SECOND AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO SECURITY AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO SECURITY AGREEMENT (this “Amendment”), dated as of April 29, 2015, is by and among CARROLS RESTAURANT GROUP, INC., a Delaware corporation (the “Borrower”), certain Subsidiaries of the Borrower party hereto (collectively, the “Guarantors”), the Lenders party hereto (the “Lenders”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders under the Credit Agreement (as hereinafter defined) (in such capacity, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

WHEREAS, (i) the Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to that certain Credit Agreement dated as of May 30, 2012 (as amended by that certain First Amendment to Credit Agreement dated as of December 19, 2014 and as may be further amended, modified, extended, restated, replaced, or supplemented from time to time, the “Credit Agreement”) and (ii) the Borrower, the Guarantors and the Administrative Agent are parties to that certain Security Agreement dated as of May 30, 2012 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Security Agreement”);

WHEREAS, the Credit Parties have requested that the Lenders amend certain provisions of the Credit Agreement and the Security Agreement; and

WHEREAS, the Lenders are willing to make such amendments to the Credit Agreement and to the Security Agreement, in accordance with and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.1    New Definitions. The following definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

1.2    Deleted Definitions. The definitions of Deposit Account Control Agreement, Fee Letter and Securities Account Control Agreement are hereby deleted from Section 1.1 of the Credit Agreement in their entirety. All references to the term “Fee Letter” in the Credit Agreement are hereby amended to refer to the term “Engagement Letter”.

1.3    Amendment to Definition of Applicable Margin. The definition of Applicable Margin set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.4    Amendment to Definition of Consolidated EBITDA. Clause (v) contained in the definition of Consolidated EBITDA set forth in Section 1.1 is hereby amended and restated in its entirety to read as follows:

1.5    Amendment to Definition of Credit Party Obligations. The definition of Credit Party Obligations set forth in Section 1.1 is hereby amended by adding the following sentence to the end of such definition:

1.6    Amendment to Definition of Default Rate. Clause (c) contained in the definition of Default Rate set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.7    Amendment to Definition of Intercreditor Agreement. The definition of Intercreditor Agreement set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.8    Amendment to Definition of LIBOR. The definition of LIBOR set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.9    Amendment to Definition of Maturity Date. The definition of Maturity Date set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.10    Amendment to Definition of Obligations. The definition of Obligations set forth in Section 1.1 is hereby amended by adding the following sentence to the end of such definition:

1.11    Amendment to Definition of Other Designated Expenses. The definition of Other Designated Expenses set forth in Section 1.1 is hereby amended and restated in its entirety as follows:

1.12    Amendment to Definition of Permitted Acquisition. Clause (ii) contained in the definition of Permitted Acquisition set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.13    Amendment to Definition of Second Lien Notes. The definition of Second Lien Notes set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.14    Amendment to Definition of Second Lien Notes Indenture. The definition of Second Lien Notes Indenture set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.15    Amendment to Definition of Security Documents. The definition of Security Documents set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.16    Amendment to Section 1.3. Clause (c) of Section 1.3 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.17    Amendment to Section 2.1(a). The reference to “TWENTY MILLION DOLLARS ($20,000,000)” contained in Section 2.1(a) of the Credit Agreement is hereby amended to read “THIRTY MILLION DOLLARS ($30,000,000). Correspondingly, the references to “$20,000,000” appearing on the cover page and in the first whereas clause of the Credit Agreement are hereby amended to read “$30,000,000”.

1.18    Amendment to Section 2.3(a). The reference to “FIFTEEN MILLION DOLLARS ($15,000,000)” contained in Section 2.3(a) of the Credit Agreement is hereby amended to read “TWENTY MILLION DOLLARS ($20,000,000)”.

1.19    Amendment to Section 2.7(b). The words “after the Cash Collateral Release Date” appearing in clauses (i), (ii), (iii) and (iv) of Section 2.7(b) of the Credit Agreement are hereby deleted in their entirety.

1.20    Amendments to Section 2.22. Subclause (xii) contained in clause (b) of Section 2.22 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.21    Amendments to Section 3.11. Clause (b) contained in Section 3.11 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.22    Amendments to Section 5.7. The reference to “$2,500,000” contained in Section 5.7(b) of the Credit Agreement is hereby amended to read “$5,000,000”. The reference to “$5,000,000” contained in Section 5.7(c) of the Credit Agreement is hereby amended to read “$10,000,000”. The reference to “$5,000,000” contained in Section 5.7(e) of the Credit Agreement is hereby amended to read “$10,000,000”.

1.23    Amendments to Section 5.9. Section 5.9 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.24    Amendments to Section 5.12. Clause (b) contained in Section 5.12 of the Credit Agreement is hereby amended by adding the following sentence to the end of such clause:

1.25    Amendments to Section 5.12. Clause (e) contained in Section 5.12 of the Credit Agreement is hereby deleted in its entirety.

1.26    Amendments to Section 5.13. Clause (e)(ii) contained in Section 5.13 of the Credit Agreement is hereby deleted in its entirety.

1.27    Amendments to Section 6.1. Clause (i) contained in Section 6.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.28    Amendments to Section 6.5. Clause (h) contained in Section 6.5 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

level set forth in Section 5.9; provided, however, the requirement set forth in this clause (B) shall not apply to any construction or development consummated at any time after the Adjusted Leverage Ratio covenant level set forth in Section 5.9(a) has been less than or equal to 6.00 to 1.00 for two consecutive fiscal quarters as evidenced by a certificate of an Authorized Officer substantially in the form of Exhibit 5.2(b) and delivered concurrently with the financial statements required to be delivered pursuant to Section 5.1(b) (each such construction or development of a new Restaurant permitted pursuant to this clause (h) shall be referred to in this Agreement as a “Permitted Construction Transaction”);

1.29    Amendment to Section 6.10(f). Clause (f) contained in Section 6.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.30    Amendment to Section 6.14. Section 6.14 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.32    Amendment to Section 7.1. Clauses (d), (g), (k) and (n) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

1.33    Amendment to Article X. Sections 10.10 and 10.11 are hereby added to Article X of the Credit Agreement to read as follows:

1.36    Amendment to Schedules and Exhibits. Those certain Schedules and Exhibits attached as Exhibit A to this Amendment shall replace the corresponding Schedules and Exhibits to the Credit Agreement. All other Schedules and Exhibits to the Credit Agreement shall not be modified or otherwise affected.

2.1    Amendment to Section 3.3. Section 3.3 of the Security Agreement is hereby amended and restated in its entirety to read as follows:

2.2    Amendment to Section 3.4. Clauses (b) and (c) contained in Section 3.4 of the Security Agreement are hereby amended and restated in their entirety to read as follows:

2.3    Amendment to Section 3.6. The first sentence of Section 3.6 is hereby amended and restated in its entirety to read as follows:

2.4    Amendment to Section 4.2. The first sentence of Section 4.2 is hereby amended and restated in its entirety to read as follows:

2.5    Amendment to Section 4.11. The first sentence of Section 4.11 is hereby amended and restated in its entirety to read as follows:

3.1    Closing Conditions. This Amendment shall become effective as of the day and year set forth above (the “Second Amendment Effective Date”) upon satisfaction of the following conditions (in each case, in form and substance reasonably acceptable to the Administrative Agent):

(a)    Executed Amendment. The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties, the Lenders and the Administrative Agent.

(b)    Organizational Documents. The Administrative Agent shall have received (i) a certificate of a secretary or assistant secretary of each Credit Party certifying that the articles of incorporation, bylaws and/or other organizational documents (or their equivalent), as applicable, of each Credit Party that were delivered on the Closing Date (as defined in the Credit Agreement) or the date on which any Credit Party was joined as a Guarantor pursuant to the terms of the Credit Agreement, as applicable, or certified updates as applicable, remain true and correct and in force and effect as of the Second Amendment Effective Date and (ii) resolutions, incumbency and good standing certificates (or their equivalent), as applicable, for the Credit Parties.

(c)    Officer’s Certificate. The Administrative Agent shall have received a certificate or certificates executed by an Authorized Officer of the Borrower stating that (i) after giving effect to this Amendment, no Default or Event of Default shall exist, (ii) all governmental and third party consents and all equity holder and board of directors (or comparable entity management body) authorizations for each Credit Party as are necessary for the execution and delivery of the Amendment shall have been obtained and shall be in full force and effect and (iii) the representations and warranties made by the Credit Parties in the Credit Agreement and in the other Credit Documents and which are contained in any certificate furnished at any time under or in connection with this Amendment shall (x) with respect to representations and warranties that contain a materiality qualification, be true and correct and (y) with respect to representations and warranties that do not contain a materiality qualification, be true and correct in all material respects as if made on and as of the Second Amendment Effective Date except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date.

(d)    Legal Opinion. The Administrative Agent shall have received customary legal opinions of counsel for the Credit Parties (including an opinion of the general counsel of the Borrower) as may be reasonably requested by the Administrative Agent, in each case dated the Second Amendment Effective Date, addressed to the Administrative Agent and the Lenders (and their permitted assigns) and in form and substance acceptable to the Administrative Agent.

(e)    Second Lien Notes. The Borrower shall have received gross proceeds from the issuance of the Second Lien Notes on the Second Amendment Effective Date of $200,000,000. The Administrative Agent shall have received (i) a certified copy of the Second Lien Note Indenture and

other related documents (including, without limitation, the Intercreditor Agreement), each to be in form and substance reasonably satisfactory to the Administrative Agent and (ii) evidence that all obligations under the existing second lien notes have been satisfied and discharged in full and all security interests related thereto have been terminated.

(f)    Financial Statements. The Administrative Agent will have received, in form and substance reasonably satisfactory to the Administrative Agent, (i) copies of satisfactory audited consolidated and consolidating financial statements for the Borrower and its Subsidiaries for the three fiscal years most recently ended for which financial statements are available and interim unaudited consolidated and consolidating financial statements for each quarterly period ended since the last audited financial statements for which financial statements are available and (ii) projections prepared by management of balance sheets, income statements and cashflow statements of the Borrower and its Subsidiaries (excluding the Excluded Subsidiaries), which will be quarterly through the fourth quarter of 2015 and annually thereafter for the term of the Credit Agreement.

(g)    Financial Covenants. The Administrative Agent shall have received evidence that as of the Second Amendment Effective Date (i) Consolidated EBITDA is not less than $42,400,000 and (ii) the Adjusted Leverage Ratio is not greater than 6.75 to 1.00, in each case, calculated on a Pro Forma Basis (including adjustments reasonably acceptable to the Administrative Agent) after giving effect to the transactions contemplated to occur on the Second Amendment Effective Date, for the twelve-month period ending as of March 31, 2015, such calculations to be reasonably satisfactory to the Administrative Agent.

(h)    Fees and Expenses.

(i)    The Administrative Agent shall have received from the Borrower, for the account of each Lender that executes and delivers this Amendment (each such Lender, a “Consenting Lender”, and collectively, the “Consenting Lenders”), an amendment fee in an amount equal to 25 basis points on the aggregate Revolving Commitments of such Consenting Lender (after giving effect to this Amendment); and

(ii) The Administrative Agent shall have received from the Borrower such other fees and expenses that are payable in connection with the consummation of the transactions contemplated hereby and King & Spalding LLP shall have received from the Borrower payment of all outstanding fees and expenses previously incurred and all fees and expenses incurred in connection with this Amendment.

(i)    Miscellaneous. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

4.1    Amended Terms. On and after the Second Amendment Effective Date, all references to the Credit Agreement in each of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

4.2    Representations and Warranties of Credit Parties. Each of the Credit Parties represents and warrants as follows:

(a)    It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

(b)    This Amendment has been duly executed and delivered by such Person and constitutes such Person’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(c)    No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment.

(d)    The representations and warranties set forth in Article III of the Credit Agreement are true and correct as of the date hereof (except for those which expressly relate to an earlier date).

(e)    After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default.

(f)    The Security Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Administrative Agent, for the benefit of the Lenders, which security interests and Liens are perfected in accordance with the terms of the Credit Agreement and the Security Documents and prior to all Liens other than Permitted Liens.

(g)    The Credit Party Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

4.3    Reaffirmation of Credit Party Obligations. Each Credit Party hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Documents applicable to it and (b) that it is responsible for the observance and full performance of its respective Credit Party Obligations.

4.4    Credit Document. This Amendment shall constitute a Credit Document under the terms of the Credit Agreement.

4.5    Expenses. The Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of the Administrative Agent’s legal counsel.

4.6    Further Assurances. The Credit Parties agree to promptly take such action, upon the request of the Administrative Agent, as is necessary to carry out the intent of this Amendment.

4.7    Entirety. This Amendment and the other Credit Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

4.8    Counterparts; Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart to this Amendment by telecopy or other electronic means shall be effective as an original and shall constitute a representation that an original will be delivered.

4.9    No Actions, Claims, Etc. As of the date hereof, each of the Credit Parties hereby acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, against the Administrative Agent, the Lenders, or the Administrative Agent’s or the Lenders’ respective officers, employees, representatives, agents, counsel or directors arising from any action by such Persons, or failure of such Persons to act under the Credit Agreement on or prior to the date hereof.

4.10    GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

4.11    Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

4.12    Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The jurisdiction, service of process and waiver of jury trial provisions set forth in Sections 9.13 and 9.16 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly executed on the date first above written.

as a Lender and as Administrative Agent

By:/s/ Stephen A. Leon                    

Name: Stephen A. Leon

Title: Managing Director