gains or losses or shall be or control the
managing  director  or  general  partner  of  such  limited  liability  company,
partnership, association or other business entity.

               "Threshold  Amount"  has  the  meaning  set  forth  in  paragraph
5(c)(vii).

               "Transfer" has the meaning set forth in paragraph 4(a).

               "Vituli" has the meaning set forth in the preamble.

               "Wholly-Owned  Subsidiary" has the meaning set forth in the Stock
Purchase Agreement.

               12.  Transfers  in  Violation  of  Agreement.   Any  Transfer  or
attempted  Transfer of any  Stockholder  Shares in violation of any provision of
this Agreement  shall be void, and the Company shall not record such Transfer on
its books or treat any purported  transferee of such  Stockholder  Shares as the
owner of such shares for any purpose.

               13.  Amendment  and Waiver.  Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective  against the  Company,  the Investor  Holders,  the ARI Holders or the
holders of Stockholder Shares unless such  modification,  amendment or waiver is
approved  in writing by the  Company,  the  Investors,  ARI or the  holders of a
majority of the Stockholder  Shares,  respectively.  The failure of any party to
enforce any of the provisions of this Agreement  shall in no way be construed as
a waiver  of such  provisions  and  shall not  affect  the  right of such  party
thereafter to enforce each and every  provision of this  Agreement in accordance
with its terms.

               14.  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 invalid,
illegal or  unenforceable in any respect under any applicable law or rule in any
jurisdiction,  such invalidity,  illegality or unenforceability shall not affect
the  validity,  legality  or  enforceability  of any  other  provision  of  this
Agreement   in  such   jurisdiction   or  affect  the   validity,   legality  or
enforceability  of any provision in any other  jurisdiction,  but this Agreement
shall be  reformed,  construed  and  enforced  in such  jurisdiction  as if such
invalid, illegal or unenforceable provision had never been contained herein.

               15.  Entire  Agreement.  Except as otherwise  expressly set forth
herein,  this Agreement embodies the complete agreement and understanding  among
the parties  hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.

               16.  Successors and Assigns. Except as otherwise provided herein,
this Agreement  shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the  Stockholders  and any subsequent
holders  of  Stockholder  Shares and the  respective  successors  and  permitted
assigns of each of them, so long as they hold


                                      -22-




<PAGE>
 
<PAGE>

Stockholder  Shares;  provided that neither the Investors nor ARI may assign its
rights  under this  Agreement to any  subsequent  holder of  Stockholder  Shares
except to an Investor Holder or a ARI Holder, respectively.

               17.  Counterparts.  This  Agreement  may be  executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

               18.  Remedies.  The Company and the holders of Stockholder Shares
shall be entitled to enforce their rights under this Agreement specifically,  to
recover  damages by reason of any breach of any provision of this  Agreement and
to exercise all other rights  existing in their favor.  The parties hereto agree
and  acknowledge  that money  damages  would not be an  adequate  remedy for any
breach of the  provisions of this  Agreement and that the Company,  any Investor
Holder,  any ARI Holder  and any  Management  Holder may in its sole  discretion
apply to any court of law or  equity  of  competent  jurisdiction  for  specific
performance  and/or injunctive relief (without posting a bond or other security)
in  order  to  enforce  or  prevent  any  violation  of the  provisions  of this
Agreement.

               19.  Notices.  Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered,  or mailed first class mail
(postage  prepaid)  or sent by  reputable  overnight  courier  service  (charges
prepaid)  to the  Company  at the  address  set  forth  below  and to any  other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of  Stockholder  Shares  subject  to this  Agreement  at such  address as
indicated by the  Company's  records,  or at such address or to the attention of
such other person as the recipient  party has specified by prior written  notice
to the sending party.  Notices shall be deemed to have been given hereunder when
delivered  personally,  three  days after  deposit in the U.S.  mail and one day
after deposit with a reputable overnight courier service as follows:

               (a)    Notices to the Company and the Management Holders:

                      Carrols Holdings Corporation
                      968 James Street
                      Syracuse, New York 13203
                      Attn:  Mr. Alan Vituli

                      With copies (which shall not constitute notice) to:

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

                                      -23-




<PAGE>
 
<PAGE>

               (b)    Notices to the 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

                      With copies (which shall not constitute notice) to:

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

               (c)    Notices to ARI:

                      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 & Flynn
                      410 Park Avenue, 10th floor
                      New York, NY 10022
                      Attn:  Selig Sacks, Esq.

               20.  Governing  Law. The  corporate  law of the State of Delaware
shall govern all issues and  questions  concerning  the  relative  rights of the
Company and its  stockholders.  All other issues and  questions  concerning  the
construction,  validity, interpretation and enforceability 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.


                                      -24-




<PAGE>
 
<PAGE>

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.

               21.  Business  Days.  If any time  period  for  giving  notice or
taking action  hereunder  expires on a day which is a Saturday,  Sunday or legal
holiday in the state in which the Company's chief  executive  office is located,
the time period shall  automatically be extended to the business day immediately
following such Saturday, Sunday or legal holiday.

               22.  Descriptive  Headings.  The  descriptive  headings  of  this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

                                     * * * *




                                      -25-




<PAGE>
 
<PAGE>



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

                                       CARROLS HOLDINGS CORPORATION

                                       By
                                         ---------------------------------------

                                       Its
                                         ---------------------------------------


                                        MADISON DEARBORN CAPITAL
                                        PARTNERS, L.P.

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

                                             By  Madison Dearborn Partners, Inc.
                                             Its General Partner

                                                 By
                                                   -----------------------------
                                                   Benjamin D. Chereskin
                                                 Its
                                                   -----------------------------

                                        MADISON DEARBORN CAPITAL
                                        PARTNERS II, L.P.

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

                                             By  Madison Dearborn Partners, Inc.
                                             Its General Partner

                                                 By
                                                    ----------------------------
                                                    Benjamin D. Chereskin
                                                 Its
                                                    ----------------------------

                                         ATLANTIC RESTAURANTS, INC.


                                         By
                                            ------------------------------------
 
                                         Its
                                            ------------------------------------

                                      -26-




<PAGE>
 
<PAGE>

                                            ------------------------------------
                                            Alan Vituli


                                            ------------------------------------
                                            Daniel T. Accordino


                                            ------------------------------------
                                            Joseph A. Zirkman



                                      -27-




<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 Stockholders Agreement
and shall cause Atlantic Restaurants, Inc. to comply with the provisions of this
Stockholders Agreement.

                                            BAHRAIN INTERNATIONAL BANK, E.C.

                                            By
                                            ------------------------------------

                                            Its
                                            ------------------------------------



                                      -28-




<PAGE>
 
<PAGE>



                            SCHEDULE OF STOCKHOLDERS


Name and Address                                    Number of Stockholder Shares
----------------                                    ----------------------------

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

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

Alan Vituli
c/o Carrols Corporation
968 James Street
Syracuse, NY 13203

Daniel T. Accordino
c/o Carrols Corporation
968 James Street
Syracuse, NY 13203

Joseph A. Zirkman
c/o Carrols Corporation
968 James Street
Syracuse, NY 13203

                                  -29-




<PAGE>