UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________

SCHEDULE 14A

________________

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Check the appropriate box:

CARROLS RESTAURANT GROUP, INC.

(Name of Registrant as Specified In Its Charter)

_________________________________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION

CARROLS RESTAURANT GROUP, INC.

968 James Street

Syracuse, New York 13203

To the Stockholders of Carrols Restaurant Group, Inc.:

You are cordially invited to attend a special meeting of stockholders (together with any adjournment, postponement, or other delay thereof, the “Special Meeting”) of Carrols Restaurant Group, Inc., a Delaware corporation (“Carrols”). The Special Meeting will be held via live webcast on [•], at [•], Eastern time. Stockholders who hold shares as of [•] will be able to participate in the virtual meeting by visiting www.virtualshareholdermeeting.com/TAST2024SM.

At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger (as it may be amended, supplemented or modified from time to time), dated as of January 16, 2024 (the “Merger Agreement”), among Restaurant Brands International Inc. (“Parent”), BK Cheshire Corp. (“Merger Sub”) and Carrols. Pursuant to the Merger Agreement, Merger Sub will merge with and into Carrols, with Carrols surviving such merger as a subsidiary of Parent (the “Merger”). At the Special Meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger.

If the Merger is completed, at the effective time of the Merger, each share of Carrols’ common stock that is outstanding as of immediately prior to the effective time of the Merger (the “Carrols Common Stock”), subject to certain exceptions specified in the Merger Agreement, will be canceled and extinguished and automatically converted into the right to receive cash in an amount equal to $9.55 per share, without interest thereon and subject to any applicable withholding taxes. This amount represents an approximately 23.1% premium to Carrols 30-day volume-weighted average price as of January 12, 2024 of $7.76 per share and an approximately 13.4% premium to the closing price of Carrols Common Stock of $8.42 per share on January 12, 2024, the last full trading day before public announcement of the Merger Agreement.

The proposed Merger is a “going private transaction” under the rules of the Securities and Exchange Commission. If the Merger is completed, Carrols will become a privately held company and a subsidiary of Parent.

Carrols’ Board of Directors (the “Carrols Board”) formed a Special Committee of the Carrols Board comprised solely of independent and disinterested directors (the “Special Committee”) to engage with Parent with respect to the Merger proposal, to consider other potential value creation opportunities and to take other actions that the Special Committee deemed appropriate. The Special Committee, as more fully described in the enclosed proxy statement, evaluated the Merger with the assistance of its own independent financial and legal advisors. At the conclusion of its review, the Special Committee, among other things, unanimously (1) determined that it is fair to and in the best interests of Carrols and Carrols Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated therein, (2) recommended that the Carrols Board approve and adopt the execution and delivery of the Merger Agreement by Carrols, the performance by Carrols of its covenants and other obligations thereunder, and the consummation of the Merger and the transactions contemplated therein upon the terms and conditions set forth therein, in accordance with General Corporation Law of the State of Delaware (the “DGCL”), and determine that

the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Carrols and the Carrols Stockholders (including the Unaffiliated Company Stockholders), and (3) resolved to recommend to the Carrols Board that it recommend that the Carrols Stockholders adopt the Merger Agreement in accordance with the DGCL. In addition, the Special Committee believes that the Merger is fair to Carrols’ “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Carrols Board, acting upon the recommendation of the Special Committee, (1) determined that it is fair to and in the best interests of Carrols and Carrols Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated therein, (2) approved and adopted the execution and delivery of the Merger Agreement by Carrols, the performance by Carrols of its covenants and other obligations thereunder, and the consummation of the Merger and the transactions contemplated therein, upon the terms and conditions set forth therein, in accordance with the DGCL, and determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Carrols and the Carrols Stockholders (including the Unaffiliated Company Stockholders), and (3) resolved to recommend that the Carrols Stockholders adopt the Merger Agreement in accordance with the DGCL. In addition, the Carrols Board, on behalf of Carrols, believes that the Merger is fair to Carrols’ “unaffiliated security holders,” as such term is defined in Rule 13e-3 under the Exchange Act.

The Carrols Board recommends that you vote: (1) “FOR” the adoption of the Merger Agreement and (2) “FOR” the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger.

Your vote is very important, regardless of the number of shares you own. The approval of the proposal to adopt the Merger Agreement requires the affirmative vote of the holders of (1) a majority of the voting power of the outstanding Carrols Common Stock and Carrols preferred stock entitled to vote thereon, voting together as a single class and (2) a majority of the outstanding Carrols Common Stock held by the Unaffiliated Company Stockholders (as defined below).

The “Unaffiliated Company Stockholders” means the Company stockholders other than (i) Parent, Merger Sub and their affiliates, (ii) any members of the Carrols Board who are employees of Parent or its affiliates, (iii) any officer of the Company and (iv) any member of any of the foregoing’s “immediate family” (as defined in Rule 16a-1 of the Exchange Act), or any “affiliate” or “associate” (as defined in Rule 12b-2 of the Exchange Act) of any of the foregoing. Each record holder of Carrols Common Stock is entitled to one (1) vote for each share of Carrols Common Stock owned of record as of the close of business on [•] (the “Record Date”). If you fail to vote on the proposal to adopt the Merger Agreement, the effect will be the same as a vote against such proposal.

The accompanying proxy statement provides detailed information about the Special Meeting, the Merger Agreement, the Merger and the other proposals to be considered at the Special Meeting. A copy of the Merger Agreement is attached as Annex A to the proxy statement. The accompanying proxy statement also describes the actions and determinations of the Carrols Board and the Special Committee in connection with their evaluation of, among other things, the Merger Agreement and the Merger. Please read the proxy statement and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information.

In connection with execution of the Merger Agreement, certain of Carrols’ existing stockholders entered into a voting agreement, pursuant to which the applicable stockholders agreed to vote all of their respective shares of Carrols Common Stock in favor of the adoption of the Merger Agreement, subject to certain terms and conditions contained in the voting agreement. A copy of the voting agreement is attached as Annex C to the accompanying proxy statement.

Even if you plan to attend the Special Meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the Special Meeting and vote at the Special Meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and will have the same effect as a vote against the adoption of the Merger Agreement.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee that you must follow in order to submit your voting instructions and have your shares counted at the Special Meeting. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the Special Meeting without your instructions. As a result, if you do not provide your bank, broker or other nominee with any voting instructions, your shares will not be counted for purposes of a quorum and will not be voted at the Special Meeting, which will have the same effect as a vote against the adoption of the Merger Agreement. If you give voting instructions to your bank, broker or other nominee with respect to one of the proposals, but give no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders call: (877) 717-3922 (toll-free from the U.S. and Canada) or
+1 (412) 232-3651 (from other countries)
Banks and brokers call collect: (212) 750-5833

Thank you for your support.

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [•] and, together with the enclosed form of proxy card, is first being sent to stockholders on or about [•].

PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION

CARROLS RESTAURANT GROUP, INC.

968 James Street

Syracuse, New York 13203

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [•]

Notice is given that a special meeting of stockholders (together with any adjournment, postponement or other delay thereof, the “Special Meeting”) of Carrols Restaurant Group, Inc., a Delaware corporation (“Carrols”), will be held on [•], at [•], Eastern time, for the following purposes:

1.      To consider and vote on the proposal to adopt the Agreement and Plan of Merger (as it may be amended, supplemented or modified from time to time, the “Merger Agreement”), dated as of January 16, 2024, among Restaurant Brands International Inc. (“Parent”), BK Cheshire Corp. (“Merger Sub”), and Carrols (the “Merger Proposal”);

2.      To consider and vote on the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Carrols to its named executive officers in connection with the merger (the “Merger”) of BK Cheshire Corp., a subsidiary of Restaurant Brands International Inc., with and into Carrols (the “Compensation Proposal”); and

3.      To transact any other business that may properly come before the Special Meeting.

Approval of the Merger Proposal requires the affirmative vote of the holders of (1) a majority of the voting power of the outstanding Carrols common stock and preferred stock entitled to vote thereon, voting together as a single class and (2) a majority of the outstanding Carrols common stock held by the Unaffiliated Company Stockholders (as defined below). The “Unaffiliated Company Stockholders” means the Carrols stockholders other than (i) Parent, Merger Sub and their affiliates, (ii) any members of the Carrols Board of Directors who are employees of Parent or its affiliates, (iii) any officer of Carrols and (iv) any member of any of the foregoing’s “immediate family” (as defined in Rule 16a-1 of the Exchange Act), or any “affiliate” or “associate” (as defined in Rule 12b-2 of the Exchange Act) of any of the foregoing. Approval of the Compensation Proposal requires the affirmative vote of a majority of the voting power of the Carrols capital stock present at the Special Meeting in person or represented by proxy and entitled to vote thereon.

The Special Meeting will be held by means of a live interactive webcast on the internet at www.virtualshareholdermeeting.com/TAST2024SM. The Special Meeting will begin promptly at [•] Eastern time. Online check-in will begin at [•] Eastern time, and you should allow ample time for the check-in procedures. You will need the control number found on your proxy card or voting instruction form in order to participate in the Special Meeting (including voting your shares).

Only Carrols stockholders as of the close of business on [•] are entitled to notice of, and to vote at, the Special Meeting. A list of stockholders of record entitled to vote at the Special Meeting will be available at Carrols’ corporate offices located at 968 James Street, Syracuse, New York 13203 during regular business hours for a period of no less than 10 days before the Special Meeting and on the virtual meeting website during the Special Meeting.

Carrols’ Board of Directors, acting upon the recommendation of the Special Committee of Carrols’ Board of Directors, recommends that you vote: (1) “FOR” the adoption of the Merger Agreement and (2) “FOR” the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger.

Holders of Carrols common stock who do not vote in favor of the proposal to adopt the Merger Agreement and otherwise comply with the requirements under Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) will have the right to seek appraisal of the “fair value” of their shares of Carrols common stock (exclusive of any element of value arising from the accomplishment or expectation of the Merger and together with interest (as described in the accompanying proxy statement) to be paid on the amount determined to be “fair value”) in lieu of receiving $9.55 per share in cash if the Merger is completed, as determined in accordance with Section 262 of the DGCL. To do so, a Carrols stockholder must properly demand appraisal before the vote is taken on the Merger Agreement and comply with all other requirements of the DGCL, including Section 262 of the DGCL, which are summarized in the accompanying proxy statement, and certain conditions set forth in Section 262(g) of the DGCL must be satisfied. Section 262 of the DGCL may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262 and is incorporated in this notice by reference.

Even if you plan to attend the Special Meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the Special Meeting and vote at the Special Meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and will have the same effect as a vote against the Merger Proposal.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee that you must follow in order to submit your voting instructions and have your shares counted at the Special Meeting. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the Special Meeting without your instructions. As a result, if you do not provide your bank, broker or other nominee with any voting instructions, your shares will not be counted for purposes of a quorum and will not be voted at the Special Meeting, which will have the same effect as a vote against the Merger Proposal. If you give voting instructions to your bank, broker or other nominee with respect to one of the proposals, but give no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal.

TABLE OF CONTENTS

DEFINED TERMS

Unless stated otherwise, whenever used in this proxy statement, the following terms have the meanings set forth below:

2029 Notes means Carrols’ 5.875% senior notes due 2029.

Buyer Parties means Parent and Merger Sub.

Cambridge Holdings means Cambridge Franchise Holdings, LLC.

Cambridge Shares means the shares of Carrols Common Stock beneficially owned by the Cambridge Stockholders.

Cambridge Stockholders means Cambridge Franchise Holdings, LLC, Matthew Perelman and Alexander Sloane.

Carrols means Carrols Restaurant Group, Inc. In addition, the terms “we,” “us” and “our” refer to Carrols Restaurant Group, Inc.

Carrols Board means the board of directors of Carrols Restaurant Group, Inc.

Carrols Bylaws means the bylaws of Carrols Restaurant Group, Inc.

Carrols Capital Stock means Carrols Common Stock and Carrols Preferred Stock.

Carrols Common Stock means Carrols’ common stock, par value $0.01 per share.

Carrols Preferred Stock means the preferred stock, par value $0.01 per share, of the Company, including the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and the Series D Convertible Preferred Stock.

Carrols Stockholders means the holders of shares of Carrols Capital Stock.

Certificate of Merger means a certificate of merger in such form as required by and in accordance with the applicable provisions of the DGCL.

Closing means the consummation of the Merger.

Code means the Internal Revenue Code of 1986, as amended.

Commitment Letter means the Commitment Letter, dated January 16, 2024, by and among the Buyer Parties, JPMorgan Chase Bank, N.A. and the other parties joined to the Commitment Letter from time to time.

Commitment Parties means JPMCB and the other parties joined to the Commitment Letter from time to time.

Company means Carrols Restaurant Group, Inc.

Company Equity Awards means the Company Options, Company RSAs, Company RSUs, Company PSAs and Company PSUs.

Company Equity Plans means the Carrols Restaurant Group, Inc. 2016 Stock Incentive Plan, as amended and restated effective June 16, 2023, and the Carrols Restaurant Group, Inc. 2006 Stock Incentive Plan (as amended from time to time), in each case, that provide for the issuance of any Company Equity Awards.

Company Option means each option to purchase shares of Carrols Common Stock granted under the Company Equity Plans.

Company PSA means each award of restricted stock of the Company issued under the Company Equity Plans whose vesting is conditioned in full or in part based on achievement of performance goals or metrics.

Company PSU means each restricted sock unit award granted under the Company Equity Plans whose vesting is conditioned in full or in part based on achievement of performance goals or metrics.

Company RSA means each award of restricted stock of the Company issue under the Company Equity Plans, other than a Company PSA.

Company RSU means each restricted stock unit award granted under the Company Equity Plans, other than a Company PSU.

Compensation Proposal means the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger.

DGCL means the General Corporation Law of the State of Delaware.

Dissenting Company Shares means all shares of Carrols Common Stock that are issued and outstanding as of immediately prior to the Effective Time of the Merger and held by Carrols Stockholders who have neither voted in favor of the Merger nor consented thereto in writing and who have properly and validly exercised and not withdrawn their statutory rights of appraisal in respect of such shares of Carrols Common Stock in accordance with Section 262 of the DGCL.

DOJ means the United States Department of Justice or any successor thereto.

Exchange Act means the Securities Exchange Act of 1934.

Existing Company Credit Agreement means the Credit Agreement, dated as of April 30, 2019, among Carrols, as Borrower, certain subsidiaries of Carrols, as Guarantors, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders party thereto, as amended.

Existing RBI Credit Agreement means the Credit Agreement, dated October 27, 2014, among 1011778 B.C. Unlimited Liability Company, as the Parent Borrower, New Red Finance, Inc., as the Subsidiary Borrower, 1013421 B.C. Unlimited Liability Company, as Holdings, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and the lenders party thereto, as amended, pursuant to the terms thereof.

Franchise Agreements means any and all franchise agreements, development agreements, master franchise agreements and any bailment, advertising, master program or other similar agreements (excluding, for the avoidance of doubt, (i) agreements relating to Parent’s or its affiliates’ ownership of securities of the Company and (ii) the Merger Agreement), by and between Parent or any of its affiliates, on the one hand, and the Company or any of its subsidiaries, on the other hand.

FTC means the United States Federal Trade Commission or any successor thereto.

GAAP means generally accepted accounting principles, consistently applied, in the United States.

Go-Shop Period means the period beginning on the date of the Merger Agreement and continuing until 11:59 p.m., Eastern time, on February 15, 2024.

HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Incremental Term Facility means the senior secured term facility arranged under the Existing RBI Credit Agreement and denominated in U.S. dollars in an aggregate principal amount of $750 million.

IRS means the United States Internal Revenue Service or any successor thereto.

Jefferies means Jefferies LLC, the Special Committee’s financial advisor.

JPMCB means JPMorgan Chase Bank, N.A.

Merger means the merger of Merger Sub with and into Carrols pursuant to the Merger Agreement in accordance with the applicable provisions of the DGCL, with Carrols surviving the Merger as a subsidiary of Parent.

Merger Agreement means the Agreement and Plan of Merger, dated as of January 16, 2024, by and among Carrols, Parent, and Merger Sub, as it may be amended, supplemented or modified from time to time.

Merger Proposal means the proposal to adopt the Merger Agreement, pursuant to which Merger Sub will merge with and into Carrols, with Carrols continuing as the Surviving Corporation and becoming a subsidiary of Parent.

Merger Sub means BK Cheshire Corp., a subsidiary of Parent.

Milbank means Milbank LLP, counsel to the Special Committee.

NASDAQ means the Nasdaq Global Select Market and any successor stock exchange.

Owned Company Shares means each share of Carrols Common Stock that is (1) held by Carrols or its subsidiaries, (2) owned by Parent or Merger Sub, or (3) owned by any direct or indirect subsidiary of Parent or Merger Sub as of immediately prior to the Effective Time.

Parent means Restaurant Brands International Inc.

Per Share Price means $9.55 in cash per share of Carrols Common Stock.

Record Date means [•].

SEC means the United States Securities and Exchange Commission or any successor thereto.

Securities Act means the Securities Act of 1933.

Series A Convertible Preferred Stock means Carrols’ Series A Convertible Preferred Stock, par value $0.01 per share.

Series B Convertible Preferred Stock means Carrols’ Series B Convertible Preferred Stock, par value $0.01 per share.

Series C Convertible Preferred Stock means Carrols’ Series C Convertible Preferred Stock, par value $0.01 per share.

Series D Convertible Preferred Stock means Carrols’ Series D Convertible Preferred Stock, par value $0.01 per share.

Series D Convertible Preferred Stock Certificate of Designation means the Certificate of Designation of the Series D Convertible Preferred Stock of the Surviving Corporation.

Special Committee means the special transaction committee established by the Carrols Board comprised solely of independent and disinterested members of the Carrols Board.

Special Meeting means the special meeting of the stockholders of Carrols to be held on [•] at [•], Eastern time, and any adjournment, postponement or other delay thereof.

Surviving Corporation means the Company after the consummation of the Merger.

Termination Date means November 30, 2024.

Unaffiliated Company Stockholders means the Carrols Stockholders other than (i) Parent, Merger Sub and their affiliates, (ii) any members of the Carrols Board who are employees of Parent or its affiliates, (iii) any officer of the Company and (iv) any member of any of the foregoing’s “immediate family” (as defined in Rule 16a-1 of the Exchange Act), or any “affiliate” or “associate” (as defined in Rule 12b-2 of the Exchange Act) of any of the foregoing.

Voting Agreement means the voting agreement, dated January 16, 2024, among Parent and the Cambridge Stockholders.

QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the Merger, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that are important to you. Carrols encourages you to carefully read the more detailed information contained elsewhere in this proxy statement, including the annexes to this proxy statement and the other documents to which Carrols refers in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find Additional Information.”

Q:     Why am I receiving these materials?

A:     On January 16, 2024, Carrols entered into the Merger Agreement. Under the Merger Agreement, Parent will acquire Carrols for the Per Share Price. In order to complete the Merger, Carrols Stockholders must vote to approve the adoption of the Merger Agreement at the Special Meeting pursuant to the Requisite Stockholder Approval. This approval is a condition to the consummation of the Merger. See the section of this proxy statement captioned “The Merger Agreement — Conditions to the Closing of the Merger.” The Carrols Board is furnishing this proxy statement and form of proxy card to the Carrols Stockholders as of the Record Date in connection with the solicitation of proxies of Carrols Stockholders to be voted at the Special Meeting.

This proxy statement, which you should read carefully, contains important information about the Merger, the Merger Agreement, the Special Meeting and the matters to be voted on at the Special Meeting. The enclosed materials allow you to submit a proxy to vote your shares of Carrols Capital Stock without attending the Special Meeting and to ensure that your shares of Carrols Capital Stock are represented and voted at the Special Meeting.

Your vote is very important. Even if you plan to attend the Special Meeting, Carrols encourages you to submit a proxy as soon as possible.

Q:     What is the Merger and what effects will it have on Carrols?

A:     The Merger is the acquisition of Carrols by Parent. If the Merger Proposal is approved by Carrols Stockholders pursuant to the Requisite Stockholder Approval and the other closing conditions under the Merger Agreement are satisfied or waived, Merger Sub will merge with and into Carrols, with Carrols continuing as the Surviving Corporation. As a result of the Merger, Carrols will become a subsidiary of Parent, and Carrols Common Stock will no longer be publicly traded and will be delisted from NASDAQ. In addition, Carrols Common Stock will be deregistered under the Exchange Act, and Carrols will no longer file periodic reports with the SEC.

Q:     What will I receive if the Merger is completed?

A:     Upon completion of the Merger, you will be entitled to receive the Per Share Price, without interest and less any applicable withholding taxes, for each share of Carrols Common Stock that you own, unless you have properly perfected and exercised, and not validly withdrawn or subsequently lost, your appraisal rights under the DGCL, and certain other conditions under the DGCL are satisfied. For example, if you own 100 shares of Carrols Common Stock, you will receive $955.00 in cash in exchange for your shares of Carrols Common Stock, without interest and less applicable withholding taxes (if any).

Q:     How does the Per Share Price compare to the market price of Carrols Common Stock?

A:     This amount constitutes an approximately 23.1% premium to Carrols 30-day volume-weighted average price as of January 12, 2024 of $7.76 per share and an approximately 13.4% premium to the closing price of Carrols Common Stock of $8.42 per share on January 12, 2024, the last full trading day before public announcement of the Merger Agreement.

Q:     What will happen to Company Equity Awards?

A:     The Company Equity Awards will be treated as follows:

•        Each Company RSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSA, multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSA (with any performance conditions deemed to be earned at “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company RSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSU (together with any accrued and unpaid dividends or dividend equivalents corresponding to such Company RSU), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically converted, into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSU (together with any accrued and unpaid dividend or dividend equivalents corresponding to such Company PSU) (with any performance conditions deemed to be earned based on the greater of “target” level or “actual” performance, as measured through the Effective Time and extrapolated over the full performance period; provided, that, if the Effective Time occurs on or prior to December 31, 2024, the performance conditions for the Company PSUs granted in 2024 shall be deemed to be earned based on “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company Option, whether vested or unvested, that is unexpired, unexercised, and outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company Option, multiplied by (ii) the excess, if any, of the Price Per Share over the applicable exercise price per share applicable to such Company Option, subject to any applicable withholding taxes payable in respect thereof. Each Company Option with an exercise price per share that is equal to or greater than the Per Share Price will be cancelled immediately upon the Effective Time for no consideration.

Q:     What am I being asked to vote on at the Special Meeting?

A:     You are being asked to vote on the following proposals:

•        The Merger Proposal:    the proposal to adopt the Merger Agreement, pursuant to which Merger Sub will merge with and into Carrols, with Carrols continuing as the Surviving Corporation and becoming a subsidiary of Parent; and

•        The Compensation Proposal:    the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger.

Q:     When will the Special Meeting be held and how can I attend?

A:     The meeting is scheduled to be held at [•] Eastern time on [•]. Only Carrols Stockholders or their duly authorized proxies may attend the meeting. To facilitate Carrols Stockholders’ attendance, the meeting will be held exclusively via live webcast at www.virtualshareholdermeeting.com/TAST2024SM. This format permits Carrols Stockholders to participate from any location, without the cost of travel. The meeting will only be conducted via webcast; there will be no physical meeting location. To participate in the virtual annual meeting, Carrols Stockholders will need the 16-digit control number that appears on their proxy card or the instructions that accompanied the proxy materials. If you would like to attend the virtual meeting and you have your control number, please go to www.virtualshareholdermeeting.com/TAST2024SM prior to the start of the meeting to log in. Online access to the webcast will open approximately 15 minutes prior to the start of the meeting to allow time for Carrols Stockholders to log in and test their devices’ audio system.

Q:     Who is entitled to vote at the Special Meeting?

A:     All Carrols Stockholders as of the close of business on [•], which is the Record Date for the Special Meeting, are entitled to vote at the Special Meeting. For each share of Carrols Common Stock that you owned as of the close of business on the Record Date, you will have one vote on each matter submitted for a vote at the Special Meeting. In addition, Series D Convertible Preferred Stock vote with Carrols Common Stock on an as-converted basis. As of the Record Date, there were [•] shares of Carrols Common Stock outstanding and entitled to vote at the Special Meeting (without giving effect to the conversion of the Series D Convertible Preferred Stock). Each share of Series D Convertible Preferred Stock is convertible into 94,145.80 shares of Carrols Common Stock, or an aggregate of 9,414,580 shares of Carrols Common Stock, as of the Record Date.

Q:     What vote is required to approve the Merger Proposal?

A:     Approval of the Merger Proposal requires the affirmative vote of the holders of (1) a majority of the voting power of the outstanding Carrols Capital Stock entitled to vote thereon, voting together as a single class, and (2) a majority of the outstanding Carrols Common Stock held by the Unaffiliated Company Stockholders.

Q:     What vote is required to approve the Compensation Proposal?

A:     Approval of the Compensation Proposal requires the affirmative vote of a majority of the voting power of the Carrols Capital Stock present at the Special Meeting in person or represented by proxy and entitled to vote thereon, voting together as a single class. This vote will be on a non-binding, advisory basis.

Q:     What happens if I fail to vote or abstain from voting on a proposal?

A:     If you (1) are a stockholder of record and fail to submit a signed proxy card, grant a proxy over the internet or by telephone, or vote your shares at the Special Meeting, or if you (2) hold in “street name” and you fail to instruct your broker, bank or other nominee on how to vote your shares, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting, and such failure to vote will have the same effect as voting “AGAINST” the Merger Proposal, but will not have any effect on the outcome of the vote on the Compensation Proposal (assuming a quorum is present).

With respect to the Merger Proposal and the Compensation Proposal, if you abstain from voting, your shares will be counted as present for purposes of determining the presence of a quorum, and such abstention will have the same effect as voting “AGAINST” the proposals.

Q:     How will Carrols’ directors and executive officers and certain other stockholders vote on the Special Meeting proposals?

A:     Carrols’ directors and executive officers have informed Carrols that, as of the date of this proxy statement, they intend to vote all of the shares of Carrols Common Stock owned directly by them in favor of the Merger Proposal and the Compensation Proposal. As of the Record Date, Carrols’ directors and executive officers beneficially owned and were entitled to vote, in the aggregate, approximately [•]% of the voting power of the shares of Carrols Common Stock outstanding as of the Record Date. For more information, see the section of this proxy statement captioned “Special Factors — Intent of Carrols’ Directors and Executive Officers to Vote in Favor of the Merger.”

The Cambridge Stockholders, who beneficially owned approximately [•]% of the outstanding shares of Carrols Common Stock as of the Record Date, entered into the Voting Agreement, pursuant to which the Cambridge Stockholders agreed to vote the Cambridge Shares in favor of the Merger Proposal, subject to the terms and conditions contained in the Voting Agreement. For more information, see the sections of this proxy statement captioned “Special Factors — Intent of Carrols’ Directors and Executive Officers to Vote in Favor of the Merger” and “The Voting Agreement,” as well as the full text of the Voting Agreement, attached as Annex C, which is incorporated by reference in this proxy statement in its entirety.

Q:     What do I need to do now?

A:     We encourage you to read this proxy statement, the annexes to this proxy statement and the documents that Carrols refers to in this proxy statement carefully and consider how the Merger affects you. Then, even if you expect to attend the Special Meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience), or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card), so that your shares can be voted at the Special Meeting. If you hold your shares in “street name,” please refer to the voting instruction form provided by your bank, broker or other nominee for information on how to vote your shares. Please do not send your Certificates with your proxy card.

Q:     What is the Special Committee, and what role did it play in evaluating the Merger?

A:     The Carrols Board formed the Special Committee to evaluate and negotiate a possible sale of Carrols and other strategic alternatives involving Carrols and provide a recommendation to the Carrols Board as to whether or not to approve any such transaction. The Special Committee is comprised solely of members of the Carrols Board who were determined by the Carrols Board to be independent of Parent. As more fully described in the section of this proxy statement captioned “Special Factors — Reasons for the Merger; Recommendation of the Special Committee and the Carrols Board,” the Special Committee evaluated the Merger Agreement, the Voting Agreement and the transactions contemplated by the Merger Agreement, including the Merger, with the assistance of its own independent financial and legal advisors and, where appropriate, Carrols management. At the conclusion of its review, the Special Committee, among other things, unanimously (1) determined that it is fair to and in the best interests of Carrols and Carrols Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated therein, (2) recommended that the Carrols Board approve and adopt the execution and delivery of the Merger Agreement by Carrols, the performance by Carrols of its covenants and other obligations thereunder, and the consummation of the Merger and the transactions contemplated therein upon the terms and conditions set forth therein, in accordance with the DGCL, and determine that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Carrols and the Carrols Stockholders (including the Unaffiliated Company Stockholders), and (3) resolved to recommend to the Carrols Board that it recommend that the Carrols Stockholders adopt the Merger Agreement in accordance with the DGCL. The Special Committee also recommended that the Carrols Board submit the Merger Agreement to the stockholders of Carrols for their adoption and approval and recommend that Carrols Stockholders vote in favor of the adoption of the Merger Agreement and approve the Merger in accordance with the DGCL. The Carrols Board, acting upon the recommendation of the Special Committee, (1) determined that it is fair to and in the best interests of Carrols and Carrols Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated therein, (2) approved and adopted the execution and delivery of the Merger Agreement by Carrols, the performance by Carrols of its covenants and other obligations thereunder, and the consummation of the Merger and the transactions contemplated therein, upon the terms and conditions set forth therein, in accordance with the DGCL, and determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Carrols and the Carrols Stockholders (including the Unaffiliated Company Stockholders), and (3) resolved to recommend that the Carrols Stockholders adopt the Merger Agreement in accordance with the DGCL.

Q:     How does the Carrols Board recommend that I vote?

A:     The Carrols Board, acting upon the unanimous recommendation of the Special Committee, recommends that you vote:

•        “FOR” the approval of the Merger Proposal; and

•        “FOR” the approval of the Compensation Proposal.

You should read the section of this proxy statement captioned “Special Factors — Reasons for the Merger; Recommendation of the Special Committee and the Carrols Board” for a discussion of the factors that the Special Committee and the Carrols Board considered in deciding to recommend and/or approve, as applicable, the approval of the adoption of the Merger Agreement.

Q:     What happens if the Merger is not completed?

A:     If the Merger Agreement is not adopted as a result of the failure to obtain the Requisite Stockholder Approval, or if the Merger is not completed for any other reason, Carrols Stockholders will not receive any payment for their shares of Carrols Common Stock. Instead: (1) Carrols will remain an independent public company, (2) Carrols Common Stock will continue to be listed and traded on NASDAQ and registered under the Exchange Act, and (3) Carrols will continue to file periodic reports with the SEC.

In specified circumstances in which the Merger Agreement is terminated, Carrols has agreed to pay Parent a termination fee. For more information, see the section of this proxy statement captioned “The Merger Agreement — Company Termination Fee.”

Q:     What is the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger?

A:     The compensation that will or may become payable by Carrols to Carrols’ named executive officers in connection with the Merger is certain compensation that is based on or otherwise relates to the Merger and payable to certain of Carrols’ named executive officers pursuant to underlying plans and arrangements. For further information, see the section of this proxy statement captioned “Proposal 2: The Compensation Proposal.”

Q:     Why am I being asked to cast a vote to approve the compensation that will or may become payable by Carrols to its named executive officers in connection with the Merger?

A:     Carrols is required by SEC rules to seek approval, on a non-binding, advisory basis, of compensation that will or may become payable by Carrols to its named executive officers that is based on or otherwise relates to the Merger. Approval of these compensation arrangements is not required to consummate the Merger.

Q:     What will happen if Carrols Stockholders do not approve the Compensation Proposal?

A:     Approval of the compensation that will or may become payable by Carrols to its named executive officers that is based on or otherwise relates to the Merger is not a condition to consummation of the Merger. The vote is an advisory vote and will not be binding on Carrols or Parent. The underlying plans and arrangements providing for such compensation are contractual in nature and are not, by their terms, subject to stockholder approval.

Accordingly, if the Merger Agreement is adopted by Carrols Stockholders and the Merger is consummated, such compensation will or may be paid to Carrols’ named executive officers regardless of the outcome of this advisory vote.

Q:     What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A:     If your shares are registered directly in your name with Carrols’ transfer agent, American Stock Transfer & Trust Company, LLC you are considered, with respect to those shares, to be the “stockholder of record.” If you are a stockholder of record, this proxy statement and your proxy card have been sent directly to you by or on behalf of Carrols. As a stockholder of record, you may attend the Special Meeting and vote your shares at the Special Meeting using the control number on the enclosed proxy card.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of Carrols Common Stock held in “street name.” If you are a beneficial owner of shares of Carrols Common Stock held in “street name,” this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the Special Meeting. However, because you are not the stockholder of record, you may not vote your shares at the Special Meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the Special Meeting.

Q:     If my broker holds my shares in “street name,” will my broker vote my shares for me?

A:     No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the Special Meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares.

If you do not provide your bank, broker or other nominee with voting instructions, your shares will not be voted on any of the proposals, which will have the same effect as if you voted “AGAINST” the Merger Proposal but will have no effect on the outcome of the vote on the Compensation Proposal, except to the extent affecting the obtaining of a quorum at the meeting. If you give voting instructions to your bank, broker or other nominee with respect to one of the proposals, but give no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal.

Q:     How may I vote?

A:     If you are a stockholder of record (that is, if your shares of Carrols Capital Stock are registered in your name with American Stock Transfer & Trust Company, LLC, Carrols’ transfer agent), there are four ways to vote:

•        by signing, dating and returning the enclosed proxy card (a prepaid reply envelope is provided for your convenience);

•        by visiting the internet address on your proxy card;

•        by calling the toll-free (within the United States or Canada) phone number on your proxy card; or

•        by attending the Special Meeting and voting at the Special Meeting using the control number on the enclosed proxy card.

The control number located on your proxy card is designed to verify your identity and allow you to vote your shares of Carrols Capital Stock and to confirm that your voting instructions have been properly recorded when voting electronically over the internet or by telephone. Although there is no charge for voting your shares, if you vote electronically over the internet or by telephone, you may incur costs such as internet access and telephone charges for which you will be responsible.

Even if you plan to attend the Special Meeting, you are strongly encouraged to vote your shares of Carrols Capital Stock by proxy. If you are a stockholder of record or if you provide a “legal proxy” to vote shares that you beneficially own, you may vote your shares of Carrols Common Stock at the Special Meeting even if you have previously voted by proxy. If you attend the Special Meeting and vote at the Special Meeting, your vote will revoke any previously submitted proxy.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the internet or by telephone. To vote over the internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting instruction form provided by your bank, broker or nominee. However, because you are not the stockholder of record, you may not vote your shares at the Special Meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the Special Meeting.

Q:     May I attend the Special Meeting and vote at the Special Meeting?

A:     Yes. You may attend the Special Meeting via live interactive webcast on the internet at www.virtualshareholdermeeting.com/TAST2024SM. You will be able to listen to the Special Meeting live and vote at that time. The Special Meeting will begin at [•], Eastern time, on [•]. Online check-in will begin a few minutes prior to the Special Meeting. You will need the control number found on your proxy card or voting instruction form in order to participate in the Special Meeting (including voting your shares). As the Special Meeting is virtual, there will be no physical meeting location.

Even if you plan to attend the Special Meeting, to ensure that your shares will be represented at the Special Meeting, Carrols encourages you to promptly sign, date and return the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the Special Meeting and vote at the Special Meeting, your vote will revoke any proxy previously submitted.

If, as of the Record Date, you are a beneficial owner of shares held in “street name,” you may not vote your shares at the Special Meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the Special Meeting. Otherwise, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the Special Meeting without your instructions.

Q:     Why did Carrols choose to hold a virtual Special Meeting?

A:     The Carrols Board decided to hold the Special Meeting virtually in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from virtually any location around the world, at no cost. However, you will bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

Q:     What is a proxy?

A:     A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of Carrols Common Stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Carrols Common Stock is called a “proxy card.” You may follow the instructions on the proxy card to designate a proxy by telephone or by the Internet in the same manner as if you had signed, dated and returned a proxy card. David S. Harris and Jared L. Landaw, each with full power of substitution and re-substitution, have been designated as proxy holders for the Special Meeting by the Carrols Board.

Q:     May I change my vote after I have mailed my signed and dated proxy card?

A:     Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:

•        signing another proxy card with a later date and returning it to Carrols prior to the Special Meeting;

•        submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy;

•        delivering a written notice of revocation to Carrols’ Secretary; or

•        attending the Special Meeting and voting at the Special Meeting using the control number on the enclosed proxy card.

If you hold your shares of Carrols Common Stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the Special Meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the Special Meeting.

Q:     If a stockholder gives a proxy, how are the shares voted?

A:     Regardless of the method you choose to grant your proxy, the individuals named on the enclosed proxy card, with full power of substitution and re-substitution, will vote your shares in the way that you direct.

If you sign and date your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted as recommended by the Carrols Board with respect to each proposal. This means that they will be voted: (1) “FOR” the approval of the Merger Proposal and (2) “FOR” the approval of the Compensation Proposal, and in the proxyholders’ discretion with respect to any other business that may properly come before the Special Meeting.

Q:     Should I send in my Carrols Common Stock Certificates now?

A:     No. After the Merger is completed, any holders of physical Certificates will receive a letter of transmittal containing instructions for how to send your Certificates to the Payment Agent in order to receive the appropriate cash payment for the shares of Carrols Common Stock represented by your Certificates. Unless you are seeking appraisal, you should use the letter of transmittal to exchange your Certificates for the cash payment to which you are entitled. Please do not send your Certificates with your proxy card. If you hold your shares of Carrols Common Stock in book-entry form, the Payment Agent will pay you the appropriate portion of the aggregate Per Share Price (subject to any applicable withholding taxes) upon receipt of a customary “agent’s message” (or such other evidence of transfer as the Payment Agent may reasonably request) and any other items specified by the Payment Agent.

Q:     What happens if I sell or transfer my shares of Carrols Common Stock after the Record Date but before the Special Meeting?

A:     The Record Date for the Special Meeting is earlier than the date of the Special Meeting and the expected effective date of the Merger. If you sell or transfer your shares of Carrols Common Stock after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or transfer your shares and each of you notifies Carrols in writing of such special arrangements, you will transfer the right to receive the Per Share Price with respect to such shares, if the Merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the Special Meeting. Even if you sell or transfer your shares of Carrols Common Stock after the Record Date, Carrols encourages you to sign, date and return the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card).

Q:     What should I do if I receive more than one set of voting materials?

A:     Please sign, date and return (or grant your proxy electronically over the internet or by telephone for) each proxy card and voting instruction form that you receive to ensure that all of your shares are voted.

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction forms, if your shares are registered differently or are held in more than one account. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please vote all voting materials that you receive.

Q:     Where can I find the voting results of the Special Meeting?

A:     Carrols intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Special Meeting. All reports that Carrols files with the SEC are publicly available when filed. See the section of this proxy statement captioned “Where You Can Find Additional Information.”

Q:     Will I be subject to U.S. federal income tax upon the exchange of common stock for cash pursuant to the Merger?

A:     The exchange of Carrols Common Stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, a U.S. Holder (as defined in the section of this proxy statement captioned “Special Factors — Certain U.S. Federal Income Tax Consequences of the Merger”) who exchanges shares of Carrols Common Stock for cash in the Merger will generally recognize gain or loss in an amount equal to the difference, if any, between the amount of cash that such U.S. Holder receives with respect to such shares and the U.S. Holder’s adjusted tax basis in such shares. If you are a Non-U.S. Holder (as defined in the section of this proxy statement captioned “Special Factors — Certain U.S. Federal Income Tax Consequences of the Merger”), the Merger will generally not result in U.S. federal income tax to you unless you have certain connections to the United States.

For a more complete description of the U.S. federal income tax consequences of the Merger, see the section of this proxy statement captioned “Special Factors — Certain U.S. Federal Income Tax Consequences of the Merger.” This description does not address any non-income tax consequences, nor does it address state, local, non-U.S. or other tax consequences or the consequences to holders who are subject to special treatment under U.S. federal income tax law. Consequently, you are urged to consult your tax advisor to determine the particular tax consequences to you of the Merger.

Q:     When do you expect the Merger to be completed?

A:     Carrols currently expects to complete the Merger in the second quarter of 2024. However, the exact timing of completion of the Merger, if at all, cannot be predicted because the Merger is subject to the closing conditions specified in the Merger Agreement, many of which are outside of Carrols’ control.

Q:     What governmental and regulatory approvals are required?

A:     Under the terms of the Merger Agreement, the Merger cannot be completed until the waiting period applicable to the Merger under the HSR Act has expired or been terminated. The waiting period under the HSR Act expired at 11:59 p.m. Eastern time on February 29, 2024.

Q:     Am I entitled to appraisal rights under the DGCL?

A:     If the Merger is consummated and certain conditions set forth in Section 262(g) of the DGCL are satisfied, holders of record and beneficial owners of Carrols Common Stock who (1) do not vote in favor of the Merger Proposal (whether by voting against the Merger Proposal, abstaining or otherwise not voting with respect to the Merger Proposal), (2) continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) their applicable shares of Carrols Common Stock through the effective date of the Merger, (3) properly demand appraisal of their applicable shares, (4) meet certain statutory requirements as described in this proxy statement, and (5) do not withdraw their demands or otherwise lose their rights to appraisal, will be entitled to seek appraisal of their shares in connection with the Merger under Section 262 of the DGCL. This means that such holders of record and beneficial owners will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Carrols Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the Merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to each person seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for perfecting and exercising appraisal rights are described in additional detail in the section of

this proxy statement captioned “Appraisal Rights,” which description is qualified in its entirety by Section 262 of the DGCL regarding appraisal rights, which may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262.

Q:     Do any of Carrols’ directors or officers have interests in the Merger that may differ from those of Carrols Stockholders generally?

A:     Yes. In considering the recommendations of the Special Committee and the Carrols Board with respect to the Merger, you should be aware that Carrols’ directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of stockholders more generally. The Special Committee and the Carrols Board were aware of and considered these interests to the extent that they existed at the time, among other matters. For more information, see the section of this proxy statement captioned “Special Factors — Interests of Carrols’ Directors and Executive Officers in the Merger.”

Q:     Who can help answer my questions?

A:     If you have any questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of the accompanying proxy statement or need help submitting your proxy or voting your shares of Carrols Common Stock, please contact Carrols’ proxy solicitor:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders call: (877) 717-3922 (toll-free from the U.S. and Canada) or
+1 (412) 232-3651 (from other countries)
Banks and brokers call collect: (212) 750-5833

SPECIAL FACTORS

Background of the Merger

The following chronology summarizes the key meetings and events that led to and immediately followed the signing of the Merger Agreement. This chronology does not purport to catalogue every conversation of or among the members of the Carrols Board, the members of the Special Committee, the representatives of Carrols or the Special Committee, or other parties, including Parent.

The Carrols Board and senior management regularly evaluate Carrols’ strategic direction, ongoing business plans, performance and prospects in the context of the restaurant and franchising industry with a view toward strengthening Carrols’ business and financial performance and enhancing long-term stockholder value.

As part of its regular evaluation, the Carrols Board takes into consideration Carrols’ relationship with Parent, including the fact that (a) Carrols is party to numerous franchise agreements with Parent’s affiliates pursuant to which Carrols operates its Burger King and Popeyes restaurants, (b) such franchise agreements, among other things, require Carrols to make capital expenditures to remodel restaurant locations and provide Parent’s affiliates party to such agreements a consent right, as franchisor, to the acquisition of additional Burger King or Popeyes franchise locations by Carrols, and (c) there is a possibility that Parent may not provide Carrols with consent to acquire additional restaurants, which could limit Carrols’ growth prospects. The Board has also considered that the BKC Stockholders have the right to elect two members of the Carrols Board as Class D members, who are currently Matthew Dunnigan, Chief Financial Officer of Parent, and Tom Curtis, President of BKC, (the “Class D Directors”), and that the BKC Stockholders have consent rights over certain actions taken by Carrols under the Series D Certificate of Designation, including the Series D Consent Right (as defined in the section entitled “Important Information Regarding Carrols — Transactions in Carrols Common Stock) and a consent right over entry by Carrols into any line of business other than ownership of Burger King and Popeyes franchise locations (see “Important Information Regarding Carrols — Security Ownership of Certain Beneficial Owners and Management”). Given the relationship between Carrols and Parent as franchisee and franchisor, respectively, members of Carrols senior management interact with representatives of Parent on a regular basis in the ordinary course of business.

Beginning in April 2023, and concluding in November 2023, Carrols and Parent negotiated an agreement related to the Burger King Reclaim the Flame program, pursuant to which Carrols agreed to remodel sixty-four (64) restaurants between 2023 and 2024 and BKC agreed to contribute toward the cost of remodeling the restaurants, as further described under “Transactions by Carrols and the Buyer Parties in the Last Two Years” (the “Reclaim the Flame Agreement”).

In late September 2023, members of the Carrols Board began conversations with potential financial advisors in connection with an exploration of Carrols’ potential strategic alternatives, including a potential sale of Carrols. A subset of the Carrols Board subsequently met with and interviewed potential financial advisors. Prior to the first meeting with potential financial advisors, the Class D Directors were informed of the process and requested to participate. At that time, the Class D Directors informed the Carrols Board that while Parent evaluates its investment in Carrols from time to time, Parent had not determined what it would do in connection with a potential acquisition of Carrols by a third party, but Parent was not at that time interested in pursuing an acquisition of the company. During the months of September and October of 2023, Carrols entered into confidentiality agreements (“NDAs”) with six (6) different potential financial advisors, which included two investment banks recommended by the Class D Directors. Each of the financial advisors presented their initial assessment of Carrols’ strategic alternatives, including a potential sale of Carrols, based on their review of Carrols’ public filings and information provided by Carrols.

During the course of the fall of 2023, Parent monitored and evaluated Carrols’ progress in implementing the refreshing and remodeling of its restaurants under the Reclaim the Flame program, in light of Parent’s view that remodeling and upgrading existing restaurants was critical for maximizing the value of Carrols’ business. During this time, the Class D Directors discussed with other members of the Carrols Board Parent’s view that remodeling and upgrading Carrols’ existing restaurant portfolio should be Carrols’ priority use of capital in the near term, rather than large acquisitions of new restaurants, but that Parent was prepared to consider any request for its consent to the acquisition of small numbers of restaurants on a case-by-case basis.

Because Parent believed that maximizing the long-term value of Carrols and the Burger King brand as a whole would require more rapid refreshing and remodeling of restaurants than the Company was then prepared to implement, and that reinvestment in the business should take priority over other uses of cash at that time, Parent’s representatives informed representatives of Carrols that Parent planned to evaluate whether Parent was interested in pursuing a potential acquisition of Carrols. As a result, the Carrols Board was informed that the Class D Directors would refrain from participating in or attending any discussions by the Carrols Board of potential strategic alternatives, pending Parent’s completion of this evaluation.

On November 6, 2023, the Carrols Board, other than the Class D Directors (who refrained from participating in or attending the related discussion), determined not to move forward with retaining a financial advisor or exploring a potential sale of Carrols at that time. In making this decision, the Carrols Board considered, among other things, the belief, based in part on their conversations with prospective financial advisors, that there would likely be few, if any, potential buyers for Carrols at that time due to Carrols’ ongoing and substantial remodel investment requirements and Parent’s contractual consent rights over the acquisition of additional Burger King or Popeyes franchise locations and restaurants outside the Burger King or Popeyes brands going forward. The Carrols Board also believed it could be beneficial to assess the impact of the anticipated capital expenditures under the Reclaim the Flame Agreement, including its return on investment, and Carrols’ recent strong financial performance, before making a decision regarding whether to retain a financial advisor.

On November 9, 2023, Carrols announced its financial results for the third quarter of 2023 as well as its entry into the Reclaim the Flame Agreement.

On December 3, 2023, David Harris, Chairman of the Carrols Board, and Deborah Derby, President and Chief Executive Officer of Carrols and a member of the Carrols Board, received a letter from Parent (the “December 3 Letter”) stating that Parent was “exploring a possible proposal to combine” Carrols and Parent. The December 3 Letter included a request that Carrols form a special committee of independent directors to consider and oversee a process for evaluating a potential transaction, noting that Parent would “only undertake a transaction if it [was] conditioned on the approval of a special committee of independent directors and a ‘majority-of-the-minority’ vote of unaffiliated shareholders.” Additionally, Parent proposed that Parent and Carrols execute an NDA to facilitate the provision of due diligence information to Parent. The December 3 Letter further stated that there were no assurances that Parent would make any offers or proposals in respect of a potential transaction with Carrols.

On December 5, 2023, in furtherance of the December 3 Letter, Joshua Kobza, Chief Executive Officer of Parent, called Ms. Derby to inform her that Parent planned to send Carrols a proposed form of NDA and a preliminary due diligence request list.

Following the call between Ms. Derby and Mr. Kobza on December 5, 2023, Parent sent Carrols a proposed NDA and an initial due diligence request list. No action was taken by Carrols with respect to the NDA or the proposed due diligence request list, pending instructions from a properly formed and authorized special committee of independent directors.

Also on December 5, 2023, Matthew Perelman and Alexander Sloane, members of the Carrols Board and managing principals of Cambridge Franchise Partners, LLC (“CFP”) (which in turn is the sole member and manager of Cambridge Holdings, Carrols’ largest stockholder (see “Important Information Regarding Carrols — Security Ownership of Certain Beneficial Owners and Management”)) informed Mr. Harris that a meeting between Messrs. Perelman and Sloane and Patrick Doyle, Executive Chairman of Parent, had been scheduled for December 6, 2023 prior to the receipt of the December 3 Letter. Given that such parties had met several times in the past and discussions were typically focused on general industry matters, Messrs. Perelman and Sloane determined to not cancel the meeting in the interest of continuing a good working relationship between Parent, Carrols and CFP if no transaction were to occur; however, they confirmed with Mr. Harris that they would not have any discussion at the meeting regarding any potential transaction between Carrols and Parent.

On December 6, 2023, Messrs. Perelman and Sloane attended the previously scheduled meeting with Mr. Doyle at the offices of Garnett Station Partners. Mr. Kobza attended for a portion of the meeting via videoconference. At the outset of the meeting, Messrs. Perelman and Sloane acknowledged that the Carrols Board was in receipt of the December 3 Letter and stated that they would not discuss the December 3 Letter or any potential transaction between Carrols and Parent. Topics of discussion during the meeting were limited to the general performance of the Burger King system in the United States and other industry matters. There was no further discussion of the December 3 Letter or of any potential transaction between Carrols and Parent.

On December 10, 2023, the Carrols Board held a special meeting, with members of the Carrols senior management team and representatives of Milbank LLP (“Milbank”), anticipated counsel to a special committee of the Carrols Board, in attendance, to consider and approve the formation of a special committee of independent and disinterested directors in connection with the December 3 Letter and the possibility that Parent would submit a proposal for a potential transaction with Carrols. Mr. Dunnigan and Mr. Curtis, the Class D Directors, did not attend the meeting and thereafter refrained from participating in the remainder of the transaction process. The Carrols Board discussed the December 3 Letter and determined that any future engagement or negotiation with Parent in connection with a potential transaction with Parent should take place exclusively between Parent and a special committee of independent and disinterested directors of the Carrols Board. The representatives of Milbank discussed with the Carrols Board its fiduciary duties in connection with the review and evaluation of a potential transaction with Parent as well as the formation of a special committee empowered to negotiate, recommend or reject any potential transaction on behalf of Carrols. The representatives of Milbank then discussed with the Carrols Board information relevant to assessing whether the proposed members of such a committee (Mr. Harris, Ms. Craven, Mr. Hyatt and Mr. Perelman) were independent and disinterested with respect to a potential transaction. In assessing the foregoing with respect to Mr. Perelman, it was discussed that he is a managing principal of CFP, which is the sole member and manager of Cambridge Holdings (together with CFP, the “Cambridge Entities”), Carrols’ largest stockholder, and that the Cambridge Entities had recently sold Carrols Common Stock pursuant to a forward confirmation agreement (see “Important Information Regarding Carrols — Security Ownership of Certain Beneficial Owners and Management”). Mr. Perelman confirmed that he/Cambridge would not have interests in a potential transaction that differed from those of other stockholders of Carrols. Following discussion of these considerations with representatives of Milbank and after noting that each of the independent directors of the Carrols Board had been previously found to be independent as that term is defined by applicable standards promulgated by Nasdaq and/or the SEC, the Carrols Board determined that each of the proposed members of the special committee was independent from Parent and disinterested with respect to a potential transaction. The Carrols Board then voted to form a special committee (the “Special Committee”), comprised of Mr. Harris, Ms. Craven, Mr. Hyatt and Mr. Perelman, to evaluate and negotiate a possible transaction involving Carrols and other strategic alternatives and provide a recommendation to the Carrols Board as to whether or not to approve any such transaction. The Carrols Board adopted the charter of the Special Committee, which appointed Mr. Harris as the chairperson of the Special Committee and provided, among other matters, that the Special Committee would be empowered to retain its own independent financial and legal advisors and to definitively reject any transaction on behalf of Carrols and the Carrols Board. Ms. Derby recused herself from each vote.

Also on December 10, 2023, immediately following adjournment of the special meeting of the Carrols Board, the Special Committee held its first meeting, with representatives of Milbank in attendance. The representatives of Milbank provided an overview of the purpose and authority of and best practices for independent special committees as well as enhanced disclosure obligations under Rule 13e-3 that would apply to Carrols in a potential transaction with Parent. After confirming that Milbank was disinterested in any potential transaction with Parent, the Special Committee engaged Milbank as its counsel and discussed potential financial advisors to be engaged by the Special Committee. After discussion, the Special Committee determined that there were no additional financial advisors beyond the six investment banks the subset of the Carrols Board met with in the fall of 2023 with superior expertise in the franchise space. The Special Committee further determined that, of the six investment banks previously met, two were best positioned to provide advice on a potential sale of Carrols based on the quality of their presentations in the fall of 2023, as well as their reputation, experience and knowledge of the franchise space. Among them was Jefferies, which was not one of the investment banks recommended by the Class D Directors in the fall of 2023. The Special Committee noted that the Class D Directors had participated in the initial meetings in the fall of 2023 with all of these potential financial advisors. However, after further discussion, the Special Committee concluded that, given the significant changes in Carrols’ stock price, earnings and outlook since the fall of 2023, as well as the fact that at the time of the fall 2023 meetings the banks were not provided with a copy of Carrols’ long term business plan, Parent would not have an advantage by virtue of the fact that its two director designees had attended the meetings with those financial advisors in the fall of 2023. Further, it was noted that the Carrols Board, other than the Class D Directors (who refrained from participating or attending), had determined that it would not move forward with any transaction at the time following those earlier meetings. At the close of the meeting, the Special Committee authorized Messrs. Harris and Perelman to reach out to the two identified financial advisors to determine if either had conflicts with Parent and to discuss a possible engagement. The Special Committee then authorized Milbank to work with management to finalize the proposed NDA and procedures for Parent to conduct diligence.

On December 11, 2023, representatives of Milbank shared a revised draft of the NDA with representatives of Paul, Weiss, Rifkind, Wharton and Garrison LLP, counsel to Parent (“Paul Weiss”). Milbank’s draft contained, among other provisions, a standstill provision and a requirement that any requests for information from Carrols be directed to the Special Committee or persons designated in writing by the Special Committee.

Later on December 11, 2023, Mr. Harris and members of Carrols management held a call with representatives of Parent. During this call, the parties discussed the proposed scope of due diligence materials to be provided to Parent following the execution of an NDA between Carrols and Parent. No terms of a potential transaction were discussed.

Representatives of Milbank and representatives of Paul Weiss discussed certain open items in the NDA on December 12, 2023, including Parent’s rejection of any standstill.

On December 15, 2023, the Carrols Board held a special meeting, with members of Carrols management and representatives of Milbank in attendance. The Class D Directors, Mr. Dunnigan and Mr. Curtis did not attend this meeting. During the meeting, the Carrols Board discussed appointing Mr. Sloane and John Smith, both independent directors of the Carrols Board, to the Special Committee. In particular, the Carrols Board noted that Mr. Smith’s operating experience and business expertise in the franchising space and Mr. Sloane’s experience with and knowledge relating to similar transactions, including transactions in the restaurant industry, would enrich the Special Committee’s evaluation process. The Carrols Board also noted that having all of the independent directors of Carrols serve on the Special Committee would improve the efficiency of the Special Committee’s evaluation process. Representatives of Milbank then provided an overview of the purpose and authority of the Special Committee and discussed with the Carrols Board information relevant to assessing whether Messrs. Sloane and Smith were independent and disinterested with respect to a potential transaction. In assessing the foregoing with respect to Mr. Sloane, it was discussed that he is a managing principal of CFP, which is the sole member and manager of Cambridge Holdings, Carrols’ largest stockholder, and that the Cambridge Entities had recently sold Carrols Common Stock pursuant to a forward confirmation agreement (see “Important Information Regarding Carrols — Security Ownership of Certain Beneficial Owners and Management”). Mr. Sloane confirmed that he/Cambridge would not have interests in a potential transaction that differed from those of other stockholders of Carrols. Following discussion of these considerations with representatives of Milbank and after determining that Mr. Sloane and Mr. Smith were independent from Parent and disinterested with respect to a potential transaction, the Carrols Board voted to appoint Mr. Sloane and Mr. Smith to the Special Committee. Ms. Derby recused herself from voting.

Later on December 15, 2023, the Special Committee held a meeting, with representatives of Milbank in attendance. The Special Committee discussed the NDA being negotiated with Parent in connection with the December 3 Letter, including the fact that Parent indicated it was unwilling to agree to a standstill provision in the NDA. Messrs. Harris and Perelman provided an update on the outreach to the two identified potential financial advisors and reported that one of the financial advisors they contacted disclosed having significant ties to Parent, but that representatives of Jefferies had stated that Jefferies had no significant current or prior engagements with Parent. Following discussion, the Special Committee determined to ask representatives of Jefferies to make a presentation to the Special Committee at a subsequent meeting to provide an overview of their services. From this date until the execution of the Merger Agreement, representatives of Jefferies were provided with access to Carrols’ information and management as appropriate to complete their diligence of Carrols and were given the Company Projections to use in their analysis.

On December 16 2023, Mr. Harris had a call with Mr. Kobza to discuss the process and timing for Parent’s due diligence review. Mr. Harris relayed that the Special Committee had been formed and was working to formally engage a financial advisor, and that this financial advisor would also require some time to complete its work for the Special Committee. No terms of a potential transaction were discussed.

On December 18, 2023, Carrols entered into an NDA with Parent to facilitate the provision of certain confidential and proprietary information as part of Parent’s due diligence review. The NDA did not contain a standstill provision. Following execution of the NDA, Parent was granted access to an electronic data room (the “VDR”) containing certain confidential due diligence materials on December 20, 2023. From this date until execution of the Merger Agreement, Parent continued to conduct due diligence on the Company.

On December 21, 2023, the Special Committee held a meeting, with representatives of Milbank and Jefferies in attendance. Representatives of Jefferies provided an overview of the services Jefferies could offer as financial advisor to the Special Committee in connection with a potential transaction with Parent. Representatives of Jefferies also provided customary relationship disclosures to the Special Committee, which included disclosure of the open market sale agreement between Jefferies, Carrols and Cambridge Holdings, pursuant to which Cambridge Holdings may sell shares of Carrols Common Stock from time to time and enter into forward purchase transactions with Jefferies in Jefferies’ capacity as forward purchaser. After answering questions from the Special Committee, the representatives of Jefferies exited the meeting. Following further discussion among the Special Committee, the Special Committee approved the engagement of Jefferies as its independent financial advisor subject to negotiation of acceptable terms of engagement and directed Messrs. Harris and Perelman to work with Milbank to negotiate an engagement letter with Jefferies on behalf of the Special Committee. The Special Committee selected Jefferies based on its reputation, experience and knowledge of the franchise industry as well as its experience with public M&A transactions.

On December 27, 2023, the Special Committee held a meeting, with representatives of Milbank in attendance. Messrs. Harris and Perelman and representatives of Milbank discussed the proposed terms of the engagement letter with Jefferies. After discussion of the remaining open points, the Special Committee directed Messrs. Harris and Perelman, working with Milbank, to finalize the engagement letter on terms consistent with the Special Committee’s discussions. From this date until its execution on January 8, 2024, the representatives of the Special Committee with the assistance of Milbank negotiated the engagement letter with representatives of Jefferies.

On December 29, 2023, Mr. Harris had a call with Mr. Kobza to discuss the ongoing due diligence process. Mr. Kobza noted that Parent’s due diligence review continued apace, and that Parent would potentially be in a position to determine whether Parent would be interested in pursuing a potential acquisition of Carrols as early as the first week of January. Mr. Harris indicated that the Special Committee was continuing to work to formally engage a financial advisor. No terms of a potential transaction were discussed. Following this conversation, Mr. Harris updated members of the Special Committee on this discussion and noted that, since Carrols expected to announce sales results for the fourth quarter and full year of 2023 in early January, if the Special Committee was going to engage with Parent regarding a potential transaction, it might be in Carrols’ best interests to do so following that announcement.

On January 5, 2024, Mr. Harris had another call with Mr. Kobza to discuss Parent’s ongoing due diligence process. Mr. Kobza stated that Parent’s review of the information provided in response to its higher-priority due diligence requests was substantially complete, and Parent was continuing to evaluate whether Parent would be interested in pursuing a potential transaction involving Carrols. Mr. Harris noted that the Special Committee was still in the process of formally engaging Jefferies as its financial advisor and anticipated Jefferies being up to speed the following week.

On January 8, 2024, Carrols reported its preliminary sales results for the fourth quarter and full year of 2023. Carrols outperformed its previously announced guidance for the fourth quarter and full year of 2023, with Burger King comparable restaurant sales growth of 7.2% and Popeye’s comparable restaurant sales growth of 7.6% in the fourth quarter.

On January 9, 2024, representatives of a financial sponsor contacted Mr. Sloane and expressed preliminary interest in exploring a transaction involving Carrols. After discussion with members of the Special Committee, Mr. Sloane indicated to the representatives of the financial sponsor that, if the financial sponsor was interested in exploring further with Carrols, the financial sponsor could enter into an NDA to access additional information about Carrols. Representatives of the financial sponsor did not re-engage with Mr. Sloane regarding Carrols and did not request to sign an NDA.

On January 11, 2024, Mr. Harris had a call with Mr. Kobza during which Mr. Kobza indicated an offer letter was being sent by Parent to Mr. Harris and Ms. Derby. Later the same day, Mr. Harris and Ms. Derby received a letter from Parent (the “January 11 Letter”) proposing to acquire all of the issued and outstanding shares of Carrols capital stock not held by Parent or its controlled affiliates at a price of $8.75 in cash per share, such transaction to be “irrevocably conditioned on both (i) the approval of a Special Committee of independent directors of Carrols, and (ii) the affirmative vote of the holders of Carrols’ [C]ommon [S]tock not affiliated with Parent (i.e., a ‘majority-of-the-minority’ vote).”. The letter noted that Parent had substantially completed due diligence prior to making its offer and, further, that the offer would expire if the parties did not reach a definitive agreement

by 5 p.m. Eastern Time on January 16, 2024. The proposed $8.75 per share consideration represented a premium of approximately 6% over the $8.24 closing stock price of Carrols Common Stock on January 10, 2024 and a premium of approximately 13% over the thirty (30) trading-day volume weight average price (“VWAP”) as of January 10, 2024 of $7.74. The January 11 Letter noted that the proposed price also represented a 23% premium to the ninety (90) trading-day VWAP as of January 10, 2024 of $7.11 and was higher than the price per share at any point in the last four years.

Later on January 11, 2024, representatives of Paul Weiss sent to representatives of Milbank a draft Merger Agreement, an outline of draft disclosure schedules and a draft voting agreement that Parent proposed to enter into with Cambridge in connection with the proposed transaction.

On January 11, 2024, the Special Committee held a meeting, with representatives of Milbank and Jefferies in attendance. Representatives of Jefferies reviewed with the Special Committee a summary of the proposed transaction terms and Jefferies’ preliminary financial analyses of Carrols. The Special Committee discussed the analysis, including sensitivities relating to key assumptions relevant to Carrols’ valuation. The Special Committee noted that it believed the then current price of Carrols Common Stock, rather than an average of the historical trading prices, was a more relevant reference point for assessing a potential M&A premium. Representatives of Milbank noted that they had received earlier in the day a draft merger agreement from Paul Weiss, as well as a proposed form of voting agreement to be entered into by affiliates of Cambridge in connection with the proposed transaction. Representatives of Milbank noted that the draft merger agreement did not contain a go-shop provision. The Special Committee also discussed Carrols’ alternatives with representatives of Jefferies and Milbank. As part of this discussion the Special Committee discussed, among other things, the challenges of pursuing an alternative sale transaction in light of Parent’s Series D Consent Right and the extensive franchisee/franchisor relationship with Parent. The Special Committee also discussed Carrols’ recent strong performance and the challenges of Carrols continuing to operate on a standalone basis, including the capital expenditures required under the Reclaim the Flame Agreement and the requirement for Carrols to obtain consent from Parent to acquire additional Burger King or Popeyes franchise locations or engage in another line of business. Following further discussion, the Special Committee directed representatives of Jefferies to communicate to Parent that the proposed price of $8.75 per share was not of interest to the Special Committee without offering a counterproposal.

Later on January 11, 2024, representatives of Jefferies, as directed by the Special Committee, had a call with representatives of Parent and informed them that, while the Special Committee might be open to a potential transaction, the proposed price of $8.75 per share was not of interest to the Special Committee.

On January 12, 2024, representatives of Parent reached out to representatives of Jefferies to discuss price, noting that Parent was analyzing the price of Carrols Common Stock on the basis of an average historical trading price. Representatives of Jefferies declined to provide specific pricing guidance but indicated that the Special Committee believed the current price of Carrols Common Stock, rather than average historical trading prices, was a more relevant reference point for assessing a potential M&A premium. Representatives of Parent advised the representatives of Jefferies that Parent was willing to consider a higher purchase price than the proposed price of $8.75 per share, but that Parent would not offer a price per share in the range of $10.00 or more.

On January 13, 2024, Mr. Harris and Ms. Derby received a letter from Parent (the “January 13 Letter”) including a revised offer to acquire all of the issued and outstanding shares of Carrols capital stock not already held by Parent or its controlled affiliates for $9.20 in cash per share, which represented a premium of approximately 9% over the $8.42 closing stock price of Carrols Common Stock on January 12, 2024 and a premium of approximately 18% over the thirty (30) trading-day VWAP as of January 12, 2024 of $7.80. The January 13 Letter also noted that the proposed price represented a 29% premium to the ninety (90) trading-day VWAP as of January 12, 2024 of $7.13. Later that same day, the Special Committee held a meeting, in which representatives of Jefferies and Milbank participated. Representatives of Jefferies communicated the January 13 Letter and provided an overview of their prior discussions with the representatives of Parent. The Special Committee and its advisors then discussed Carrols’ alternatives and other factors deemed relevant by the Special Committee, including Carrols’ recent strong financial performance, the lack of other likely buyers and the premium represented by the proposed merger consideration of $9.20 per share. The Special Committee also discussed its belief, based on Parent’s previously expressed view that Carrols’ priority use of capital in the near term should be the remodeling and upgrading of Carrols’ existing restaurant portfolio, that Parent was unlikely to consent to a significant number of acquisitions of additional Burger King or Popeyes franchise locations, which the Special Committee believed would likely limit Carrols’ growth

prospects. The representatives of Jefferies then exited the meeting. After further discussion, the Special Committee determined to direct representatives of Jefferies to propose a price of $9.80 in cash per share to Parent. The Special Committee then discussed with the representatives of Milbank certain key issues in the draft merger agreement received from Paul Weiss, including the lack of a go-shop provision that would permit the Special Committee to solicit alternative offers to acquire Carrols, the size of the proposed termination fee and the absence of restrictions on Parent’s right to make additional acquisitions during the pendency of the proposed transaction that could adversely affect obtaining antitrust approval. After asking questions of the representatives of Milbank, the Special Committee directed Milbank to revise the Merger Agreement to include a go-shop provision, a waiver of Parent’s Series D Consent Right and consent rights under other agreements in connection with an alternative acquisition agreement for a Superior Proposal, an ability for Carrols to pay its regular quarterly dividend in a manner consistent with Carrols’ past practice between signing and closing of the transaction without Parent’s consent, and a requirement that Parent not make acquisitions between signing and closing that could adversely affect obtaining antitrust approval.

Following the Special Committee meeting held on January 13, 2024, representatives of Jefferies, as directed by the Special Committee, communicated to Parent the counterproposal of $9.80 in cash per share, which represented a premium of approximately 16% over the $8.42 closing stock price of Carrols Common Stock on January 12, 2024 and a premium of approximately 26% over the thirty (30) trading-day VWAP as of January 12, 2024 of $7.80.

On the evening of January 13, 2024, Parent communicated to representatives of Jefferies that in order to consider the requested further increase in price, Parent needed an understanding of open issues on the draft merger agreement. A call was set up between representatives of Milbank and Paul Weiss for later in the evening on January 13, 2024.

Later in the evening on January 13, 2024, representatives of Milbank held a call with representatives of Paul Weiss to discuss the draft merger agreement received from Paul Weiss, including the lack of a go-shop and the absence of restrictions on Parent’s right to make additional acquisitions during the pendency of this proposed transaction that could adversely affect obtaining antitrust approval.

On January 14, 2024, representatives of Parent contacted representatives of Jefferies and indicated that following a constructive call between Milbank and Paul Weiss regarding the terms of the merger agreement, Parent was willing to move higher on price and indicated Parent would provide a revised offer and that the price indicated in that revised offer letter would be Parent’s best and final offer.

Later on January 14, 2024, the Special Committee received a revised offer letter (the “January 14 Letter”) from Parent proposing a price of $9.55 in cash per share which represented a premium of approximately 13% over the $8.42 closing stock price of Carrols Common Stock on January 12, 2024 and a premium of approximately 23% over the thirty (30) trading-day VWAP as of January 12, 2024 of $7.80. The January 14 Letter also noted that the proposed price represented a 34% premium to the ninety (90) trading-day VWAP, as of January 12, 2024 of $7.13. The Special Committee then held a meeting that same day to discuss the latest offer, with representatives of Milbank and Jefferies in attendance. Representatives of Jefferies updated the Special Committee on their January 13 conversation with representatives of Parent. Representatives of Milbank then provided an overview of the revised draft of the merger agreement that was planned to be shared with Paul Weiss, noting in particular that the draft would include a 45-day go-shop period, a 3% termination fee, a waiver of Parent’s Series D Consent Right and consent rights under other agreements in connection with an alternative acquisition agreement for a Superior Proposal and restrictions on Parent’s right to make additional acquisitions during the pendency of this proposed transaction that could adversely affect obtaining antitrust approval. The Special Committee also discussed Carrols’ alternatives and other relevant factors previously discussed in light of Parent’s latest offer as well as the implied premium on the latest closing stock price of Carrols Common Stock. Following discussion, the Special Committee directed representatives of Jefferies to propose to Parent a price of $9.65 per share. Mr. Sloane and Mr. Perelman then exited the meeting, and the remaining members of the Special Committee and representatives of Milbank discussed the draft voting agreement received from Parent, as revised by Kirkland & Ellis LLP, counsel to Mr. Perelman and Mr. Sloane, that would require Mr. Perelman, Mr. Sloane and Cambridge Holdings, as shareholders of Carrols, to vote for the adoption of the merger agreement with Parent (see Summary Term Sheet — The Voting Agreement). After discussion, the Special Committee instructed Milbank to request an additional change to make the voting agreement terminate upon a change of recommendation with respect to the transaction by the Carrols Board or the Special Committee.

Following the Special Committee meeting on January 14, 2024, Milbank shared a revised draft of the merger agreement with Paul Weiss that, as directed by the Special Committee, included a 45-day go-shop period, a 3% termination fee, a waiver of Parent’s Series D Consent Right and consent rights under other agreements in connection with an alternative acquisition agreement for a Superior Proposal, and a covenant restricting Parent’s right to make additional acquisitions during the pendency of this proposed transaction that could adversely affect obtaining antitrust approval.

On January 14, 2024, representatives of Jefferies, at the direction of the Special Committee, communicated to Parent a counterproposal of $9.65 in cash per share of Carrols capital stock. The representatives of Parent reiterated that Parent’s offer of $9.55 in cash per share as communicated to the Special Committee in the January 14 Letter was Parent’s best and final offer.

On January 15, 2024, Paul Weiss shared a revised draft of the Merger Agreement with Milbank, including agreement to a 30-day go-shop and the 3% termination fee but rejecting the automatic waiver of the Series D Consent Right and consent rights under other agreements in connection with an alternative acquisition agreement for a superior proposal and any restriction on Parent’s right to make acquisitions between signing and closing. The revised merger agreement also restricted Carrols from paying its regular quarterly dividend between signing and closing of the transaction without Parent’s consent. Representatives of Milbank then held a call with Paul Weiss that same day to discuss the foregoing open issues.

Later on January 15, 2024, representatives of Milbank held a call with representatives of the Special Committee and Jefferies to discuss the revised merger agreement, including the go-shop period, Parent’s position that Carrols be restricted from paying its regular quarterly dividend between signing and closing without Parent’s consent and the importance of restrictions on Parents right to make acquisitions that could have adverse effects on antitrust approval. The representatives of the Special Committee directed representatives of Jefferies to immediately contact representatives of Parent to emphasize the importance of these points. Representatives of Jefferies, as directed by the Special Committee, then raised these points with representatives of Parent.

In the evening of January 15, 2024, the Special Committee held a meeting, with representatives of Milbank and Jefferies in attendance. The representatives of Milbank provided an update on the merger agreement negotiations, including that Parent, after discussions between representatives of Jefferies and Parent, had conceded that Carrols could continue to pay its regular quarterly dividend between signing and closing of the transaction. The representatives of Milbank noted that the remaining open items in the merger agreement included Parent’s refusal to waive its Series D Consent Right and consent rights under other agreements in connection with an alternative acquisition agreement for a Superior Proposal, and its rejection of any restriction on its ability to enter into any transactions between signing and closing that could adversely affect its ability to obtain antitrust approval. During the meeting, Milbank received a proposal from Paul Weiss with respect to Parent’s antitrust efforts. The Special Committee ended the meeting so that Milbank could discuss the proposal with Paul Weiss. The Special Committee also authorized Mr. Perelman to discuss the proposal with representatives of Parent.

Following the adjournment of the Special Committee meeting, representatives of Paul Weiss and Milbank discussed the scope of the proposed restriction on Parent’s activity between signing and closing and, concurrently, representatives of Parent spoke about the proposed scope of the restriction to Mr. Perelman, as a representative of the Special Committee.

Following the foregoing discussions, the Special Committee meeting was reconvened on January 15, 2024, with representatives of Milbank and Jefferies in attendance. Representatives of Milbank explained that Parent had agreed, except for certain limited exceptions (including with respect to other Burger King franchises), that they would not, between signing and closing, enter into any acquisitions of other burger restaurant brands that require HSR filings. Following a discussion with the representatives of Milbank, the Special Committee agreed to Parent’s proposed language. The Special Committee also considered that even if Carrols had sought to terminate discussions with Parent and engage in an auction process, Parent would retain its consent rights, and determined that Parent’s consistent refusal to waive its Series D Consent Right and consent rights under other agreements in connection with an alternative acquisition agreement for a superior proposal was not an issue that should prevent Parent and the Special Committee from reaching an agreement that provided a significant premium to Carrols Stockholders and that the remaining material open items in the Merger Agreement were substantially resolved. Thereafter, at the request of the Special Committee, representatives of Jefferies reviewed with the Special Committee Jefferies’ financial analysis of the proposed transaction and rendered Jefferies’ opinion to the Special Committee to the

effect that, as of January 15, 2024, and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Per Share Price to be received by the Unaffiliated Company Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. For more information, see “The Merger — Opinion of the Special Committee’s Financial Advisor.” After the representatives of Jefferies exited the meeting, the representatives of Milbank provided an overview of the Special Committee’s fiduciary duties in considering whether to recommend that the Carrols Board adopt and approve the merger agreement. The representatives of Milbank then reviewed with the Special Committee a detailed summary of the proposed terms of the Merger Agreement, and the proposed transaction generally. The Special Committee then asked questions of the representatives of Milbank regarding key points in the Merger Agreement, to which representatives of Milbank responded to the satisfaction of the members of the Special Committee. The representatives of Milbank also noted that the voting agreement among Messrs. Perelman and Sloane, Cambridge Holdings and Parent was in agreed form. After further discussion and deliberation by the Special Committee, including as to the matters described in the section of this proxy statement entitled “Special Factors — Reasons for the Merger”, the Special Committee determined unanimously that it was advisable, fair to and in the best interests of the holders of Carrols Common Stock that Carrols enter into the Merger Agreement and unanimously resolved to recommend to the Carrols Board that the Carrols Board adopt and approve the Merger Agreement and the transactions contemplated thereby and recommend that Carrols’ stockholders adopt and approve the Merger Agreement and the transactions contemplated thereby.    

Immediately following the Special Committee meeting, the Carrols Board met in its entirety, with the exception of the Class D Directors who did not participate in or attend the Carrols Board meeting, along with representatives of Milbank in their capacity as outside counsel to the Special Committee. Consistent with the Special Committee’s recommendation, the members of the Carrols Board other than the Class D Directors who had recused themselves, unanimously determined that the transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of Carrols and Carrols’ stockholders, unanimously approved and adopted the Merger Agreement and the transactions contemplated thereby and unanimously resolved to recommend that Carrols’ stockholders approve and adopt the Merger Agreement and the transactions contemplated thereby.

Through the night the parties and their respective financial and legal advisors finalized the transaction documents. On January 16, 2024, the parties executed the transaction documents, including the merger agreement and voting agreement, and the proposed transaction was announced by press release prior to the market opening.

On January 19, 2023, in accordance with the directions of the Special Committee, representatives of Jefferies and members of the Special Committee began outreach to persons potentially interested in exploring a transaction involving Carrols during the Go-Shop Period, contacting forty (40) potential parties, comprised of thirty-five (35) financial sponsors and five (5) strategic parties. Of the forty (40) parties contacted, three (3) entered into NDAs with Carrols, each of which did not include a standstill provision, and were provided with due diligence materials previously shared with Parent in the VDR. All three (3) of the parties that entered into NDAs with Carrols declined to submit an alternative Acquisition Proposal (as defined in the section entitled “The Merger Agreement — Solicitation of Other Offers”). The Go-Shop Period expired at 11:59 p.m., Eastern time, on February 15, 2024. On February 16, 2024, representatives of Milbank sent requests to each of the three parties that entered into NDAs with Carrols to return or destroy any confidential materials in their possession.

Reasons for the Merger; Recommendation of the Special Committee and the Carrols Board

Recommendation of the Special Committee

In evaluating the Merger Agreement, the Voting Agreement, and the transactions contemplated thereby, including the Merger, the Special Committee consulted with its independent financial advisor, Jefferies, and its independent legal advisor, Milbank, and, where appropriate, with members of Carrols management. At the conclusion of its review, the Special Committee unanimously (1) determined that it is fair to and in the best interests of Carrols and Carrols Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated therein, (2) recommended that the Carrols Board approve and adopt the execution and delivery of the Merger Agreement by Carrols, the performance by Carrols of its covenants and other obligations thereunder, and the consummation of the Merger and the transactions contemplated therein upon the terms and conditions set forth therein, in accordance with the DGCL, and determine that the Merger Agreement and the transactions contemplated thereby, including

the Merger, are advisable, fair to, and in the best interests of Carrols and the Carrols Stockholders (including the Unaffiliated Company Stockholders), and (3) resolved to recommend to the Carrols Board that it recommend that the Carrols Stockholders adopt the Merger Agreement in accordance with the DGCL. In addition, the Special Committee believes that the Merger is fair to Carrols’ unaffiliated security holders.

In the course of reaching its determination and making its recommendations, the Special Committee considered the following non-exhaustive list of material factors, which are not presented in any relative order of importance and each of which the Special Committee viewed as being generally supportive of its determination and recommendations to the Carrols Board:

•        Potential Strategic Alternatives.    The assessment of the Special Committee that none of the possible alternatives to the Merger (including continuing to operate Carrols as an independent company or pursuing a different transaction, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to the unaffiliated security holders of those alternatives and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for Carrols to create greater value for the unaffiliated security holders, taking into account execution risks as well as business, financial, industry, competitive and regulatory risks. In consultation with its legal and financial advisors, the Special Committee assessed the potential benefits of soliciting additional parties to determine interest in a transaction for control of Carrols and determined that the benefits of doing so were outweighed by the risks, including the risk that Parent would no longer engage with Carrols in connection with a transaction. The Special Committee also considered the fact that the Merger Agreement contains a go-shop provision, which allowed the Special Committee to solicit additional parties to determine interest in a transaction for control of Carrols during the Go-Shop Period (as described in the section of this proxy statement captioned “The Merger Agreement — Solicitation of Other Offers”).

•        Certainty of Value.    The fact that the consideration to be received by the holders of Carrols Common Stock in the Merger consists entirely of cash, which provides certainty of value and immediate liquidity at an attractive price measured against the ongoing business and financial execution risks of Carrols’ business plan and its continued operations as an independent company and allows the unaffiliated security holders to realize that value immediately upon the consummation of the Merger. In that regard, the Special Committee noted that the amount of cash to be received for each outstanding share of Carrols Common Stock is fixed and will not be reduced if the share price of Carrols Common Stock declines prior to the Effective Time.

•        Best Value Reasonably Obtainable.    The belief of the Special Committee that the Per Share Price represented Parent’s best and final offer and the best value that Carrols could reasonably obtain from Parent for the shares of Carrols Common Stock, taking into account (1) Parent’s statements and reputation as a bidder, and (2) the Special Committee’s familiarity with the business, operations, prospects, business strategy, assets, liabilities and general financial condition of Carrols on a historical and prospective basis and its assessment of associated risks, including execution risks with respect to Carrols’ business plan. The Special Committee believed that, after negotiations with the assistance of experienced independent legal and financial advisors, the Special Committee obtained the best terms and highest price that Parent was willing to pay for Carrols, and that further negotiations would have created a risk of causing Parent to abandon the Merger altogether or materially delay the entry into definitive transaction agreements with respect to the Merger. In addition, the Special Committee believed that, measured against the longer-term execution risks described below, the Per Share Price reflects a fair and favorable price for the shares of Carrols Common Stock held by the unaffiliated security holders. The Special Committee also considered that the Per Share Price constitutes an approximately 23.1% premium to Carrols 30-day volume-weighted average price as of January 12, 2024 of $7.76 per share and an approximately 13.4% premium to the closing price of Carrols Common Stock of $8.42 per share on January 12, 2024, the last full trading day before public announcement of the Merger Agreement.

•        Loss of Opportunity.    The possibility that, if the Special Committee declined to recommend that the Carrols Board approve the Merger Agreement, there may not be another opportunity for Carrols Stockholders (including the unaffiliated security holders) to receive a comparably priced offer with a comparable level of closing certainty. The Special Committee also considered that Parent’s offer would expire if the parties did not finalize a definitive agreement on the timeline proposed in the January 11 Parent Proposal (as described in the section of this proxy statement captioned “— Background of the Merger”).

•        Financial Condition, Results of Operations and Prospects of Carrols; Risks of Execution.    The current, historical and projected financial condition, results of operations and business of Carrols, as well as Carrols’ prospects and risks if it were to remain an independent company. In particular, the Special Committee considered Carrols’ then-current business plan, including management’s then-current estimated projections of Carrols’ financial prospects, as reflected in the Company Projections. As part of this, the Special Committee considered Carrols’ current business plan and the potential opportunities and risks that it presented against, among other things, various execution, operational and other risks to achieving the business plan and related uncertainties, including: (1) the impact of market, customer and competitive trends on Carrols, (2) the likelihood that the business plan could be achieved in the face of potential operational and execution risks, including loss of market share, changing consumer preferences, customer dissatisfaction with the Burger King or Popeyes brands or employee attrition and (3) general risks related to market conditions that could negatively impact valuation or reduce the price of Carrols Common Stock. In particular, the Special Committee considered the likelihood and timing of, and risks to, achieving the operational improvements, objectives and share improvement assumptions underlying the business plan, as well as the estimated projections of Carrols’ financial prospects, all as reflected in the section of this proxy captioned “— Unaudited Prospective Financial Information.”

Among the potential risks of staying independent identified by the Special Committee were consideration of (1) Carrols’ ability to sustain growth and to manage infrastructure to support such growth, (2) Carrols’ ability to introduce new franchise locations successfully and to make enhancements to customer experience, (3) Carrols’ and the Burger King and Popeyes brands’ ability to navigate the competitive industry landscape and to maintain or improve share within its industry, (4) the fact that Parent’s consent, as franchisor, would be required in order for Carrols to acquire additional Burger King franchise locations and the likelihood that Parent may not permit Carrols to acquire a significant number of additional Burger King franchise locations, which the Special Committee believed would limit Carrols’ growth prospects, (5) the substantial ongoing capital requirements to develop and remodel Carrols restaurants and (6) the contractual limitation on the ability of Carrols to engage in any business other than the acquisition and operation of Burger King and Popeyes restaurants as set forth in the Series D Convertible Preferred Stock Certificate of Designation.

The Special Committee was also aware that the price of Carrols Common Stock could be negatively affected if Carrols failed to meet investor expectations, including if Carrols failed to meet its growth and profitability objectives.

•        Opinion of the Special Committee’s Financial Advisor.    The financial analysis of the Per Share Price reviewed by representatives of Jefferies with the Special Committee as well as the opinion of Jefferies rendered to the Special Committee on January 15, 2024, to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Per Share Price to be received by the Unaffiliated Company Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described in the section of this proxy statement captioned “— Opinion of the Special Committee’s Financial Advisor” and the full text of the written opinion of Jefferies attached as Annex B to this proxy statement.

•        Negotiations with Parent and Terms of the Merger Agreement.    The terms and conditions of the Merger Agreement, which was the product of arm’s-length negotiations, including:

•        The requirement that approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Carrols Common Stock held by the Unaffiliated Company Stockholders (the “Unaffiliated Stockholder Approval”).

•        Carrols’ ability during the Go-Shop Period to solicit alternative Acquisition Proposals from, and participate in discussions and negotiations with, third parties.

•        Carrols’ ability, under certain circumstances, to furnish information to, and conduct negotiations with, third parties submitting unsolicited alternative Acquisition Proposals.

•        The Special Committee’s belief that the terms of the Merger Agreement would be unlikely to unduly deter third parties from making a Superior Proposal.

•        The ability of the Carrols Board, acting upon the recommendation of the Special Committee, and the Special Committee’s ability, in each case under certain circumstances, to change, withdraw or modify the recommendation that our stockholders (including the unaffiliated security holders) vote in favor of the adoption of the Merger Agreement.

•        The Carrols Board’s ability, acting upon the recommendation of the Special Committee, under certain circumstances, to terminate the Merger Agreement to enter into a definitive agreement with respect to a Superior Proposal. In that regard, the Special Committee believed that the termination fee payable by Carrols in such instance in accordance with the terms of the Merger Agreement was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers.

•        The remedies available to Carrols under the Merger Agreement in the event the Merger is not consummated.

•        The terms of the Merger Agreement provide Carrols with sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement.

•        Reasonable Likelihood of Consummation.    The belief of the Special Committee that an acquisition by Parent has a reasonable likelihood of closing, based on, among other matters:

•        the limited conditions to Parent’s obligation to consummate the Merger as provided by the Merger Agreement, including the absence of a financing condition;

•        no anticipated substantive issues expected in connection with the required regulatory approvals and the meaningful obligation of Parent to obtain such regulatory approval; and

•        the fact that Cambridge Stockholders, who hold approximately [•] of the voting power of Carrols’ outstanding share capital, have duly executed and entered into the Voting Agreement and have agreed to vote their respective shares in favor of the Merger Agreement, subject to, and in accordance with, the terms and conditions of the Voting Agreement.

•        Appraisal Rights.    The holders of Carrols Common Stock have the right to exercise their statutory appraisal rights under Section 262 of the DGCL and receive payment of the fair value of their shares of the Carrols Common Stock in lieu of the Per Share Price, subject to and in accordance with the terms and conditions of the Merger Agreement and the DGCL, unless and until any such holder fails to perfect or effectively withdraws or loses such holder’s rights to appraisal and payment under the DGCL.

•        Current and Historical Market Prices.    The current and historical market prices of Carrols’ Common Stock, including as set forth in the table under “Important Information Regarding Carrols — Market Price of Carrols’ Common Stock” and “Special Factors — Opinion of the Financial Advisor to the Special Committee” taking into account the market performance of Carrols’ Common Stock relative to the capital stock of other participants in the industries in which Carrols operates and general market indices.

The Special Committee also considered a number of factors relating to the procedural safeguards that it believes were and are present to ensure the fairness of the Merger and to permit the Special Committee to represent effectively the interests of the Unaffiliated Company Stockholders and the unaffiliated security holders of Carrols. In light of such procedural safeguards, the Special Committee did not consider it necessary to retain an unaffiliated representative to act solely on behalf of the Unaffiliated Company Stockholders and the unaffiliated security holders of Carrols for purposes of negotiating the terms of the Merger Agreement or preparing a report concerning the fairness of the Merger Agreement and the Merger. The Special Committee believes these factors support its determinations and recommendations and provide assurance of the procedural fairness of the Merger to the Unaffiliated Company Stockholders and the unaffiliated security holders of Carrols.

•        Independence.    The Special Committee has consisted solely of independent (for purposes of serving on the Special Committee) and disinterested directors that are not affiliated with, and are independent of, any of the potential counterparties to a potential acquisition of Carrols and were otherwise disinterested and independent with respect to a potential acquisition of Carrols (including a potential acquisition of Carrols that has a transaction or series of transactions in which one or more significant stockholders of Carrols have an interest that is in addition to, and/or different from, the interests of Carrols Stockholders as a whole), other than as discussed in the section of this proxy statement captioned “Special Factors — Interests of Carrols’ Directors and Executive Officers in the Merger.”

•        Negotiating Authority and Procedural Safeguards.    The fact that any potential transaction with Parent was conditioned, from the outset of discussions regarding a potential transaction, on (1) the Special Committee being empowered to freely select its own independent legal and financial advisors and to consider (including the ability to reject) any proposal by Parent regarding a potential transaction, and (2) the transaction being subject to a non-waivable condition requiring approval of a majority of the shares of common stock of Carrols not owned by Parent and such approval actually being obtained before consummation of the Merger.

•        Prior Special Committee Action.    The Carrols Board was not permitted to approve any potential acquisition of Carrols (including a potential acquisition of Carrols that also included a transaction or series of transactions in which one or more significant stockholders of Carrols had an interest that was in addition to, and/or different from, the interests of Carrols’ stockholders as a whole) or recommend for approval any such transactions by Carrols Stockholders without a prior favorable recommendation of the transaction by the Special Committee.

•        Active Involvement and Oversight.    The numerous meetings held by the Special Committee over an approximately one-month period (with its legal and financial advisors present) to discuss and evaluate, among other things, the process for exploring a potential strategic transaction and the proposals from Parent, and the Special Committee’s active oversight of the negotiation process. The Special Committee was actively engaged in this process on a regular basis and was provided with full access to Carrols management and its advisors in connection with the evaluation process.

•        Independent Advice.    The Special Committee selected and engaged its own independent legal and financial advisors and received the advice of such advisors throughout its review, evaluation and negotiation of a potential acquisition of Carrols, which independent financial advisor delivered a fairness opinion to the Special Committee.

•        Full Knowledge.    The Special Committee made its evaluation of a potential acquisition of Carrols by Parent based upon the factors discussed in this proxy statement.

•        No Obligation to Recommend.    The recognition by the Special Committee that it had no obligation to recommend to the Carrols Board the approval of the Merger or any other transaction and had the authority to reject any proposals made.

•        Majority of the Minority Approval.    The consummation of the Merger requires the affirmative vote of the holders of a majority of the outstanding shares of Carrols Common Stock held by the Unaffiliated Company Stockholders to adopt the Merger Agreement.

In the course of reaching its determinations and making its recommendations, the Special Committee also considered the following non-exhaustive list of countervailing factors concerning the Merger Agreement and the Merger, which are not presented in any relative order of importance:

•        No Stockholder Participation in Future Growth or Earnings.    The nature of the Merger as a cash transaction means that holders of Carrols Common Stock (including the unaffiliated security holders) will not participate in Carrols’ future earnings or growth and will not benefit from any appreciation in value of the Surviving Corporation.

•        No-Shop Restrictions after the Go-Shop Period.    The restrictions in the Merger Agreement on Carrols’ ability to solicit competing transactions following the Go-Shop Period (subject to certain exceptions to allow the Carrols Board, acting upon the recommendation of the Special Committee, or the Special

Committee, to exercise their respective fiduciary duties and, in the case of Carrols Board, acting upon the recommendation of the Special Committee, to accept a Superior Proposal, and then only upon the payment of a termination fee by Carrols to Parent).

•        Risk Associated with Failure to Consummate the Merger.    The possibility that the Merger might not be consummated, and if it is not consummated, that: (1) Carrols’ directors, management team and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of Carrols during the pendency of the Merger, (2) Carrols will have incurred significant transaction and other costs, (3) Carrols’ continuing business relationships with business partners and employees may be adversely affected, which could include the loss of key personnel, (4) the trading price of Carrols Common Stock could be adversely affected, (5) the contractual and legal remedies available to Carrols in the event of the breach or termination of the Merger Agreement may be insufficient, costly to pursue, or both and (6) the failure of the Merger to be consummated could result in an adverse perception among our employees, business partners and investors about Carrols’ prospects.

•        Regulatory Risks.    The possibility that regulatory agencies may delay, object to, challenge or seek to enjoin the Merger, or may seek to impose terms and conditions on their approvals that are not acceptable to Parent, notwithstanding its obligations under the Merger Agreement.

•        Impact of Interim Restrictions on Carrols’ Business Pending the Completion of the Merger.    The restrictions on the conduct of Carrols’ business prior to the consummation of the Merger, which may delay or prevent us from undertaking strategic initiatives before the completion of the Merger that, absent the Merger Agreement, we might have pursued, or from taking certain actions aimed at incentivizing and retaining our employees.

•        Effects of the Merger Announcement.    The effects of the public announcement of the Merger, including the: (1) effects on our employees, operating results and stock price, (2) impact on our ability to attract and retain key management, sales and marketing, and technical personnel, and (3) potential for litigation in connection with the Merger.

•        Termination Fee Payable by Carrols.    The requirement that Carrols pay Parent a termination fee of $19,000,000 under certain circumstances following termination of the Merger Agreement, including if Carrols terminates the Merger Agreement to accept a Superior Proposal or if Parent terminates the Merger Agreement because the Special Committee and/or the Carrols Board changes its recommendation (as further described under “The Merger Agreement — Termination Fees and Expenses”). The Special Committee considered the potentially discouraging impact that this termination fee could have on a third party’s interest in making a competing proposal to acquire Carrols; noting, however, that the Merger Agreement was negotiated to ameliorate such potential deterrence by reducing the amount of the termination fee to $9,500,000 if the termination fee is payable in connection with entering into the Alternative Acquisition Agreement during the Go-Shop Period.

•        Interests of Carrols’ Directors and Executive Officers.    The interests that Carrols’ directors and executive officers may have in the Merger, which may be different from, or in addition to, those of the other unaffiliated security holders.

•        Voting Obligations of Certain Significant Stockholders.    Certain significant stockholders of Carrols are parties to the Voting Agreement with Parent, which, under certain circumstances, obligates such holders to vote in favor of the adoption of the Merger Agreement and that those obligations do not automatically terminate in the event that the Special Committee, or the Carrols Board, acting upon the recommendation of the Special Committee, modifies, changes or withdraws Carrols’ recommendation with respect to the transaction.

•        Transaction Costs.    Carrols has incurred and will incur substantial costs in connection with the transactions contemplated by the Merger Agreement, even if the Merger is not consummated.

The Special Committee concluded that the uncertainties, risks and potentially negative factors relevant to the Merger Agreement and the Merger were outweighed by the potential benefits of the Merger Agreement and the Merger.

Recommendation of the Carrols Board

Based on the unanimous recommendation of the Special Committee and on the basis of the other factors described above, the Carrols Board (with the exception of the Class D Directors, who recused themselves) unanimously (1) determined that it is fair to and in the best interests of Carrols and Carrols Stockholders (including the Unaffiliated Company Stockholders), and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated therein, (2) approved and adopted the execution and delivery of the Merger Agreement by Carrols, the performance by Carrols of its covenants and other obligations thereunder, and the consummation of the Merger and the transactions contemplated therein, upon the terms and conditions set forth therein, in accordance with the DGCL, and determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Carrols and the Carrols Stockholders (including the Unaffiliated Company Stockholders), and (3) resolved to recommend that the Carrols Stockholders adopt the Merger Agreement in accordance with the DGCL.

In addition, the Carrols Board, on behalf of Carrols, believes, based on the factors described below, that the Merger is fair to the unaffiliated security holders.

In the course of reaching its determination and making its recommendations, the Carrols Board considered the following non-exhaustive list of material factors and countervailing factors, which are not presented in any relative order of importance:

•        Determinations of the Special Committee.    The Special Committee’s analysis (as to both substantive and procedural aspects of the Merger), conclusions and unanimous determination, which the Carrols Board adopted, that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Carrols and the Unaffiliated Company Stockholders. The Carrols Board also considered the Special Committee’s unanimous recommendation that the Carrols Board approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger.

•        Procedural Protections.    The procedural fairness of the Merger, including that (1) it was negotiated by a Special Committee consisting solely of non-management independent members of the Carrols Board not affiliated with Parent, which was formed at the outset of discussions regarding exploration of a potential transaction between Carrols and Parent, and (2) the Special Committee had the authority to select and engage, and was advised by, its own independent legal and financial advisors.

•        Unaffiliated Stockholder Vote.    Although consummation of the Merger pursuant to the DGCL does not require that the Merger Agreement be adopted by Carrols’ unaffiliated security holders, the Merger Agreement provides that consummation of the Merger is conditioned upon Carrols obtaining the Unaffiliated Stockholder Approval. The directors who hold shares of Carrols Common Stock, other than those who are employees of Parent or its affiliates and other than those who are employees of Carrols (the “Stockholder Directors”), are deemed to be Unaffiliated Company Stockholders; accordingly, the shares they beneficially own will be counted toward the vote for the Unaffiliated Stockholder Approval. While the Stockholder Directors are not deemed to be unaffiliated security holders for purposes of Rule 13e-3 under the Exchange Act, the Carrols Board and the Special Committee included the Stockholder Directors in the Unaffiliated Stockholder Approval because such directors will not retain any equity interest in Carrols, will receive the same Per Share Price as the unaffiliated security holders upon consummation of the Merger, and have not received any consideration beyond the Per Share Price from any Buyer Party in connection with the Merger. Accordingly, the Carrols Board and the Special Committee considered the Unaffiliated Stockholder Approval as a factor in support of their belief that the Merger is fair to Carrols’ unaffiliated security holders.

•        Other Factors Considered by the Special Committee.    The other material factors and countervailing factors considered by the Special Committee and listed above.

The Carrols Board concluded that the uncertainties, risks and potentially negative factors relevant to the Merger Agreement and the Merger were outweighed by the potential benefits of the Merger Agreement and the Merger.

The foregoing discussion of the information and factors considered by the Special Committee and by the Carrols Board is not intended to be exhaustive and includes only the material factors considered. In light of the variety of factors considered by the Special Committee and by the Carrols Board and the complexity of these factors, neither the Special Committee nor the Carrols Board found it practicable to, and did not, quantify or otherwise assign relative weights, ranks or values to the foregoing factors in reaching their respective determinations and recommendations. Moreover, each member of the Special Committee and of the Carrols Board applied his or her own personal business judgment to the process and may have assigned different relative weights, ranks or values to the different factors, and the recommendations, determinations and approvals, where applicable, by the Special Committee and the Carrols Board were based upon the totality of the information presented to, and considered by, the Special Committee and the Carrols Board, respectively.

In the course of evaluating the Merger Agreement and the transactions contemplated thereby, including the Merger, and making the decisions, determinations and recommendations described above (as applicable), the Carrols Board and the Special Committee did not consider the liquidation value of Carrols because (1) they considered Carrols to be a viable, going concern, (2) they believed that liquidation sales generally result in proceeds substantially less than sales of a going concern, and (3) they considered determining a liquidation value to be impracticable given the significant execution risk involved in any breakup of Carrols. For the foregoing reasons, the Carrols Board and the Special Committee did not consider liquidation value to be a relevant factor. Further, the Carrols Board and the Special Committee did not consider Carrols’ net book value, which is an accounting concept, as a factor because they believed (1) that net book value is not a material indicator of the value of Carrols as a going concern but rather is indicative of historical costs and (2) net book value does not take into account the prospects of Carrols, market conditions, trends in the industry in which Carrols operates or the business risks inherent in the industry. In addition, the Carrols Board and the Special Committee did not view the purchase prices paid in the transactions described in the section of this proxy statement captioned “Important Information Regarding Carrols — Transactions in Carrols Common Stock” (all of which were below the Per Share Price) to be relevant except to the extent that those prices indicated the trading price of the Carrols Common Stock during the applicable periods. The Carrols Board and the Special Committee believe that the trading price of the shares of Carrols Common Stock at any given time represents the best available indicator of Carrols’ going concern value at that time so long as the trading price at that time is not impacted by speculation regarding the likelihood of a potential transaction. In addition, the Carrols Board and the Special Committee implicitly considered the value of Carrols as a going concern by taking into account the value of Carrols’ current and anticipated business, financial condition, results of operations, prospects, and other forward-looking matters.

Other than as described in this proxy statement, the Carrols Board is not aware of any firm offer by any other person during the prior two years for (1) a merger or consolidation of Carrols with another company, (2) the sale or transfer of all or substantially all of Carrols’ assets, or (3) a purchase of Carrols’ securities that would enable such person to exercise control of Carrols.

Opinion of the Special Committee’s Financial Advisor

The Special Committee retained Jefferies as its financial advisor in connection with a possible sale, disposition, or other business transaction involving Carrols. In connection with this engagement, the Special Committee requested that Jefferies evaluate the fairness, from a financial point of view, of the Per Share Price to be received by the Unaffiliated Company Stockholders pursuant to the Merger Agreement. At a meeting of the Special Committee held on January 15, 2024, Jefferies rendered its opinion to the Special Committee to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Per Share Price to be received by the Unaffiliated Company Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of Jefferies’ opinion, which describes the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex B to this proxy statement and is incorporated herein by reference. The Company encourages you to read the opinion carefully and in its entirety. Jefferies’ opinion was provided for the use and benefit of the Special Committee (in its capacity as such) in its evaluation of the Per Share Price from a financial point of view and did not address any other aspect of the Merger or any other matter. Jefferies’ opinion did not address the relative merits of the Merger or other transactions contemplated by the Merger Agreement as compared to any alternative

transaction or opportunity that might be available to Carrols, nor did it address the underlying business decision by Carrols or the Special Committee to engage in the Merger or any term, aspect or implication of any other agreement (or amendment thereto or related arrangements) entered into in connection with, or contemplated by or resulting from, the Merger or otherwise. Jefferies’ opinion did not constitute a recommendation as to how the Special Committee or any holder of shares of Carrols Common Stock should act or vote on the Merger or any other matter. The following summary is qualified in its entirety by reference to the full text of Jefferies’ opinion.

In arriving at its opinion, Jefferies, among other things:

•        reviewed a draft dated January 15, 2024 of the Merger Agreement;

•        reviewed certain publicly available financial and other information about Carrols;

•        reviewed certain information furnished to Jefferies by Carrols’ management and approved for Jefferies’ use by the Special Committee, including financial forecasts and analyses, relating to the business, operations and prospects of Carrols (the “Company Projections”);

•        held discussions with members of senior management of Carrols concerning the matters described in the second and third bullets above;

•        reviewed the share trading price history and valuation multiples for Carrols Common Stock and compared them with those of certain publicly traded companies that Jefferies deemed relevant;

•        compared the proposed financial terms of the Merger with the financial terms of certain other transactions that Jefferies deemed relevant; and

•        conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate.

In Jefferies’ review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available to Jefferies by Carrols or that was publicly available to Jefferies (including, without limitation, the information described above), or that was otherwise reviewed by Jefferies. Jefferies relied on assurances of the management of Carrols that it was not aware of any facts or circumstances that would make any of the foregoing information incomplete, inaccurate or misleading. In Jefferies’ review, Jefferies did not obtain any independent evaluation or appraisal of any of the assets or liabilities (contingent, accrued, derivative, off-balance sheet or otherwise), nor did Jefferies conduct a physical inspection of any of the properties or facilities of, Carrols, and Jefferies was not furnished with and assumed no responsibility to obtain, any such evaluations, appraisals or physical inspections. Jefferies did not evaluate the solvency or fair value of Carrols or any other entity under any laws relating to bankruptcy, insolvency or similar matters.

With respect to the Company Projections provided to and reviewed by Jefferies, Jefferies noted that projecting future results of any company is inherently subject to uncertainty. However, Jefferies was advised, and Jefferies assumed, that the Company Projections were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Carrols as to the future financial performance of Carrols and the other matters covered thereby. Jefferies expressed no opinion as to the Company Projections or the assumptions on which they were based.

Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date thereof. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which Jefferies become aware after the date thereof.

Jefferies made no independent investigation of, and expressed no view or opinion as to, any legal, regulatory, accounting or tax matters affecting or relating to Carrols, and Jefferies assumed the correctness in all respects material to its analyses and opinion of all legal, regulatory, accounting and tax advice given to Carrols, the Carrols Board or the Special Committee including, without limitation, with respect to changes in, or the impact of, accounting standards or tax and other laws, regulations and governmental and legislative policies affecting Carrols or the Merger and legal, regulatory, accounting and tax consequences of the terms of, and transactions contemplated by, the Merger Agreement and related documents to Carrols and its stockholders. In addition, in preparing its opinion,

Jefferies did not take into account any tax consequences of the transaction to any holder of Carrols Common Stock. Jefferies assumed that the Merger would be consummated in accordance with the terms of the Merger Agreement without waiver, modification or amendment of any term, condition or agreement and in compliance with all applicable laws, documents and other requirements and that the final form of the Merger Agreement would be substantially similar to the last draft reviewed by Jefferies. Jefferies also assumed that in the course of obtaining the necessary governmental, regulatory or third-party approvals, consents, waivers and releases for the Merger or otherwise, including with respect to any divestitures or other requirements, no delay, limitation, restriction or condition would be imposed or occur that would have an adverse effect on Carrols, Parent or the contemplated benefits of the Merger or that otherwise would be material in any respect to Jefferies’ analyses or opinion.

Jefferies’ opinion did not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Carrols, nor did it address the underlying business decision by Carrols or the Special Committee to engage in the Merger or the terms of the Merger Agreement or the documents referred to therein, including the form or structure of the Merger or any term, aspect or implication of any other agreements, arrangements or understandings entered into in connection with, or contemplated by or resulting from the Merger or otherwise. Jefferies’ opinion did not constitute a recommendation as to how any holder of shares of Carrols Common Stock should vote on the Merger or any matter related thereto. At the direction of the Special Committee, Jefferies was not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of Carrols or any other alternative transaction. Jefferies expressed no opinion as to whether any alternative transaction might result in consideration more favorable to Carrols’ stockholders than that contemplated by the Merger Agreement. Jefferies was not asked to address, and its opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Carrols or any other party, other than the Unaffiliated Company Stockholders. Jefferies expressed no view or opinion as to the price at which shares of Carrols Common Stock would trade or otherwise be transferrable at any time. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation or other consideration payable to or to be received by any of Carrols’ officers, directors or employees, or any class of such persons, in connection with the Merger relative to the Per Share Price to be received by the Unaffiliated Company Stockholders or otherwise. Jefferies opinion was authorized by the Fairness Committee of Jefferies LLC.

In connection with rendering its opinion to the Special Committee, Jefferies performed certain financial and comparative analyses, including those described below. The following summary is not a complete description of all analyses performed and factors considered by Jefferies in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the selected public companies analysis summarized below, no company used as a comparison was identical or directly comparable to Carrols. These analyses necessarily involved complex considerations and judgments concerning financing characteristics and other factors that could affect the public trading or other values of the companies concerned.

Jefferies believes that its analyses and the summary below must be considered as a whole and in context and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Jefferies’ analyses and opinion. Jefferies did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.

The estimates of the future performance of Carrols in or underlying Jefferies’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, Jefferies considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Carrols. Estimates of the financial value of companies or businesses do not purport to be appraisals or necessarily reflect the prices at which companies, businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the implied reference ranges resulting from, any particular analysis described below are inherently subject to substantial uncertainty and should not be taken as Jefferies’ view of the actual value of Carrols or its businesses or securities.

The terms of the Merger were determined through negotiations between the Special Committee and Carrols and Parent, and the decision by Carrols to enter into the Merger Agreement was solely that of the Carrols Board, acting upon the recommendation of the Special Committee. Jefferies’ opinion and financial analyses were only

one of many factors considered by the Special Committee in its evaluation of the Per Share Price and should not be viewed as determinative of the views of the Special Committee, the Carrols Board or Company management with respect to the Merger or the Per Share Price payable in the Merger.

A copy of the discussion materials Jefferies provided to the Special Committee on January 15, 2024 has been attached as an exhibit to the Transaction Statement on Schedule 13E-3 related to the Merger.

Financial Analyses

The summary of the financial analyses described in this section is a summary of the material financial analyses reviewed with the Special Committee and performed by Jefferies in connection with its analyses and opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, the tables must be read together with the text of each summary.

The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses. The order in which the financial analyses summarized below appear does not necessarily reflect the relative importance or weight given to such analyses. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before January 12, 2024, and is not necessarily indicative of current or future market conditions.

Selected Public Companies Analysis

Jefferies reviewed publicly available financial, stock market and operating information of Carrols and the following eight selected publicly traded U.S. listed restaurant franchisee, small-cap limited-service and small-cap full-service restaurant companies that Jefferies considered generally relevant for purposes of its analysis, which are collectively referred to as the “selected companies.”

The selected companies reviewed included the following:

Public Franchisees

•        Arcos Dorados Holdings Inc.

Limited Service Restaurants

•        El Pollo Loco Holdings, Inc.

•        Noodles & Company

•        Potbelly Corporation

Full Service Restaurants

•        BJ’s Restaurants, Inc.

•        Chuy’s Holdings, Inc.

•        Red Robin Gourmet Burgers, Inc.

•        The ONE Group Hospitality, Inc.

Additionally, the following companies were evaluated for informational purposes only:

Non-U.S. Listed Restaurants and RBI

•        Alsea S.A.B. de C.V.

•        Domino’s Pizza Enterprises Limited

•        Jubilant FoodWorks Limited

•        Restaurant Brands International Inc.

Jefferies reviewed, among other information and to the extent publicly available, enterprise values (“EVs”) of the selected companies, calculated as fully diluted equity values based on closing stock prices on January 12, 2024, plus total debt, preferred equity and non-controlling interests, minus cash and cash equivalents, as a multiple of each such company’s estimated adjusted earnings before interest, taxes, depreciation and amortization, burdened by stock based compensation expense and pre-opening expenses (“Adjusted EBITDA”), for the calendar years 2023 and 2024, which we refer to as FY 2023E and FY 2024E, respectively. Financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information.

The financial data reviewed included the following:

Selected Public Companies Analysis

Jefferies applied a selected range of enterprise value to estimated Adjusted EBITDA multiples of 6.25x to 7.25x and 6.0x to 7.0x to corresponding data of Carrols based on the Company Projections for estimated Adjusted EBITDA for FY 2023E and FY 2024E, respectively, to determine ranges of implied enterprise values for Carrols. Jefferies then subtracted Carrols’ net debt as of December 31, 2023, as provided by Company management, to calculate a range of implied equity values, and divided the result by the number of fully diluted shares of Carrols Common Stock outstanding to calculate a range of implied per share equity values for Carrols. This analysis indicated reference ranges of implied per share equity values of $7.80 to $10.00 and $8.35 to $10.70 (each rounded to the nearest $0.05) based on estimated Adjusted EBITDA for FY 2023E and FY 2024E, respectively, as compared to the Per Share Price of $9.55 per share.

No company utilized in the selected public companies analysis is identical to Carrols. In evaluating the selected public companies, Jefferies made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond Carrols’ and Jefferies’ control.

Discounted Cash Flow Analysis

Jefferies performed a discounted cash flow analysis of Carrols by calculating the estimated present value of the stand-alone unlevered, after-tax free cash flows that Carrols was forecasted to generate during the calendar years ending December 31, 2024 through December 31, 2028 based on the Company Projections. The terminal values of Carrols were calculated by applying a selected range of perpetuity growth rates of 2.5% to 3.5% to Carrols’ estimated unlevered free cash flows for the calendar year ending December 31, 2028 (including normalized levels of capital expenditures, working capital and depreciation and amortization), based on the Company Projections. The present values of the unlevered free cash flows and terminal values were then calculated using a selected discount rate range of 11.0% to 13.0%, based on an estimate of Carrols’ weighted average cost of capital, and added to the present value of Carrols’ net operating losses and work opportunity and tax credits, calculated using a discount rate of 15.5% based on an estimate of Carrols’ cost of equity, to determine a range of implied enterprise values for Carrols. Jefferies then subtracted Carrols’ net debt as of December 31, 2023, as provided by Company management, to calculate a range of implied equity values, and divided the result by the number of fully diluted shares of Carrols Common Stock outstanding to calculate a range of implied per share equity values for Carrols. This analysis indicated a reference range of implied per share equity values of $6.10 to $10.35 (rounded to the nearest $0.05), as compared to the Per Share Price of $9.55 per share.

Other Factors

Jefferies reviewed certain additional information that was not considered part of Jefferies’ financial analysis with respect to its opinion but was noted for informational purposes, including the following:

Selected Transactions Analysis

Jefferies reviewed, for informational purposes only, publicly available financial, stock market and operating information of Carrols and nineteen historical M&A transactions, announced since December 2016, involving franchisee restaurant companies that have financial and operating characteristics that Jefferies, in its professional judgment, considered generally relevant for purposes of its analysis, which are collectively referred to as the “selected transactions.” Because all but one of the selected transactions did not have publicly disclosed enterprise value to latest twelve month Adjusted EBITDA multiples, Jefferies did not rely upon the selected transactions analysis for purposes of its opinion.

Premiums Paid Analysis.

Jefferies reviewed, for informational purposes only, the implied premiums paid in 294 selected all-cash transactions across all industries, excluding financial targets, with implied equity values ranging from $500 million to $2.0 billion, and 20 all-cash restaurant transactions involving U.S. domiciled and listed publicly traded targets closed since January 1, 2012.

Miscellaneous

The Company has agreed to pay Jefferies for its financial advisory services in connection with the Merger an aggregate fee based upon a percentage of the transaction value of the Merger, which fee is estimated as of the date of this proxy statement to be approximately $12.3 million, $2 million of which became payable upon delivery of Jefferies’ opinion to the Special Committee and the remainder of which is payable contingent upon the closing of the Merger. In addition, Carrols agreed to reimburse Jefferies for expenses, including fees and expenses of counsel, incurred in connection with Jefferies’ engagement and to indemnify Jefferies and related parties against liabilities, including liabilities under federal securities laws, arising out of or in connection with the services rendered and to be rendered by Jefferies under its engagement.

During the two-year period prior to the date of Jefferies’ opinion, Jefferies and its affiliates have provided financial advisory or financing services to Cambridge Holdings for which Jefferies or its affiliates received fees of approximately $1 million in connection with Jefferies’ role as sales agent and forward purchaser in “at-the-market” programs involving shares of Carrols Common Stock sold by Cambridge Holdings. During the two-year period prior to the date of Jefferies’ opinion, Jefferies and its affiliates have not provided financial advisory or financing services to Carrols, Parent or their respective affiliates (other than as described in the immediately preceding sentence) for which Jefferies or its affiliates received fees. Jefferies and its affiliates may provide financial advisory and/or financing services to Carrols, Parent and/or their respective affiliates in the future, for which services Jefferies and its affiliates would expect to receive compensation. In the ordinary course of business, Jefferies and its affiliates may trade or hold securities or financial instruments (including loans and other obligations) of Carrols, Parent and/or their respective affiliates for Jefferies’ own account and for the accounts of Jefferies’ customers and, accordingly, may at any time hold long or short positions in those securities.

Jefferies was selected as the Special Committee’s financial advisor in connection with the Merger because, among other things, Jefferies is an internationally recognized investment banking firm with substantial experience in mergers and acquisition transactions and based on its familiarity with Carrols’ business and industry. Jefferies is regularly engaged in the valuation of businesses and their securities in connection with mergers, acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.

Other Preliminary Discussion Materials

In addition to the presentation made to the Special Committee on January 15, 2024, the date on which Jefferies delivered its opinion, as described above, Jefferies made a preliminary presentation to the Special Committee on January 11, 2024, which is referred to as the preliminary Jefferies presentation. A copy of the preliminary Jefferies presentation provided to the Special Committee by Jefferies has been attached as an exhibit to the Transaction Statement on Schedule 13E-3 related to the Merger. The preliminary Jefferies presentation does not constitute an opinion of Jefferies with respect to the Per Share Price.

January 11, 2024 Discussion Materials

The January 11, 2024 discussion materials included preliminary financial analyses that were substantially similar to those contained in the January 15, 2024 presentation based on the Company Projections, the then-current market information and the then-current terms of the draft Merger Agreement. The preliminary selected public companies analysis, using the selected ranges of EV / Adjusted EBITDA multiples described above under “— Selected Public Companies Analysis”, indicated reference ranges of implied per share equity values of $7.90 to $10.10 and $8.45 to $10.80 (each rounded to the nearest $0.05), based on estimated Adjusted EBITDA for FY 2023E and FY 2024E, respectively. The preliminary discounted cash flow analysis, using the selected ranges of perpetuity growth rates and discount rates described above under “— Discounted Cash Flow Analysis”, indicated reference ranges of implied per shares equity values of approximately $6.20 to $10.50 (rounded to the nearest $0.05). The preliminary Jefferies presentation also included, for informational purposes only, a preliminary selected transactions analysis, a preliminary premiums paid analysis, each as described above under “— Selected Transactions Analysis” and “— Premiums Paid Analysis,” as well as a preliminary illustrative theoretical future stock price analysis.

Position of the Buyer Parties as to the Fairness of the Merger

Under the SEC rules governing “going private” transactions, each Buyer Party may be deemed to be an affiliate of Carrols, and, therefore, required to express its belief as to the fairness of the proposed Merger to Carrols’ unaffiliated security holders. The Merger is a Rule 13e-3 transaction for which a Transaction Statement on Schedule 13E-3 has been filed with the SEC. The Buyer Parties are making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. However, the view of the Buyer Parties as to the fairness of the Merger is not intended to be and should not be construed as a recommendation to any Carrols Stockholder as to how that stockholder should vote on the Merger Proposal. The Buyer Parties have interests in the Merger that are different from, and/or in addition to, the unaffiliated security holders of Carrols.

The Buyer Parties believe that, as a subsidiary of Parent, Carrols will be able to improve its ability to execute initiatives such as accelerating remodels faster than it could as a standalone public company. Over time this will create additional enterprise value for Carrols and Parent as the brand owner. The Buyer Parties believe that this, along with the ability to refranchise restaurants to smaller, locally-owned operators over time, will allow the Buyer Parties’ investment in Carrols to achieve returns consistent with its investment objectives, which are in some cases more difficult for businesses to achieve as a standalone public company. Further, absent the reporting and associated costs and burdens placed on public companies, the Buyer Parties believe that the Company’s management and employees will be able to execute more effectively on future strategic plans.

The Buyer Parties believe that the interests of the unaffiliated security holders were represented by the Special Committee, which negotiated the terms and conditions of the Merger Agreement with the assistance of its independent legal and financial advisors. The Buyer Parties did not participate in the deliberation of the Special Committee regarding, and did not receive advice from the respective legal or other advisors of the Special Committee as to, the fairness of the Merger. In addition, the Buyer Parties did not participate in the deliberations of the Carrols Board regarding, and did not receive advice from any advisors of the Carrols Board as to, the fairness of the Merger. The Buyer Parties have not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the Merger to the unaffiliated security holders of Carrols. Based on, among other things, their knowledge and analysis of available information regarding Carrols, as well as discussions with the Company’s senior management regarding Carrols and its business and the factors considered by, and the analysis and resulting conclusions of, the Carrols Board and the Special Committee discussed in the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Special Committee and the Carrols Board” (which analysis and resulting conclusions the Buyer Parties adopt), the Buyer Parties believe that the Merger is substantively fair to the unaffiliated security holders of Carrols. In particular, the Buyer Parties considered the following (which are not listed in any relative order of importance):

•        the current and historical market prices of Carrols Common Stock, including the market performance of Carrols Common Stock relative to those of other participants in the Company’s industry and general market indices; the fact that the Per Share Price represents a 23.1% premium to Carrols 30-day

volume-weighted average price as of January 12, 2024 of $7.76 per share and a 13.4% premium to the January 12, 2024 closing price; and the fact that Carrols Common Stock traded as low as $1.85 per share during the 52-week period prior to the announcement of the Merger;

•        the fact that the Special Committee unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of, Carrols and the Unaffiliated Company Stockholders and, accordingly, the Company’s unaffiliated security holders, as defined in Rule 13e-3 under the Exchange Act;

•        the fact that the Carrols Board (with the exception of the Class D Directors, who recused themselves), acting upon the recommendation of the Special Committee, unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of, Carrols and its stockholders;

•        the fact that the members of the Special Committee are not officers or employees of Carrols, are not affiliated with any Buyer Party and do not have any interests in the Merger different from, or in addition to, those of the unaffiliated security holders, other than the members’ receipt of Carrols Board compensation and Special Committee compensation (which are not contingent upon the completion of the Merger or the Special Committee’s or the Carrols Board’s recommendation and/or authorization and approval of the Merger) and their indemnification and liability insurance rights under their respective indemnification agreements entered into with Carrols and under the Merger Agreement;

•        the fact that the Per Share Price will be paid to the unaffiliated security holders in all cash, thus allowing the unaffiliated security holders of Carrols to immediately realize a certain and fair value for their shares, which value represents a significant premium to the closing price of Carrols Common Stock as noted above;

•        the fact that the Merger will provide liquidity for the unaffiliated security holders of Carrols without incurring brokerage and other costs typically associated with market sales or delays that may be involved for the liquidation of larger positions in Carrols Common Stock;

•        the fact that the Merger is not conditioned on any financing being obtained by Parent, increasing the likelihood that the Merger will be consummated and that the consideration to be paid to the unaffiliated security holders of Carrols in the Merger will be received;

•        the potential risks to stockholders of Carrols continuing to have publicly traded common stock, including the risks of market volatility and global uncertainty;

•        the fact that Carrols has the ability to seek specific performance under the Merger Agreement to prevent breaches of the Merger Agreement and to specifically enforce the terms of the Merger Agreement; and

•        the fact that, notwithstanding that the Buyer Parties are not entitled to, and did not, rely on the opinion provided by Jefferies to the Special Committee on January 15, 2024, the Special Committee received an opinion from Jefferies stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations, qualifications and conditions described in the written opinion of Jefferies, the Per Share Price to be received by the Unaffiliated Company Stockholders pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The Buyer Parties did not consider the liquidation value of Carrols in determining their view as to fairness of the Merger to the unaffiliated security holders because the Buyer Parties considered Carrols to be a viable going concern, viewed the trading history of Carrols Common Stock as an indication of the Company’s going concern value and believed that liquidation sales generally result in proceeds substantially less than sales of a going concern. For the foregoing reasons, the Buyer Parties did not consider liquidation value to be a relevant factor.

The Buyer Parties did not consider net book value, which is an accounting concept, in determining their view as to fairness of the Merger to the unaffiliated security holders because they believed that net book value is not a material indicator of the value of Carrols as a going concern but rather is indicative of historical costs and therefore not a relevant measure in the determination as to the fairness of the Merger. The Buyer Parties note, however, that the Per Share Price of $9.55 is substantially higher than the net book value per share of Carrols Common Stock as of October 1, 2023 of $0.0104 (based on 51,602,340 issued and outstanding shares as of that date). See the section of this proxy statement captioned “Where You Can Find Additional Information” for a description of how to obtain copies of the Company’s periodic reports.

The Buyer Parties were not aware of, and thus did not consider, any other firm offers made by any unaffiliated person during the past two years for (i) a merger or consolidation of Carrols with another company, (ii) the sale or transfer of all or substantially all of the Company’s assets or (iii) the purchase of all or a substantial portion of the shares that would enable such person to exercise control of or significant influence over Carrols.

The Buyer Parties did not receive any reports, opinions or appraisals from any outside party materially related to the fairness of the Merger or the Per Share Price, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the Merger to unaffiliated security holders.

The Buyer Parties further believe that the Merger is procedurally fair to the unaffiliated security holders of Carrols based upon, among other things, the following factors, which are not listed in any relative order of importance:

•        the fact that the Special Committee and the Carrols Board were fully informed about the extent to which the interests of the Buyer Parties in the Merger differed from those of the unaffiliated security holders of Carrols;

•        the fact that consideration and negotiation of the Merger Agreement were conducted under the control and supervision of the Special Committee, which consists solely of independent directors, each of whom is an outside, non-employee director not affiliated with any of the Buyer Parties;

•        the fact that, since the outset of the strategic process that resulted in execution of the Merger Agreement, the Buyer Parties have conditioned the potential transaction upon (i) the approval of the Special Committee and (ii) a non-waivable condition requiring the Merger to be approved by a majority of the shares of Carrols Common Stock held by the Unaffiliated Company Stockholders, and such approval in fact being obtained prior to consummation of the Merger;

•        the fact that none of the members of the Special Committee is or ever was an employee of Carrols or any of its subsidiaries or affiliates and none of such directors has any financial interest in the Merger that is different from that of the unaffiliated security holders, other than the Special Committee members’ receipt of Carrols Board compensation and Special Committee compensation (which are not contingent upon the completion of the Merger or the Special Committee’s or the Carrols Board’s recommendation and/or authorization and approval of the Merger) and their indemnification and liability insurance rights under their respective indemnification agreements entered into with Carrols and under the Merger Agreement;

•        the fact that, in considering the transaction with the Buyer Parties, the Special Committee acted solely to represent the interests of the unaffiliated security holders, and the Special Committee had independent control of the extensive negotiations with the members of the Buyer Parties and their respective advisors on behalf of the unaffiliated security holders;

•        the fact that the Special Committee retained, and had the benefit of advice from, nationally recognized legal and financial advisors;

•        the fact that the Per Share Price, and the terms and conditions of the Merger, were the result of the Special Committee’s extensive arm’s length negotiations with Parent, during which Parent raised the value of the per share merger consideration offered twice, from $8.75, to $9.20 and finally to $9.55;

•        the fact that the Special Committee had the full power and authority to negotiate the terms and conditions of any strategic transaction involving Carrols (including the Merger), including to reject any proposals made by Parent or any other person;

•        the Company’s ability to, for a period of 30 days after entering into the Merger Agreement, solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, or is reasonably expected to lead to an Acquisition Proposal;

•        the Company’s ability, under certain circumstances as set out in the Merger Agreement, to provide information to, or participate in discussions or negotiations with, third parties regarding any alternative acquisition proposal that constitutes, or is reasonably likely to lead to, a Superior Proposal;

•        the Company’s ability, under certain circumstances as set out in the Merger Agreement, to terminate the Merger Agreement to enter into a definitive agreement related to a Superior Proposal, subject to paying Parent a termination fee of $19,000,000 in cash (which could have been reduced to $9,500,000 in certain circumstances if such termination occurred prior to the No-Shop Period Start Date and if Carrols entered into an definitive Alternative Acquisition Agreement at the time of such termination), subject to and in accordance with the terms and conditions of the Merger Agreement;

•        the recognition by the Special Committee that it had no obligation to recommend to the Carrols Board that it approve the Merger Agreement, and the recognition by the Carrols Board that it had no obligation to approve the Merger Agreement;

•        the availability of appraisal rights to the Company’s stockholders who comply with all of the required procedures under Delaware law for exercising appraisal rights, which allow such holders to seek appraisal of the fair value of their shares; and

•        the fact that, in certain circumstances under the terms of the Merger Agreement, the Special Committee and the Carrols Board are able to change, withhold, withdraw, qualify or modify their recommendation that Carrols Stockholders vote in favor of the proposal to adopt the Merger Agreement.

The Buyer Parties also considered a variety of risks and other countervailing factors related to the substantive and procedural fairness of the proposed Merger, including:

•        the fact that the unaffiliated security holders of Carrols will not participate in any future earnings, appreciation in value or growth of the Company’s business and will not benefit from any potential sale of Carrols or its assets to a third party in the future;

•        the risk that the Merger might not be completed in a timely manner or at all;

•        the restrictions on the conduct of the Company’s business prior to the completion of the Merger set forth in the Merger Agreement, which may delay or prevent Carrols from undertaking business opportunities that may arise and certain other actions it might otherwise take with respect to the operations of Carrols pending completion of the Merger;

•        the negative effect that the pendency of the Merger, or a failure to complete the Merger, could potentially have on the Company’s business and relationships with its employees, vendors and customers;

•        the fact that, subject to the terms and conditions of the Merger Agreement, beginning on the No-Shop Period Start Date, Carrols and its subsidiaries are restricted from soliciting, proposing, initiating or knowingly encouraging the submission of acquisition proposals from third parties or the making of any inquiry, proposal or offer that would reasonably be expected to lead to an Acquisition Proposal;

•        the possibility that the amounts that may be payable by Carrols upon the termination of the Merger Agreement, including payment to Parent of a termination fee of $19,000,000 in cash, and the processes required to terminate the Merger Agreement, including the opportunity for Parent to negotiate to make adjustments to the Merger Agreement, could discourage other potential acquirors from making a competing bid to acquire Carrols;

•        the fact that the receipt of cash by a U.S. Holder in exchange for shares of Carrols Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes; and

•        the risk of potential litigation relating to the Merger that could be instituted against Carrols and/or its directors and officers, and the potential effects of any outcomes related thereto, including potential management distraction and expenses that could result from such litigation.

The foregoing discussion of the information and factors considered and given weight by the Buyer Parties in connection with the fairness of the Merger is not intended to be exhaustive but is believed to include all material factors considered by them. The Buyer Parties did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their conclusion as to the fairness of the Merger. Rather, the Buyer Parties reached their position as to the fairness of the Merger after considering all of the foregoing as a whole.

The Buyer Parties believe these factors provide a reasonable basis upon which to form their position regarding the fairness of the Merger to the unaffiliated security holders of Carrols. This position, however, is not intended to be and should not be construed as a recommendation to any Carrols Stockholder to approve the Merger Agreement. The Buyer Parties make no recommendation as to how stockholders of Carrols should vote their shares relating to the Merger.

Plans for Carrols After the Merger

Following completion of the Merger, Merger Sub will have been merged with and into Carrols, with Carrols surviving the Merger as a subsidiary of Parent. The shares of Carrols Common Stock are currently listed on NASDAQ and registered under the Exchange Act. Following completion of the Merger, there will be no further market for the shares of Carrols Common Stock and, as promptly as practicable following the Effective Time and in compliance with applicable law, Carrols Common Stock will be delisted from NASDAQ and deregistered under the Exchange Act.

At the Effective Time, the directors of Merger Sub immediately prior to the Effective Time will become the initial directors of the Surviving Corporation, and the officers of Carrols immediately prior to the Effective Time will become the officers of the Surviving Corporation, in each case until their successor is duly elected and qualified or until the earlier of his or her death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation. At the Effective Time, the certificate of incorporation of Carrols as the Surviving Corporation will be amended and restated in its entirety to read as set forth in an exhibit to the Merger Agreement, and the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will become the bylaws of the Surviving Corporation, until thereafter amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation and such bylaws.

The Merger furthers the Burger King brand’s Reclaim the Flame plan to accelerate sales growth and drive franchisee profitability. This plan includes the $400 million investment announced in September 2022 to drive high quality remodels, improve operations, enhance marketing, and support ongoing technology and digital priorities. The Buyer Parties expect to significantly accelerate Carrols’ current rate of remodels to bring the acquired portfolio to modern image over the next five years, by investing Carrols’ operating cash flow to remodel acquired restaurants that are not currently considered modern image. In addition, the Buyer Parties expect to refranchise the restaurants to smaller, local operators over time, leveraging the operational strength and experience of the Carrols team.

The Buyer Parties will continue to assess the Company’s assets, corporate and capital structure, capitalization, operations, business, properties and personnel to determine what additional changes, if any, would be desirable following the Merger to enhance the business and operations of Carrols. From and after the Effective Time, Parent may seek to acquire target companies or assets that operate in the Company’s industry or combine Carrols with target companies that provide earnings and growth synergies; however, no definitive contracts, arrangements, plans, proposals, commitments or understandings with respect thereto currently exist.

Certain Effects of the Merger

If the Requisite Stockholder Approval is obtained and all other conditions to Closing of the Merger are satisfied or waived, upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the DGCL, at the Effective Time, (1) Merger Sub will merge with and into Carrols, (2) the separate existence of

Merger Sub will cease, and (3) Carrols will continue as the Surviving Corporation in the Merger and a subsidiary of Parent. As a result of the Merger, Carrols will cease to be a publicly traded company, Carrols Common Stock will be delisted from NASDAQ and deregistered under the Exchange Act and Carrols will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of capital stock of the Surviving Corporation.

The Effective Time will occur upon the filing of a Certificate of Merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as Carrols, Parent and Merger Sub may agree and specify in such Certificate of Merger).

Upon the terms and subject to the conditions of the Merger Agreement, at the Effective Time:

•        Each share of Carrols Common Stock outstanding as of immediately prior to the Effective Time (other than the Owned Company Shares or the Dissenting Company Shares, and other than Company RSAs and Company PSAs, which will be treated as described below) will be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to the Per Share Price, without interest thereon (or in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and bond, if required) in accordance with the Merger Agreement).

•        Each Owned Company Share shall remain issued and outstanding as a share of common stock of the Surviving Corporation.

•        Each share of Series D Convertible Preferred Stock that is outstanding as of immediately prior to the Effective Time shall remain issued and outstanding as a share of Series D Convertible Preferred Stock of the Surviving Corporation, on the terms set forth in the Series D Convertible Preferred Stock Certificate of Designation.

•        Each Company RSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSA, multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSA (with any performance conditions deemed to be earned at “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company RSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSU (together with any accrued and unpaid dividends or dividend equivalents corresponding to such Company RSU), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically converted, into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSU (together with any accrued and unpaid dividend or dividend equivalents corresponding to such Company PSU) (with any performance conditions deemed to be earned based on the greater of “target” level or “actual” performance, as measured through the Effective Time and extrapolated over the full performance period; provided, that, if the Effective Time occurs on or prior to December 31, 2024, the performance conditions for the Company PSUs granted in 2024 shall be deemed to be earned based on “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company Option, whether vested or unvested, that is unexpired, unexercised, and outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company Option, multiplied by (ii) the excess, if any, of the Price Per Share over the applicable exercise price per share applicable to such Company Option, subject to any applicable withholding taxes payable in respect thereof. Each Company Option with an exercise price per share that is equal to or greater than the Per Share Price will be cancelled immediately upon the Effective Time for no consideration.

At or prior to the Closing, Parent will deposit (or cause to be deposited), on behalf of Merger Sub, with the Payment Agent an amount of cash sufficient to pay the aggregate consideration to which holders become entitled pursuant to the Merger Agreement. Promptly following the Closing (and in any event within three business days following Closing), the Payment Agent will send to each holder of record of shares of Carrols Common Stock as of immediately prior to the Effective Time (A) a letter of transmittal in customary form (which will specify that delivery will be effected, and risk of loss and title to the certificates representing such shares (the “Certificates”) will pass, only upon delivery of the Certificates to the Payment Agent) and (B) instructions for use in effecting the surrender of the Certificates and book-entry shares, as applicable, in exchange for the Per Share Price. For more information, see the section of this proxy statement captioned “The Merger Agreement — Exchange and Payment Procedures.”

Following the Merger, the Surviving Corporation will become a subsidiary of Parent. If the Merger is completed, Parent and its affiliates will be the sole beneficiaries of Carrols’ future earnings and growth, if any, and will be entitled to vote on corporate matters affecting Carrols following the Merger. Similarly, Parent will also bear the risks of ongoing operations, including the risks of any decrease in Carrols’ value after the Merger.

In connection with the Merger, certain members of Carrols’ management will receive benefits and be subject to obligations that are different from, or in addition to, the benefits and obligations of Carrols Stockholders generally, as described in more detail under “— Interests of Carrols’ Directors and Executive Officers in the Merger.”

Benefits and Detriments of the Merger for the Unaffiliated Security Holders

The primary benefit of the Merger to the unaffiliated security holders will be their right to receive the Per Share Price for each share of Carrols Common Stock held by such stockholders as described above. This amount represents an approximately 23.1% premium to Carrols 30-day volume-weighted average price as of January 12, 2024 of $7.76 per share and an approximately 13.4% premium to the closing price of Carrols Common Stock of $8.42 per share on January 12, 2024, the last full trading day before public announcement of the Merger Agreement. Additionally, such stockholders will avoid the risk after the Merger of any possible decrease in Carrols’ future earnings, growth or value.

The primary detriment of the Merger to the unaffiliated security holders is the lack of an interest of such stockholders in the potential future earnings, growth, or value realized by Carrols after the Merger, including as a result of any sale of Carrols or its assets to a third party in the future. Additionally, the receipt of cash in exchange for Carrols Common Stock pursuant to the Merger will generally be a taxable sale transaction for U.S. federal income tax purposes to U.S. Holders (as defined in the section of this proxy statement captioned, “Special Factors — Certain U.S. Federal Income Tax Consequences of the Merger”) who surrender their Carrols Common Stock in the Merger to the extent that such stockholders have any gain on their shares of Carrols Common Stock.

Benefits and Detriments of the Merger for Carrols’ Directors and Executive Officers

In connection with the Merger, certain members of Carrols’ management will receive benefits and be subject to obligations that are different from, or in addition to, the benefits and obligations of Carrols Stockholders generally, as described in more detail under “— Interests of Carrols’ Directors and Executive Officers in the Merger.” The primary benefits of the Merger to Carrols’ directors and executive officers include the continued indemnification rights, rights to advancement of fees and directors and officers liability insurance. Members of the Special Committee, other than the Chairperson of the Special Committee, are entitled to compensation of $5,000 per month until the consummation of the transactions contemplated by the Merger Agreement in exchange for

their services on the Special Committee. The Chairperson of the Special Committee is entitled to compensation of $10,000 per month until the consummation of the transactions contemplated by the Merger Agreement in exchange for his service on the Special Committee.

The primary detriments of the Merger to Carrols’ directors and executive officers include, without limitation, the fact that such directors and executive officers will no longer participate in the Company’s potential growth or value, if any, and that the receipt of cash in exchange for Carrols Common Stock pursuant to the Merger will generally be a taxable sale transaction for U.S. federal income tax purposes to U.S. Holders (as defined in the section of this proxy statement captioned, “Special Factors — Certain U.S. Federal Income Tax Consequences of the Merger”) who surrender their Carrols Common Stock in the Merger to the extent that such stockholders have any gain on their shares of Carrols Common Stock.

Benefits and Detriments of the Merger for the Buyer Parties

The primary benefits of the Merger to the Buyer Parties include the fact that the Surviving Corporation will become a subsidiary of Parent. If the Merger is completed, Parent and its affiliates will be the sole beneficiaries of Carrols’ future earnings and growth, if any, and will be entitled to vote on corporate matters affecting Carrols following the Merger. Additionally, Carrols Common Stock will no longer be traded on NASDAQ and will be deregistered under the Exchange Act. Accordingly, there will be a reduction of the costs and administrative burden associated with operating Carrols as a U.S. publicly traded company, including the costs associated with regulatory filings and compliance requirements and Carrols will no longer have continued pressure to meet quarterly forecasts set by analysts.

The primary detriments of the Merger to the Buyer Parties include the fact that Parent will bear the risks of ongoing operations, including the risks of any decrease in Carrols’ value after the Merger. Additionally, the Buyer Parties’ ownership of Carrols will be illiquid, with no public trading market for such securities.

Certain Effects on Carrols if the Merger is Not Completed

If the Merger Agreement is not adopted as a result of the failure to obtain the Requisite Stockholder Approval, or if the Merger is not completed for any other reason, Carrols Stockholders will not receive any payment for their shares of Carrols Common Stock in connection with the Merger. Instead, (1) Carrols will remain an independent public company, (2) Carrols Common Stock will continue to be listed and traded on NASDAQ and registered under the Exchange Act, and (3) Carrols will continue to file periodic reports with the SEC. In addition, if the Merger is not completed, Carrols expects that: (x) our management will continue to operate the business as it is currently being operated, and (y) Carrols Stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which Carrols operates and adverse economic conditions.

Furthermore, if the Merger is not completed, and depending on the circumstances that cause the Merger not to be completed, the price of Carrols Common Stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of Carrols Common Stock would return to the price at which Carrols Common Stock trades as of the date of this proxy statement. Accordingly, there can be no assurance as to the effect of the Merger not being completed on the future value of your shares of Carrols Common Stock. If the Merger is not completed, the Carrols Board will continue to evaluate and review, among other things, Carrols’ business, operations, strategic direction and capitalization, and will make whatever changes it deems appropriate. If the Merger Agreement is not adopted as a result of the failure to obtain the Requisite Stockholder Approval, or if the Merger is not completed for any other reason, Carrols’ business, prospects or results of operation may be adversely impacted.

In addition, in specified circumstances in which the Merger Agreement is terminated, Carrols has agreed to pay Parent a termination fee of $19,000,000, as more fully described in “The Merger Agreement — Termination of the Merger Agreement” and “The Merger Agreement — Company Termination Fee.”

Unaudited Prospective Financial Information

Other than in connection with our regular earnings press releases and related investor materials, we do not, as a matter of course, make public projections as to our long-term future financial performance, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, Carrols management regularly prepares projections as to our future financial performance for internal use.

Certain Financial Projections

Except for quarterly guidance, Carrols does not, as a matter of course, publicly disclose internal projections as to future performance, earnings, or other results beyond the then-current annual period due to, among other reasons, the inherent difficulty of accurately predicting financial performance for future periods and the uncertainty, unpredictability and subjectivity of underlying assumptions and estimates. In connection with the proposed Merger, Carrols is including in this proxy statement a summary of certain limited unaudited prospective financial information of Carrols, on a standalone basis, without giving effect to the Merger, prepared by Carrols management, solely because, as described below, certain financial information was given to the Carrols Board in connection with its consideration and evaluation of the Merger and reviewed and approved by the Special Committee for Jefferies’ use in connection its financial analyses and opinion.

In January 2024, in connection with the Carrols Board’s evaluation of Parent’s proposals to acquire Carrols, Carrols management prepared the Company Projections for fiscal years 2023 through 2028. Carrols is including a summary of those Company Projections to provide Carrols Stockholders with access to information that was made available to the Carrols Board in connection with its evaluation of the Merger and the Merger consideration.

Unaudited Company Projections

Carrols management prepared the Company Projections with respect to Carrols’ business, as a standalone company, for the fiscal year 2023 through fiscal year 2028. Carrols’ management initially prepared Company projections in connection with discussions concerning the Company’s capital allocation strategy in November 2023. In addition, the Company Projections were reviewed and approved by the Special Committee for Jefferies’ use in connection with its financial analysis and opinion.

The following table summarizes the Company Projections, with dollars in millions:

____________

(1)      Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as adjusted to deduct stock-based compensation and pre-opening expenses. Adjusted EBITDA before giving effect to such deductions was $151 million, $163 million, $167 million, $177 million, $189 million and $202 million for the years 2023E through 2028E, respectively.

(2)      Free Cash Flow is defined as Adjusted EBITDA less capital expenditure and change in net working capital.

Important Information Regarding the Unaudited Company Projections

The inclusion of the Company Projections or of this summary does not constitute an admission or representation by Carrols or any other person that the information is material, should not be regarded as an indication that the Carrols Board, Carrols or its management or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results or an accurate prediction of future results, and they should not be relied on as such. This information is not fact and should not be relied upon as indicative of actual future results, and readers of this proxy statement are cautioned not to place undue reliance on the Company Projections.

The Company Projections include non-GAAP financial measures, including Adjusted EBITDA and Unlevered Free Cash Flow. Please see the tables above for a description of how Carrols defines these non-GAAP financial measures for purposes of the Company Projections in this section. Non-GAAP financial measures

should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP, and non-GAAP financial measures used by Carrols may not be comparable to similarly titled measures used by other companies.

The Company Projections and the underlying assumptions upon which the Company Projections were based are subjective in many respects and subject to multiple interpretations and frequent revisions attributable to the dynamics of Carrols’ industry and based on actual experience and business developments. The Company Projections, while presented with numerical specificity, reflect numerous assumptions with respect to Company performance, industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are difficult to predict, subject to significant economic and competitive uncertainties and beyond Carrols’ control. The Company Projections constitute forward-looking information and are subject to a wide variety of significant risks and uncertainties, including those described in the section of this proxy statement entitled “Forward-Looking Statements,” that could cause the Company Projections or the underlying assumptions to be inaccurate and for actual results to differ materially from the Company Projections. As a result, there can be no assurance that the Company Projections will be realized or that actual results will not be significantly higher or lower than projected, and the Company Projections cannot be considered a guarantee of future operating results and should not be relied upon as such. Because the Company Projections cover multiple years, such information by its nature becomes less reliable with each successive year. The Company Projections do not take into account any circumstances or events occurring after the date on which they were prepared, including the Merger, and some or all of the assumptions that have been made in connection with the preparation of the Company Projections may have changed since the date the Company Projections were prepared. Economic and business environments can and do change quickly, which adds an additional significant level of uncertainty as to whether the results portrayed in the Company Projections will be achieved.

In addition, the Company Projections have not been updated or revised to reflect information or results after the date the Company Projections were prepared or as of the date of this proxy statement. None of Carrols, Parent or any of our or their respective affiliates intends to, and each of them disclaims any obligation to, update or otherwise revise the Company Projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error (except, in the case of Carrols, as required by applicable securities laws). These considerations should be taken into account in reviewing the Company Projections, which were prepared as of an earlier date.

For the foregoing reasons, and considering that the Special Meeting will be held several months after the Company Projections were prepared, as well as the uncertainties inherent in any forecasting information, readers of this proxy statement are cautioned not to place unwarranted reliance on the Company Projections set forth above. The summary of the Company Projections is not provided to influence Carrols Stockholders’ decisions regarding whether to vote for the Merger Agreement Proposal or any other proposal. The Company Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information contained in Carrols’ public filings with the SEC. Carrols urges all of its stockholders to review its most recent SEC filings for a description of its reported financial results. See the section of this proxy statement entitled “Where You Can Find More Information.”

The Company Projections were not prepared with the purpose of, or with a view toward, public disclosure or toward compliance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither the Company’s independent auditors, Deloitte & Touche LLP (herein referred to as “Deloitte”) nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. The Deloitte report incorporated by reference in this proxy statement relates to Carrols’ historical financial information. It does not extend to the prospective financial information contained herein and should not be read to do so. None of Carrols or its affiliates, officers, directors, advisors or other representatives has made or makes any representation to any Carrols Stockholder or to Parent or Merger Sub in the Merger Agreement or otherwise concerning the Company Projections or regarding Carrols’ ultimate performance compared to the information contained in the Company Projections or that the projected results will be achieved.

Interests of Carrols’ Directors and Executive Officers in the Merger

In considering the recommendations of the Special Committee and the Carrols Board with respect to the Merger, you should be aware that, aside from their interests as holders of Carrols Common Stock, our directors and executive officers have interests in the Merger that may be different from, or in addition to, your interests as a stockholder generally. The Special Committee and the Carrols Board were aware of and considered these interests to the extent that they existed at the time, in evaluating, negotiating and approving the Merger Agreement and in determining to recommend to Carrols Stockholders to approve the Merger Proposal. For more information, see the sections of this proxy statement titled “Special Factors — Background of the Merger” and “Special Factors — Reasons for the Merger; Recommendation of the Special Committee and the Carrols Board.” Such interests are described in more detail below.

Carrols’ named executive officers (the “NEOs”) included in the summary below are:

•        Deborah M. Derby — President and Chief Executive Officer;

•        Richard G. Cross — Vice President, Chief Development Officer;

•        Joseph H. Hoffman — Executive Vice President and Chief Restaurant Officer;

•        Anthony E. Hull — Executive Vice President, Chief Financial Officer and Treasurer; and

•        Jared L. Landaw — Senior Vice President, General Counsel and Corporate Secretary.

In addition, Carrols’ executive officers, who are not named executive officers, but are included in the summary below are:

•        Ahmad Filsoof — Senior Vice President, Strategy & Business Transformation;

•        Gary McQuillan — Vice President of Strategic Procurement & Operations Support;

•        Gretta B. Miles — Vice President, Controller and Assistant Treasurer;

•        Nathan Mucher — Senior Vice President, Chief Information Officer; and

•        Gerald J. DiGenova — Former Vice President, Human Resources.

Special Committee Fees

David S. Harris, Hannah S. Craven, Alexander Sloane, Matthew Perelman, Lawrence E. Hyatt and John D. Smith are entitled to receive a fee in connection with their service on the Special Committee. Carrols will pay to David S. Harris a monthly fee equal to $10,000 per month, and Hannah S. Craven, Alexander Sloane, Matthew Perelman, Lawrence E. Hyatt and John D. Smith, a monthly fee equal to $5,000 per month, from and including December 2023 through the month in which the Closing occurs. Such fees are in addition to the regular compensation received as a member of the Carrols Board.

Insurance and Indemnification of Directors and Executive Officers

Pursuant to the terms of the Merger Agreement, directors and officers of Carrols will be entitled to certain ongoing indemnification and insurance coverage, including under directors’ and officers’ liability insurance policies. For more information, see the section of this proxy statement captioned “The Merger Agreement — Indemnification and Insurance.”

Treatment of Carrols Equity Awards

•        Each Company RSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSA, multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSA (with any performance conditions deemed to be earned at “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company RSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSU (together with any accrued and unpaid dividends or dividend equivalents corresponding to such Company RSU), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically converted, into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSU (together with any accrued and unpaid dividend or dividend equivalents corresponding to such Company PSU) (with any performance conditions deemed to be earned based on the greater of “target” level or “actual” performance, as measured through the Effective Time and extrapolated over the full performance period; provided, that, if the Effective Time occurs on or prior to December 31, 2024, the performance conditions for the Company PSUs granted in 2024 shall be deemed to be earned based on “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company Option, whether vested or unvested, that is unexpired, unexercised, and outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company Option, multiplied by (ii) the excess, if any, of the Price Per Share over the applicable exercise price per share applicable to such Company Option, subject to any applicable withholding taxes payable in respect thereof. Each Company Option with an exercise price per share that is equal to or greater than the Per Share Price will be cancelled immediately upon the Effective Time for no consideration.

Equity Interests of Carrols’ Directors and Executive Officers

The following table sets forth for each of Carrols’ executive officers and directors, as applicable (1) the number of shares of Carrols Common Stock beneficially owned, (2) the number of shares of Carrols Common Stock subject to his or her Company RSU and Company RSA awards, (3) the number of shares of Carrols Common Stock subject to his or her Company PSU and Company PSA awards and (4) the number of shares of Carrols Common Stock subject to Company Option awards with a per share exercise price less than the Per Share Price, in each case expected to be held on the date of Closing, assuming the following and such additional assumptions set forth in the footnotes to the table:

•        March 1, 2024 as the date of the Closing of the Merger (which is the assumed date solely for purposes of this proxy statement).

•        The number of outstanding shares of Carrols Common Stock and equity awards for each executive officer and director on the date of Closing is equal to the number of shares of Carrols Common Stock and equity awards that were outstanding as of March 1, 2024 and do not forecast any vesting, deferrals or forfeitures of equity-based awards following such date.

•        For purposes of this disclosure, our executive officers include Deborah M. Derby, Anthony E. Hull, Joseph W. Hoffman, Richard G. Cross, Ahmed Filsoof, Jared L. Landaw, Nathan Mucher, Gary McQuillan, Gretta B. Miles and Gerald J. DiGenova.

•        Although Gerald J. DiGenova, our former Vice President, Human Resources, is no longer an executive officer of Carrols as of the date of this filing, he served as an executive officer for a period of time during fiscal year 2023 and, therefore, is included in the summary below.

•        For purposes of this disclosure, our non-employee directors include David S. Harris, Hannah Stone Craven, Thomas B. Curtis, Matthew Dunnigan, Lawrence E. Hyatt, Matthew Perelman, Alexander Sloane, and John D. Smith.

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(1)      For Company RSUs, includes dividend equivalents accrued through March 1, 2024.

(2)      For Company PSUs, includes dividend equivalents accrued through March 1, 2024. For Company PSAs and Company PSUs granted during 2024, reflects the target number of Company PSAs. For Company PSUs granted during 2023, reflects the maximum number of Company PSUs (i.e., 200% of the target).

(3)      Although Gerald J. DiGenova, our former Vice President, Human Resources, is no longer an executive officer of Carrols as of the date of this filing, he served as an executive officer for a period of time during fiscal year 2023.

Change in Control and Severance Benefits Under Existing Agreements

Employment Agreement with Chief Executive Officer

On April 12, 2023, the Company entered into an employment agreement with Deborah M. Derby, the Company’s President and CEO (the “Employment Agreement”), which provides for severance payments in the event of a change in control and Ms. Derby’s Involuntary Termination. If within one year following a change in control, Ms. Derby experiences an Involuntary Termination, she will be entitled to receive (i) her accrued but unpaid base salary, any unreimbursed businesses expenses, and any unused vacation time which has accrued during the year of termination as of the date of termination, (ii) any accrued and unpaid annual bonus under the Carrols Executive Bonus Plan, (iii) any other amounts or benefits owed under the terms of any employee benefit plan or under the terms of an equity award plan or applicable award agreement, (iv) any amounts she may be entitled to pursuant to the Carrols Corporation and Subsidiaries Amended and Restated Deferred Compensation Plan (collectively, the “Accrued Benefits”), (v) a lump sum payment in an amount equal to the product of 18 and her monthly base salary, payable on the 5th business day following the six month anniversary of her date of termination and (vi) an amount equal to the aggregate annual bonus payment under the Carrols Executive Bonus Plan payable for the year in which the termination occurs, based on the greater of target level or actual performance, and with all individual performance goals being deemed achieved at target level.

If Ms. Derby experiences an Involuntary Termination outside of the one-year period following a change in control, she will be entitled to receive (i) the Accrued Benefits, (ii) a payment in an amount equal to 12 months’ base salary and (iii) an amount equal to the pro rata portion of the actual annual bonus payment under the Carrols Executive Bonus Plan that would have otherwise been paid for the year in which the termination occurs (with any individual goals being deemed achieved at target level).

In addition, the Employment Agreement provides that if Ms. Derby’s employment terminates for any reason other than “cause,” she will be entitled to elect to receive continued medical, dental and vision benefits under the same benefit plans as in effect for active executive officers of Carrols for Ms. Derby and her eligible dependents for a period of eighteen (18) months, subject to payment by Ms. Derby of the premiums charged to former employees of the Company pursuant to Section 4980B of the Code for continued benefit coverage. Thereafter, Carrols will pay Ms. Derby an amount necessary for her to acquire such benefits under equivalent plans from an independent provider, net of the amount she would otherwise be required to pay. The continued medical, dental and vision benefits do not extend beyond December 31 of the year in which Ms. Derby turns 65 years old and will terminate if, at any time after the date of termination of her employment, Ms. Derby is employed by or is otherwise affiliated with a party that offers her substantially comparable medical, dental and vision benefits.

Any severance benefits payable under Ms. Derby’s employment agreement are conditioned on her executing and not revoking a general release of claims in favor of Carrols and certain of its affiliates. Ms. Derby is also subject to a 12-month post-termination non-compete under the Employment Agreement as consideration for her receipt of the payments and benefits provided for under the Employment Agreement. If any of the payments or benefits provided for under an agreement with Ms. Derby would constitute “excess parachute payments” within the meaning of Section 280G of the Code and could be subject to the related excise tax, the Employment Agreement provides that Ms. Derby will receive either full payment of such payments and benefits or such lesser amount that would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to her.

Change in Control Severance Agreements with Other Executive Officers

Carrols and each of the other executive officers (except Ms. Derby and Mr. DiGenova) are currently party to change of control and severance agreements, each of which provide for substantially similar terms and conditions (the “CIC Severance Agreements”). The CIC Severance Agreements with Messrs. Cross, Hull, Landaw, Mucher, Hoffman, Filsoof and McQuillan, and Ms. Miles, provide that if within one year following a change of control, such executive experiences an Involuntary Termination, such executive will be entitled to receive (i) a lump sum payment in the amount equal to the product of 18 and the executive’s monthly base salary, payable on the 5th business day following the six month anniversary of the executive’s date of termination, (ii) an amount equal to the aggregate annual bonus payment under the Carrols Executive Bonus Plan payable for the year in which the termination occurs, based on the greater of target level or actual performance, and with all individual performance goals being deemed achieved at target level, and (iii) continued coverage under Carrols’ welfare and benefits plans for such executive and his or her eligible dependents for a period of up to 12 months (18 months for Mr. Cross).

Each CIC Severance Agreement provides that if an Involuntary Termination occurs prior to a change of control, or more than one year after a change of control, the executive will instead be entitled to receive (i) a payment in the amount equal to 12 months’ base salary, (ii) an amount equal to the pro rata portion of the aggregate bonus payment under the Carrols Executive Bonus Plan for the year in which the executive incurs a termination of employment to which the executive would otherwise have been entitled had his or her employment not been terminated payable in a lump sum, and (iii) continued coverage under the Carrols’ welfare and benefits plans for such executive and his or her eligible dependents for a period of up to 12 months (18 months for Mr. Cross).

Any severance benefits payable under the CIC Severance Agreements are conditioned on the applicable executive officer executing and not revoking a general release of claims in favor of Carrols and certain of its affiliates. The CIC Severance Agreements provide that the executive’s rights to receive outstanding severance payments will terminate if the executive commences employment with a competitor. If any of the payments or benefits provided for under an agreement with the applicable executive officer or otherwise payable to the applicable executive officer would constitute “excess parachute payments” within the meaning of Section 280G of the Code and could be subject to the related excise tax, the applicable executive officer will receive either full payment of such payments and benefits or such lesser amount that would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the applicable executive officer.

For an estimate of the value of the payments and benefits described above that would be payable to Carrols’ NEOs upon an Involuntary Termination in connection with the Merger, see “— Quantification of Potential Payments and Benefits to Carrols’ Named Executive Officers in Connection with the Merger” below. The estimated aggregate

amount that would be payable to all Carrols’ executive officers (except Mr. DiGenova, who is not entitled to any cash severance payments in connection with the Merger) if the Merger were to be completed and they were to experience an Involuntary Termination on March 1, 2024 is $8,425,850.

Non-Qualified Deferred Compensation Plan

Certain executive officer participate in the Carrols Corporation and Subsidiaries Amended and Restated Deferred Compensation Plan (the “Deferred Compensation Plan”). The consummation of the Merger will constitute a payment event under the Deferred Compensation Plan, and each participant will receive his or her entire deferred benefit payable in the form of one lump sum, no later than five days after the Closing. The estimated aggregate amount that would be payable to all Carrols’ executive officers and directors under the Deferred Compensation Plan if the Merger were to be completed on March 1, 2024, is $612,168.

Quantification of Potential Payments and Benefits to Carrols’ Named Executive Officers in Connection with the Merger

The information set forth in the tables below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about certain compensation for each of Carrols’ NEOs that is based on or otherwise relates to the Merger and assumes, among other things, that the Merger is consummated on March 1, 2024 and that the NEOs will experience an Involuntary Termination immediately following consummation of the Merger. The Merger-related compensation payable to these individuals is subject to a non-binding advisory vote of Carrols Stockholders, as described below in “Proposal 2: The Compensation Proposal.”

Under the applicable SEC rules, Carrols’ NEOs for this purpose are required to consist of the NEOs for whom executive compensation disclosures were required in Carrols’ most recent proxy statement filed with the SEC. However, because Ms. Derby, our President and Chief Executive Officer, was not an NEO included in such proxy statement, for purposes of providing enhanced disclosure, Ms. Derby is being included as an additional NEO for purposes of this disclosure.

The amounts indicated below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described below, and do not reflect certain compensation actions that may occur before the consummation of the Merger. For purposes of calculating such amounts, on a pre-tax basis, we have made the following assumptions:

•        March 1, 2024, which is the latest practicable date prior to this filing, as the date of the Closing of the Merger (which is the assumed Closing date solely for purposes of the calculations in this section);

•        each NEO experiences an Involuntary Termination on March 1, 2024, based on the terms of his or her respective agreement(s) (as described above in “— Change in Control and Severance Benefits under Existing Agreements”);

•        each NEO’s base salary rate and annual target bonus remain unchanged from those in effect as of March 1, 2024;

•        equity awards are valued based upon the Per Share Price, and do not forecast any vesting, deferrals or forfeitures of equity-based awards following March 1, 2024; and

•        no reductions or other setoffs to payment amounts are implemented on account of Section 280G and 4999 of the Code.

The calculations in the table below do not include amounts that each NEO was already vested in as of the date of this proxy statement. These amounts also do not reflect compensation actions that may occur after the date of this proxy statement but before the Effective Time. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by an NEO may materially differ from the amounts set forth below. “Single

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*        For Company RSUs, includes dividend equivalents accrued through March 1, 2024.

**      For Company PSUs, includes dividend equivalents accrued through March 1, 2024. For Company PSAs and Company PSUs granted during 2024, reflects the target number of Company PSAs. For Company PSUs granted during 2023, reflects the maximum number of Company PSUs (i.e., 200% of the target).

(3)      For each NEO (other than Messrs. Pena and Accordino, who are former executive officers), reflects the cost of continued coverage of group term life and disability insurance and group health and dental plan coverage for such NEO and his or her eligible dependents for a period of 12 months (18 months for Ms. Derby and 18 months for Mr. Cross), based on rates in effect at January 1, 2024 and calculated using assumptions used for financial reporting purposes under GAAP. The amount for Ms. Derby does not reflect any value in respect of her right to receive continued healthcare benefits at Carrols’ cost until the age of 65, because this is considered a vested benefit.

(4)      For each NEO, reflects the aggregate value of deferred benefits that will become payable under the Deferred Compensation Plan upon the consummation of the Merger. Amounts payable under the Deferred Compensation Plan are single-trigger benefits.

Employment Arrangements Following the Merger

As of the date of this proxy statement, none of Carrols’ executive officers have (i) reached an understanding on potential employment or other retention terms with the Surviving Corporation or with Parent or Merger Sub (or any of their respective affiliates), or (ii) entered into any definitive agreements or arrangements regarding employment or other retention with the Surviving Corporation or with Parent or Merger Sub (or any of their respective affiliates) to be effective following the consummation of the Merger. However, prior to the Effective Time, Parent or Merger Sub (or their respective affiliates) and certain of the Company’s employees (including certain of its executive officers) may reach such understandings, definitive agreements or arrangements regarding those matters or regarding the right to purchase or participate in the equity of the Surviving Corporation or one or more of its affiliates in connection with the Merger.

Intent of Carrols’ Directors and Executive Officers to Vote in Favor of the Merger

Carrols’ directors and executive officers have informed Carrols that, as of the date of this proxy statement, they intend to vote all of the shares of Carrols Common Stock owned directly by them in favor of the Merger Proposal and the Compensation Proposal. As of the Record Date, Carrols’ directors and executive officers beneficially owned and were entitled to vote, in the aggregate, approximately [•]% of the voting power of the shares of Carrols Common Stock outstanding as of the Record Date.

For purposes of clarity, the shares of Carrols Common Stock that the directors and executive officers are entitled to vote shall be included in determining whether the Merger Proposal has been approved by the affirmative vote of the holders of a majority of the outstanding shares of Carrols Common Stock entitled to vote thereon, but the shares held by Carrols’ officers or held by directors who are employees of Parent or any of its affiliates will be excluded from determining whether the Merger Proposal has been approved by the affirmative vote of the holders of a majority of the outstanding shares of Carrols Common Stock held by the Unaffiliated Company Stockholders and entitled to vote thereon.

Intent of Certain Stockholders to Vote in Favor of the Merger

On January 16, 2024, the Cambridge Holdings stockholders, who beneficially owned, in the aggregate, approximately [•]% of the voting power of the outstanding shares of Carrols Common Stock as of the Record Date, entered into the Voting Agreement, pursuant to which the Cambridge Holdings stockholders agreed to vote all of the shares held by Cambridge Holdings in favor of the Merger Proposal, subject to the terms and conditions contained in the Voting Agreement.

For more information, see the section of this proxy statement captioned “The Voting Agreement” and the full text of the Voting Agreement, attached as Annex C, which are incorporated by reference in this proxy statement in its entirety.

Closing and Effective Time of the Merger

The Closing of the Merger will take place on a date to be agreed upon by Parent and the Company that is no later than (1) the second business day after the satisfaction or waiver (to the extent permitted under the Merger Agreement) of the last to be satisfied or waived of the closing conditions of the Merger Agreement (described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Closing of the Merger”), other than conditions that by their terms are to be satisfied at the Closing of the Merger, but subject to the satisfaction or waiver (to the extent permitted under the Merger Agreement) of each of such conditions or (2) at such other time agreed to in writing by Carrols and Parent. On the date of Closing of the Merger, the parties will file a Certificate of Merger with the Secretary of State of the State of Delaware as provided under the DGCL. The Merger will become effective upon the filing and acceptance of such Certificate of Merger, or at a later time agreed to in writing by the parties and specified in such Certificate of Merger in accordance with the DGCL.

Accounting Treatment

The Merger will be accounted for as a “purchase transaction” for financial accounting purposes.

Certain U.S. Federal Income Tax Consequences of the Merger

The following discussion is a summary of certain U.S. federal income tax consequences of the Merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined below) whose shares of Carrols Common Stock are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Code, Treasury Department regulations promulgated under the Code (the “Treasury Regulations”), court decisions, published positions of the IRS, and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion.

This discussion is limited to holders of Carrols Common Stock who hold their shares of Carrols Common Stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes) and does not address any tax consequences applicable to holders of Company Equity Awards or Company Equity Plans. In addition, this summary does not describe any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction and does not consider any aspects of the alternative minimum tax, the Medicare tax on net investment income, or other U.S. federal non-income tax law (e.g., estate or gift taxation) that may be relevant or applicable to a particular holder in connection with the Merger. For purposes of this discussion, a “holder” means either a U.S. Holder or a Non-U.S. Holder (each as defined below) or both, as the context may require.

This discussion is for general information purposes only and does not address all of the income tax consequences that may be relevant to holders in light of their particular circumstances, nor does it address any consequences to holders subject to special rules under U.S. federal income tax law, including, for example:

•        banks or other financial institutions;

•        mutual funds;

•        insurance companies;

•        tax-exempt organizations (including private foundations), governmental agencies, instrumentalities or other governmental organizations and pension funds;

•        retirement plans, individual retirement or other tax deferred accounts;

•        S corporations, partnerships or any other entities or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes (or investors in such entities or arrangements);

•        controlled foreign corporations, passive foreign investment companies or corporations that accumulates earnings to avoid U.S. federal income tax;

•        dealers or brokers in securities, currencies or commodities;

•        traders in securities subject to the mark-to-market method of accounting for their securities;

•        regulated investment companies or real estate investment trusts, or entities subject to the U.S. anti-inversion rules;

•        U.S. expatriates or certain former citizens or long-term residents of the United States;

•        holders that own or have owned (directly, indirectly or constructively) five percent (5%) or more of Carrols Common Stock (by vote or value);

•        holders holding their Carrols Common Stock as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;

•        holders holding the shares as part of a wash sale for tax purposes;

•        holders that received their shares of Carrols Common Stock in a compensatory transaction, through a tax qualified retirement plan or pursuant to the exercise of options or warrants;

•        holders that hold their common stock as “qualified small business stock” for purposes of Sections 1045 and 1202 of the Code or “Section 1244 stock”;

•        holders who own an equity interest, actually or constructively, in Parent or the Surviving Corporation following the Merger;

•        U.S. Holders whose “functional currency” is not the U.S. dollar;

•        holders subject to any applicable minimum tax;

•        persons required to accelerate the recognition of any item of gross income with respect to their Carrols Common Stock as a result of such income being taken into account on an applicable financial statement; or

•        holders that do not vote in favor of the Merger and properly demand appraisal of their shares under Section 262 of the DGCL.

If a partnership (including an entity or arrangement, domestic or non-U.S., treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of Carrols Common Stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. This summary does not address tax considerations for partnerships (or entities or arrangements treated as such) holding shares of Carrols Common Stock and partners therein are urged to consult their tax advisors regarding the consequences of the Merger.

No ruling has been or will be sought from the IRS regarding the U.S. federal income tax consequences of the Merger described herein. No assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation.

THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE TO ANY HOLDER. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES UNDER STATE, LOCAL, NON-U.S. OR OTHER TAX LAWS.

U.S. Holders

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of Carrols Common Stock who or that is for U.S. federal income tax purposes:

•        an individual who is a citizen or resident of the United States;

•        a corporation, or other entity or arrangement taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

•        an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

•        a trust (1) that is subject to the primary supervision of a court within the United States and one or more United States persons as defined in Section 7701(a)(30) of the Code have the authority to control all substantial decisions of the trust or (2) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person as defined in section 7701(a)(30) of the Code.

The receipt of cash by a U.S. Holder in exchange for shares of Carrols Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Such U.S. Holder’s gain or loss generally will be equal to the difference, if any, between the amount of cash received by such U.S. Holder and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares of Carrols Common Stock. Any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one (1) year at the time of the completion of the Merger. A reduced tax rate on capital gain generally applies to long-term capital gain of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of Carrols Common Stock at different times or different prices, such U.S. Holder must determine its adjusted tax basis, holding period and gain or loss separately with respect to each block of Carrols Common Stock.

Non-U.S. Holders

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of Carrols Common Stock that is neither a U.S. Holder nor a partnership (nor an entity or arrangement treated as such) for U.S. federal income tax purposes.

Subject to the discussion under the sections entitled “Special Factors — Material U.S. Federal Income Tax Consequences of the Merger — Information Reporting and Backup Withholding,” any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

•        the gain is effectively connected with the conduct of a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax, net of certain deductions, at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to an additional “branch profits tax” at a rate of thirty percent (30%) (or a lower rate under an applicable income tax treaty);

•        such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the Merger, and certain other specified conditions are met, in which case such gain generally will be subject to U.S. federal income tax at a rate of thirty percent (30%) (or a lower rate under an applicable income tax treaty), which gain may be offset by certain U.S. source capital losses of such Non-U.S. Holder; or

•        Carrols is or has been a “United States real property holding corporation” as such term is defined in Section 897(c)(2) of the Code (a “USRPHC”), at any time within the shorter of the five-year period preceding the Merger or such Non-U.S. Holder’s holding period with respect to the applicable shares of Carrols Common Stock (the “Relevant Period”) and, if shares of Carrols Common Stock are regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code), such Non-U.S. Holder owns directly or is deemed to own pursuant to attribution rules more than five percent (5%) of Carrols Common Stock at any time during the Relevant Period, in which case such gain will be subject to U.S. federal income tax at rates generally applicable to U.S. persons (as described in the first bullet point above), except that the branch profits tax will not apply. Although there can be no assurances in this regard, we believe that we are not, and have not been, a USRPHC at any time during the five-year period preceding the Merger. Moreover, shares of Carrols Common Stock are, prior to the Merger, expected to be treated as regularly traded on an established securities market.

Non-U.S. Holders are urged to consult their tax advisors regarding the tax consequences to them of the Merger.

Information Reporting and Backup Withholding

Information reporting will apply to the Merger and backup withholding (currently, at a rate of twenty-four percent (24%)) may apply to the proceeds received by a holder pursuant to the Merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such holder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form) or (2) a Non-U.S. Holder that (i) provides a certification of such Non-U.S. Holder’s foreign status on an applicable IRS Form W-8 (or a substitute or successor form) or (ii) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, if any; provided that the required information is timely furnished to the IRS.

THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE RECEIPT OF CASH FOR THEIR SHARES OF COMMON STOCK PURSUANT TO THE MERGER UNDER ANY U.S. FEDERAL, STATE, FOREIGN, LOCAL OR OTHER TAX LAWS, OR UNDER ANY APPLICABLE INCOME TAX TREATY.

Regulatory Approvals Required for the Merger

General Efforts

Under the Merger Agreement, Parent, Merger Sub and Carrols agreed to use reasonable best efforts to take, or cause to be taken, all actions, do, or cause to be done, all things and assist and cooperate with the other parties in doing, or causing to be done, all things necessary, proper or advisable under applicable law or otherwise to consummate the Merger, including: (1) obtaining all consents, waivers, approvals, orders and authorizations from governmental authorities, and (2) making all registrations, declarations and filings with governmental authorities, in each case that are necessary or advisable to consummate the Merger. Additionally, Parent, Merger Sub and Carrols have agreed not to take any action, or omit to take any action, which action or omission is intended to or that has (or would reasonably be expected to have) the effect of preventing, impairing, delaying or otherwise adversely affecting the consummation of the Merger or the ability of the parties to fully perform their obligations under the Merger Agreement, with the exception of actions or omissions by Carrols taken in compliance with the special provisions during the Go-Shop Period.

HSR Act; Competition Laws

Under the HSR Act, the Merger cannot be completed until Parent and Carrols file a Notification and Report Form with the FTC and the DOJ and the applicable waiting period has expired or been terminated. The parties filed a notification and report form with the FTC and DOJ on January 30, 2024. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period. The waiting period under the HSR Act expired at 11:59 p.m. Eastern time on February 29, 2024.

Carrols and Parent have each agreed to (1) use its respective reasonable efforts to supply (or cause the other to be supplied) any additional information that may be required or requested by the FTC, the DOJ or the governmental authorities of any other applicable jurisdiction in which any such filing is made, and (2) use its respective reasonable efforts to take all action necessary to, as soon as practicable, (a) cause the expiration or termination of the applicable waiting periods pursuant to the HSR Act and any other antitrust laws applicable to the Merger and (b) obtain any required consents pursuant to any antitrust laws applicable to the Merger.

At any time before or after consummation of the Merger, notwithstanding the termination of the waiting period under the HSR Act, the FTC or the DOJ could take such action under the antitrust laws as it deems necessary or desirable, including seeking to enjoin the completion of the Merger, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or after the completion of the Merger, and notwithstanding the termination of the waiting period under the HSR Act, any state could take such action under its antitrust laws as it deems necessary or desirable. Such action could include seeking to enjoin the completion of the Merger or seeking divestiture of substantial assets of Carrols or Parent. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

Carrols and Parent have further agreed that Parent has the right, having taken into consideration in good faith all comments, proposals and suggestions made by Carrols, to control and direct the process, strategy and determinations with respect to obtaining antitrust approvals in connection with the Merger. Neither Carrols nor Parent will (and will cause their subsidiaries and affiliates not to) agree to stay, toll, or extend any applicable waiting period under antitrust laws or enter into any timing agreement with any governmental authority without the prior consent of the other party.

Parent, Merger Sub and their respective affiliates shall not be required to or agree to, and without the prior written consent of Parent, Carrols and Carrols’ subsidiaries shall not, (1) offer, negotiate, commit to or effect the sale, divestiture, license or other disposition, by consent decree, hold separate order or otherwise, of any and all of the assets, properties or businesses of Parent or Merger Sub (or their respective affiliates) or any assets, properties or businesses of Carrols or its subsidiaries, (2) terminate, modify, or assign any existing relationships, joint ventures, contracts, or obligations of Parent or Merger Sub (or their respective affiliates) or of Carrols or its subsidiaries, (3) modify any course of conduct regarding future operations of Parent or Merger Sub (or their respective affiliates) or of Carrols or its subsidiaries, (4) undertake or agree to any requirement or obligation to provide prior notice to, or obtain prior approval from, any governmental authority with respect to any transaction or (5) offer, negotiate or commit to any other restrictions on the activities of Parent or Merger Sub (or their respective affiliates) or of Carrols or its subsidiaries, including the freedom of action with respect to, or their ability to retain, one or more of their respective operations, divisions, businesses, product lines, customers, assets or rights or interests, or their freedom of action with respect to the assets, properties, or businesses to be acquired pursuant to the Merger Agreement. Subject to the terms of the Merger Agreement, Carrols shall, and shall cause its affiliates and representatives to, reasonably cooperate with Parent and its affiliates on any sale, divestiture, license, hold separate, or other action undertaken or proposed to be undertaken by Parent or Merger Sub which Parent and Merger Sub reasonably conclude, in good faith, may be necessary to consummate and make effective the Merger, unless such action is not conditioned on the Closing of the Merger.

Financing of the Merger

The obligation of Parent and Merger Sub to consummate the Merger is not subject to any financing condition. In connection with the financing of the Merger, the Buyer Parties entered into the Commitment Letter, pursuant to which, among other things, the Commitment Parties or their respective affiliates will provide the Buyer Parties with the Incremental Term Facility. The Incremental Term Facility will be available to Parent, together with available cash on hand of Parent, the Company and their respective subsidiaries, to fund the Acquisition Costs.

The obligations of the Commitment Parties or their respective affiliates to provide the debt financing under the Commitment Letter are subject to certain customary conditions, including the following:

•        the prior consummation or substantially simultaneous consummation of the Merger in all material respects in accordance with the Merger Agreement, without any amendments, consents, waivers or other modifications that would be materially adverse to the interests of the debt financing sources in their capacity as such without the approval thereof;

•        the prior consummation or substantially simultaneous consummation of the Refinancing, and the prior notice of Parent to the debt financing sources of the aggregate principal amount of the outstanding balance (as of the Closing Date) on the 2029 Notes for which Parent intends to issue a notice of redemption pursuant to the indenture governing the 2029 Notes;

•        that there has been no Company Material Adverse Effect (as defined in the Merger Agreement) since January 16, 2024 that is continuing;

•        the execution and delivery at least two business days prior to the Closing Date of all documentation and other information about the borrowers and guarantors party to the Existing RBI Credit Agreement, as reasonably requested in writing by the debt financing sources at least 10 business days prior to the Closing Date and that they reasonably determine is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001));

•        the execution and delivery at least two business days prior to the Closing Date of customary closing documents (subject to the restrictions set forth in the Commitment Letter);

•        the delivery of customary financial information, including customary pro forma financial information;

•        the payment upon the initial borrowing under the Incremental Term Facility of all required fees and reasonable out-of-pocket expenses to be paid on the Closing Date, to the extent invoiced at least three business days prior to the Closing Date (which amounts may be offset against the proceeds of the Incremental Term Facility); and

•        the accuracy of representations and warranties in the Existing RBI Credit Agreement in all material respects (subject to the restrictions set forth in the Commitment Letter).

Delisting and Deregistration of Carrols Common Stock

If the Merger is completed, Carrols Common Stock will no longer be traded on NASDAQ and will be deregistered under the Exchange Act. Carrols will no longer be required to file periodic reports, current reports and proxy and information statements with the SEC on account of Carrols Common Stock.

Fees and Expenses

Except (1) for the fees and expenses of the Payment Agent and (2) as described under “The Merger Agreement — Company Termination Fee,” all fees and expenses incurred in connection with the Merger will be paid by the party incurring those fees and expenses whether or not the Merger is consummated. Parent or the Surviving Corporation will be responsible for all fees and expenses of the Payment Agent. Total fees and expenses incurred or to be incurred by Carrols (including the Special Committee) are estimated at this time to be as follows:

It is also expected that Merger Sub and/or Parent will incur approximately $[•] of financing costs, legal fees, exchange agent fees, and other advisory fees.

FORWARD-LOOKING STATEMENTS

This proxy statement, the documents to which Carrols refers you in this proxy statement and information included in oral statements or other written statements made or to be made by Carrols or on Carrols’ behalf contain “forward-looking statements” that do not directly or exclusively relate to historical facts, including, without limitation, statements relating to the completion of the Merger. You can typically identify forward-looking statements by the use of forward-looking words, such as “may,” “will,” “should,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” “intend,” “target,” “possible,” “contemplate,” “predict,” “continue” and other words of similar import, or the negative versions of such words. Carrols Stockholders are cautioned that any forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in Carrols’ filings with the SEC, including in our most recent filings on Forms 10-K and 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

•        uncertainties related to the consummation of the Merger;

•        our ability to complete the Merger, if at all, on the anticipated terms and timing, including obtaining the Requisite Stockholder Approval and regulatory approvals, and the satisfaction of other conditions to the completion of the Merger;

•        our obligation to pay a termination fee under certain circumstances if the Merger is terminated;

•        uncertainties about the pendency of the Merger and the effect of the Merger on employees, customers and other third parties who deal with Carrols;

•        the impact of certain interim covenants that we are subject to under the Merger Agreement;

•        provisions in the Merger Agreement that limit our ability to pursue alternatives to the Merger, which might discourage a third party that has an interest in acquiring all or a significant part of Carrols from considering or proposing that acquisition;

•        the fact that we and our directors and officers may be subject to lawsuits relating to the Merger;

•        the substantial transaction-related costs we will continue to incur in connection with the Merger;

•        our efforts to complete the Merger could disrupt our relationships with third parties and employees, divert management’s attention, or result in negative publicity or legal proceedings;

•        the inability of stockholders to participate in any further upside of Carrols’ business if the Merger is consummated;

•        our ability to retain and hire key personnel;

•        competitive responses to the Merger;

•        continued availability of capital and financing and rating agency actions;

•        legislative, regulatory and economic developments affecting our business;

•        general economic and market developments and conditions;

•        unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, pandemics, outbreaks of war or hostilities, as well as our response to any of the aforementioned factors;

•        the fact that receipt of the all-cash Per Share Price will be taxable to holders of Carrols Common Stock that are treated as U.S. Holders for U.S. federal income tax purposes; and

•        the risk that Carrols’ stock price may fluctuate during the pendency of the Merger and may decline significantly if the Merger is not completed.

Consequently, all of the forward-looking statements that Carrols makes in this proxy statement are qualified by the information contained or incorporated by reference in this proxy statement, including: (1) the information contained under this caption, and (2) information in Carrols’ most recent filings on Form 10-K and Form 10-Q, including the information contained under the caption “Risk Factors,” and information in its consolidated financial statements and notes thereto. While the list of factors presented here is considered representative, no such list should be considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material impact on our financial condition, results of operations, credit rating or liquidity.

The forward-looking statements in this proxy statement are based upon information available to us as of the date of this proxy statement, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this proxy statement and the documents that we reference and have filed as exhibits to this proxy statement with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this proxy statement. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this proxy statement, whether as a result of any new information, future events or otherwise. Carrols Stockholders are advised to consult any future disclosures that Carrols makes on related subjects as may be detailed in its other filings made from time to time with the SEC.

THE PARTIES TO THE MERGER

Carrols

Carrols, which was founded in 1960, is one of the largest restaurant franchisees in the United States. With over 60 years of experience operating restaurants, Carrols has become the largest Burger King franchisee in the U.S., currently operating 1,022 Burger King restaurants in 23 states as well as 60 Popeyes restaurants in six states. For more information on Carrols, see the section of this proxy statement captioned “Where You Can Find Additional Information.”

Carrols Common Stock is listed on NASDAQ under the symbol “TAST.” Carrols’ corporate offices are located at 968 James Street, Syracuse, NY 13203.

Buyer Parties

Parent

Restaurant Brands International Inc. is a Canadian corporation. Parent’s subsidiaries franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand, fast food hamburgers principally under the Burger King® brand, chicken principally under the Popeyes® brand and sandwiches under the Firehouse Subs® brand. Parent is one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of December 31, 2023, Parent franchised or owned a total of 31,070 restaurants in more than 120 countries and territories. Nearly all of Parent’s current system-wide restaurants are franchised.

Parent indirectly beneficially owns 100 shares of Series D Convertible Preferred Stock. Each share of Series D Convertible Preferred Stock is convertible, at the option of the holder of such shares, into 94,145.8 shares of Carrols Common Stock and votes with the Carrols Common Stock on an as-converted basis. Holders of the Series D Convertible Preferred Stock are entitled to receive dividends payable on the Carrols Common Stock on an as-converted basis, are entitled to a liquidation preference of $0.01 per share and thereafter will be entitled to share ratably (on an as-converted basis) with the Carrols Common Stock in the distribution of any remaining assets.

Parent’s address is 130 King Street West, Suite 300, Toronto, Ontario M5X 1E1, and its telephone number is (905) 845-6511.

Merger Sub

BK Cheshire Corp. is a Delaware corporation and subsidiary of Parent formed on January 11, 2024 solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the Merger Agreement. Prior to the Effective Time, Merger Sub will be joined as a party under the Existing RBI Credit Agreement.

Merger Sub’s address is 5707 Blue Lagoon Drive, Miami, Florida 33126, and its telephone number is (305) 378-3000.

THE SPECIAL MEETING

Date, Time and Place

Carrols will hold the Special Meeting on [•], at [•], Eastern time. You may attend the Special Meeting via a live interactive webcast on the Internet at www.virtualshareholdermeeting.com/TAST2024SM. You will be able to listen to the Special Meeting live and vote online. You will need the control number found on your proxy card or voting instruction form in order to participate in the Special Meeting (including voting your shares). Carrols believes that a virtual meeting provides expanded access, improved communication and cost savings for its stockholders.

If you encounter technical difficulties accessing the Special Meeting or during the Special Meeting, a support line will be available on the login page of the Special Meeting website.

Purpose of the Special Meeting

At the Special Meeting, Carrols will ask stockholders to vote on the Merger Proposal and the Compensation Proposal.

Carrols Stockholders must approve the Merger Proposal in order for the Merger to be consummated. Approval of the Compensation Proposal is not a condition to completion of the Merger. A copy of the Merger Agreement is attached as Annex A to this proxy statement and is incorporated by reference in this proxy statement in its entirety. Carrols encourages you to read the Merger Agreement carefully in its entirety.

Attending the Special Meeting

The Special Meeting will begin at [•], Eastern time. Online check-in will begin a few minutes prior to the Special Meeting. Carrols encourages you to access the meeting prior to the start time.

As the Special Meeting is virtual, there will be no physical meeting location. To attend the Special Meeting, log in at www.virtualshareholdermeeting.com/TAST2024SM. You will need the control number found on your proxy card or voting instruction form in order to participate in the Special Meeting (including voting your shares). If you encounter technical difficulties accessing the Special Meeting or during the Special Meeting, a support line will be available on the login page of the Special Meeting website.

Once online access to the Special Meeting is open, shareholders may submit questions pertinent to meeting matters, if any, through the Special Meeting website. You will need the control number found on your proxy card or voting instruction form in order to submit questions. Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints.

Record Date; Shares Entitled to Vote; Quorum

Only Carrols Stockholders as of the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. A list of stockholders of record entitled to vote at the Special Meeting will be available at Carrols’ corporate offices located at 968 James Street, Syracuse, New York 13203, during regular business hours for a period of no less than 10 days before the Special Meeting and on the virtual meeting website during the Special Meeting.

As of the Record Date, there were [•] shares of Carrols Common Stock outstanding and entitled to vote at the Special Meeting(without giving effect to the conversion of the Series D Convertible Preferred Stock). For each share of Carrols Common Stock that you owned as of the close of business on the Record Date, you will have one vote on each matter submitted for a vote at the Special Meeting. In addition, Series D Convertible Preferred Stock vote with Carrols Common Stock on an as-converted basis. Each share of Series D Convertible Preferred Stock is convertible into 94,145.80 shares of Carrols Common Stock, or an aggregate of 9,414,580 shares of Carrols Common Stock, as of the Record Date. As of the Record Date, [•] shares of Series D Convertible Preferred Stock are owned by the BKC Stockholders. The BKC Stockholders are indirect subsidiaries and affiliates of Parent. All of such shares of common stock issuable upon conversion of the Series D Convertible Preferred Stock are included in the determination of the number of shares present at the meeting for quorum purposes. Pursuant to the Merger Agreement, Parent agreed to vote or cause to be voted any shares of Carrols Capital Stock beneficially owned by it or any of its subsidiaries in favor of the Merger Proposal.

The holders of a majority in voting power of the issued and outstanding Carrols Capital Stock entitled to vote at the Special Meeting, present by attending the meeting in person via live webcast or represented by proxy, will constitute a quorum at the Special Meeting.

Votes Required

Approval of the Merger Proposal requires the affirmative vote of (1) a majority of the voting power of the outstanding Carrols Capital Stock entitled to vote thereon, voting together as a single class, and (2) a majority of the outstanding Carrols Common Stock held by the Unaffiliated Company Stockholders.

Approval of the Compensation Proposal requires the affirmative vote of a majority of the voting power of the Carrols Capital Stock present at the Special Meeting in person or represented by proxy and entitled to vote thereon, voting as a single class. This vote will be on a non-binding, advisory basis.

Abstentions

Abstentions are included in the determination of the number of shares present at the Special Meeting for quorum purposes. If a stockholder abstains from voting on the Merger Proposal or the Compensation Proposal, that abstention will have the same effect as if the stockholder voted “AGAINST” the proposals.

Broker Non-Votes

Broker “non-votes” are not included in the determination of the number of shares present at the Special Meeting for quorum purposes. Broker “non-votes” will have the same effect as voting “AGAINST” the Merger Proposal and will have no effect on the outcome of the Compensation Proposal, except to the extent affecting the obtaining of a quorum at the Special Meeting. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee has not received instructions from the beneficial owner and does not have discretionary voting power with respect to that proposal because the proposal is not a “routine” proposal under applicable rules. The proposals being considered at the Special Meeting are non-routine proposals, and your broker, bank or nominee may not vote your shares on these proposals in the absence of voting instructions. We therefore encourage you to provide voting instructions on a proxy card or a provided voting instruction form to the broker, bank or nominee that holds your shares by carefully following the instructions provided in their notice to you. If you give voting instructions to your bank, broker or other nominee with respect to one of the proposals, but give no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal.

Shares Held by Carrols’ Directors and Executive Officers

As of the Record Date, Carrols’ directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [•] shares of Carrols Common Stock, collectively representing approximately [•] of the voting power of the shares of Carrols Common Stock outstanding as of the Record Date. Carrols’ directors and executive officers have informed Carrols that they intend to vote all of their shares of Carrols Common Stock: (1) “FOR” the Merger Proposal and (2) “FOR” the Compensation Proposal. For more information, please see the section of this proxy statement captioned “The Voting Agreement.”

Voting of Proxies

If you are a stockholder of record (that is, your shares are registered in your name with Carrols’ transfer agent, American Stock Transfer & Trust Company, LLC), you may vote your shares by returning a signed and dated proxy card (a proxy card and a prepaid reply envelope is provided for your convenience), or you may vote at the Special Meeting using the control number located on the enclosed proxy card. Additionally, you may grant a proxy electronically over the internet or by telephone by following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone. Based on your proxy cards or internet and telephone proxy, the proxy holders will vote your shares according to your direction.

If you attend the Special Meeting and wish to vote at the Special Meeting, you will need the control number located on the enclosed proxy card. Beneficial owners of shares held in “street name” must also provide a “legal proxy” from their bank or broker in order to vote at the Special Meeting. You are encouraged to vote by proxy even if you plan to attend the Special Meeting. If you attend the Special Meeting and vote at the Special Meeting, your vote will revoke any previously submitted proxy.

All shares represented by properly signed and dated proxies (or proxies granted electronically over the internet or by telephone) will, if received before the Special Meeting, be voted at the Special Meeting in accordance with the instructions of the stockholder. Properly signed and dated proxies (or proxies granted electronically over the internet or by telephone) that do not contain voting instructions will be voted (1) “FOR” the Merger Proposal and (2) “FOR” the Compensation Proposal.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee. You may also attend the Special Meeting and vote at the Special Meeting if you have a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the Special Meeting. If available from your bank, broker or other nominee, you may vote over the internet or telephone through your bank, broker or other nominee by following the instructions on the voting instruction form provided by your bank, broker or other nominee. If you do not (1) return your bank’s, broker’s or other nominee’s voting instruction form, (2) vote over the internet or by telephone through your bank, broker or other nominee, or (3) attend the Special Meeting and vote at the Special Meeting with a “legal proxy” from your bank, broker or other nominee, it will have the same effect as if you voted “AGAINST” the Merger Proposal. It will not, however, have any effect on the Compensation Proposal, except to the extent affecting the obtaining of a quorum at the Special Meeting. If you give voting instructions to your bank, broker or other nominee with respect to one of the proposals, but give no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal.

Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:

•        signing another proxy card with a later date and returning it to Carrols prior to the Special Meeting;

•        submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy; or

•        attending the Special Meeting and voting at the Special Meeting using the control number on the enclosed proxy card.

If you have submitted a proxy, your attendance at the Special Meeting, in the absence of voting at the Special Meeting or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

If you hold your shares of Carrols Common Stock in “street name” through a bank, broker or other nominee, you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the Special Meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the Special Meeting.

Any adjournment, postponement or other delay of the Special Meeting, including for the purpose of soliciting additional proxies, will allow Carrols Stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned, postponed or delayed.

Adjournment

If a quorum is not present, the chairperson of the Special Meeting or the stockholders entitled to vote at the Special Meeting, present in person by attending via live webcast or represented by proxy, may adjourn the Special Meeting, from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. The chairperson may also adjourn the meeting to another place, date or time, even if a quorum

is present. In addition, the Special Meeting could be postponed before it commences, subject to the terms of the Merger Agreement. If the Special Meeting is adjourned or postponed, Carrols Stockholders who have already submitted their proxies will be able to revoke them at any time before they are voted at the Special Meeting.

Solicitation of Proxies

Carrols, on behalf of the Carrols Board, is soliciting proxies from Carrols Stockholders for the Special Meeting. Under applicable SEC rules and regulations, the members of the Carrols Board are “participants” with respect to the solicitation of proxies in connection with the Special Meeting.

The expense of soliciting proxies will be borne by Carrols. Carrols has retained Innisfree M&A Incorporated, a professional proxy solicitation firm, to assist in the solicitation of proxies, and provide related advice and informational support during the solicitation process, for a fee of up to $20,000. Carrols will indemnify this firm against losses arising out of its provisions of these services on its behalf. In addition, Carrols may reimburse banks, brokers and other nominees representing beneficial owners of shares of Carrols Capital Stock for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by Carrols’ directors, officers and employees, personally or by telephone, email, fax or over the internet. No additional compensation will be paid for such services.

Anticipated Date of Completion of the Merger

Carrols currently expects to complete the Merger in the second quarter of 2024. However, the exact timing of completion of the Merger, if at all, cannot be predicted because the Merger is subject to the closing conditions specified in the Merger Agreement, many of which are outside of Carrols’ control.

Appraisal Rights

If the Merger is consummated, holders of record or beneficial owners of Carrols Common Stock who (1) do not vote in favor of the Merger Proposal (whether by voting against the Merger Proposal, abstaining or otherwise not voting with respect to the Merger Proposal), (2) continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) their applicable shares of Carrols Common Stock through the effective date of the Merger, (3) validly and properly demand appraisal of their applicable shares, (4) meet certain statutory requirements described in this proxy statement, and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the Merger under Section 262 of the DGCL if certain conditions set forth in Section 262(g) of the DGCL are satisfied. The requirements under Section 262 of the DGCL for perfecting and exercising appraisal rights are described in further detail in the section of this proxy statement captioned “Appraisal Rights,” which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, a copy of which may be accessed without subscription or cost at the Delaware Code Online (available at: https://delcode.delaware.gov/title8/c001/sc09/index.html#262).

Holders of record and beneficial owners of Carrols Common Stock who are entitled to have their shares appraised by the Delaware Court of Chancery may receive payment in cash of the “fair value” of their shares of Carrols Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger as determined by the Delaware Court of Chancery, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the Merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to persons entitled to appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, any persons who wish to seek appraisal of their shares are encouraged to review Section 262 of the DGCL carefully and seek the advice of legal counsel with respect to the exercise of appraisal rights.

Persons considering seeking appraisal should be aware that the fair value of their shares of Carrols Common Stock as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the Merger Agreement if they did not seek appraisal of their shares of Carrols Common Stock.    For more information, see the section of this proxy statement captioned “Appraisal Rights — Determination of Fair Value.”

To exercise appraisal rights, a holder of record or a beneficial owner of Carrols Common Stock must (1) submit a written demand for appraisal of such holder’s shares or such beneficial owner’s shares of Carrols Common Stock to Carrols before the vote is taken on the Merger Proposal, (2) not vote, whether in person by attending via live webcast or by proxy, in favor of the Merger Proposal (whether by voting against the Merger Proposal, abstaining or otherwise not voting with respect to the Merger Proposal), (3) continuously hold (in the case of holders of record) or continuously own (in the case of beneficial owners) the subject shares of Carrols Common Stock through the effective date of the Merger, and (4) strictly comply with all other procedures for exercising appraisal rights under Section 262 of the DGCL. If you are a beneficial owner of shares of Carrols Common Stock and you wish to exercise appraisal rights in such capacity, in addition to the foregoing requirements, your written demand for appraisal must also (1) reasonably identify the holder of record of the shares of Carrols Common Stock for which the demand is made, (2) be accompanied by documentary evidence of your beneficial ownership of stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and (3) provide an address at which you consent to receive notices given by the Surviving Corporation under Section 262 of the DGCL and to be set forth on the verified list required by Section 262(f) of DGCL. The failure to follow exactly the procedures specified under Section 262 of the DGCL may result in the loss of appraisal rights. The requirements under Section 262 of the DGCL for perfecting and exercising appraisal rights are described in further detail in the section of this proxy statement captioned “Appraisal Rights,” which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, a copy of which may be accessed without subscription or cost at the Delaware Code Online (available at: https://delcode.delaware.gov/title8/c001/sc09/index.html#262) and is herein incorporated by reference.

Other Matters

At this time, Carrols knows of no other matters to be voted on at the Special Meeting. If any other matters properly come before the Special Meeting and you deliver a proxy to Carrols, your shares of Carrols Common Stock will be voted in accordance with the discretion of the appointed proxy holders, with full power of substitution and re-substitution.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on [•]

This proxy statement is available on the “Investor Relations” section of Carrols’ website located at https://investor.carrols.com/financial-information.

Householding of Special Meeting Materials

Carrols has adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders who have the same address will receive only one copy of this proxy statement unless one or more of these stockholders notifies Carrols that they wish to continue receiving individual copies. This procedure reduces printing costs, postage fees and the use of natural resources. Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card upon request. If you wish to receive a separate set of Carrols’ disclosure documents at this time, please contact Broadridge Financial Solutions, Inc. at 1 (866) 540-7095 or in writing at Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717.

If you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact Broadridge Financial Solutions, Inc. at the above phone number or address.

Questions and Additional Information

If you have any questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of this proxy statement or need help submitting your proxy or voting your shares of Carrols Common Stock, please contact Carrols’ proxy solicitor at:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders call: (877) 717-3922 (toll-free from the U.S. and Canada) or
+1 (412) 232-3651 (from other countries)
Banks and brokers call collect: (212) 750-5833

THE MERGER AGREEMENT

The discussion of the terms of the Merger Agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated into this proxy statement by reference. This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety as it is the legal document that governs the Merger.

Explanatory Note Regarding the Merger Agreement

The following description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is included as Annex A hereto. The Merger Agreement has been included to provide Carrols Stockholders with information regarding its terms. It is not intended to provide any other factual information about Carrols, Parent, Merger Sub or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk among the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to Carrols Stockholders. Carrols Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be reflected in Carrols’ public disclosures. Accordingly, the representations, warranties, covenants and other agreements in the Merger Agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding Carrols and its business. Please see the section of this proxy statement captioned “Where You Can Find More Information.”

Effect of the Merger

The Merger Agreement provides that, upon the terms and subject to the conditions of the Merger Agreement, and the applicable provisions of the DGCL, at the Effective Time, Merger Sub will be merged with and into Carrols, whereupon the separate corporate existence of Merger Sub will thereupon cease, and Carrols will continue as the Surviving Corporation of the Merger. As a result of the Merger, the Surviving Corporation will become a subsidiary of Parent, and Carrols Common Stock will no longer be publicly traded. In addition, Carrols Common Stock will be delisted from NASDAQ and deregistered under the Exchange Act, in each case, in accordance with applicable laws, rules and regulations, and Carrols will no longer file periodic reports with the SEC on account of Carrols Common Stock. If the Merger is consummated, those that owned Carrols Common Stock before the Merger will not own any shares of capital stock of the Surviving Corporation. The Effective Time will occur upon the filing of a Certificate of Merger with, and the acceptance for record of such filing by, the Secretary of State of the State of Delaware (or at such later time as Carrols, Parent and Merger Sub may agree and specify in the Certificate of Merger).

Closing and Effective Time

The Closing of the Merger will take place on a date to be agreed upon by Parent and the Company that is no later than (1) the second business day after the satisfaction or waiver (to the extent permitted under the Merger Agreement) of the last to be satisfied or waived of the closing conditions of the Merger Agreement (described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Closing of the Merger”), other than conditions that by their terms are to be satisfied at the Closing of the Merger, but subject to the satisfaction or waiver (to the extent permitted under the Merger Agreement) of each of such conditions, or (2) such other time agreed to in writing by Carrols and Parent. On the date of Closing of the Merger, the parties will file a Certificate of Merger with the Secretary of State of the State of Delaware as provided under the DGCL. The Merger will become effective upon the filing and acceptance of such Certificate of Merger, or at a later time agreed to in writing by the parties and specified in such Certificate of Merger in accordance with the DGCL.

Directors and Officers; Certificate of Incorporation; Bylaws

From and after the Effective Time, Carrols, as the Surviving Corporation in the Merger, will possess all properties, rights, privileges, powers and franchises of Carrols and Merger Sub, and all of the debts, liabilities and duties of Carrols and Merger Sub will become the debts, liabilities and duties of the Surviving Corporation.

At the Effective Time, the board of directors of the Surviving Corporation will consist of the directors of Merger Sub as of immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal, and the officers of Carrols as of immediately prior to the Effective Time will be the officers of the Surviving Corporation, until their successors are duly appointed or until their earlier death, resignation or removal.

At the Effective Time, the Amended and Restated Certificate of Incorporation of Carrols as the Surviving Corporation will be amended and restated in its entirety to read as set forth in Exhibit A to the Merger Agreement, and the bylaws of the Surviving Corporation will be amended and restated in their entirety to read as the bylaws of Merger Sub, until thereafter amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation of the Surviving Corporation and such bylaws.

Merger Consideration

Carrols Capital Stock

At the Effective Time, each share of Carrols Common Stock outstanding as of immediately prior to the Effective Time (other than the Owned Company Shares or the Dissenting Company Shares, and other than Company RSAs and Company PSAs, which will be treated as described below) will be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to the Per Share Price, without interest thereon (or in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and bond, if required) in accordance with the Merger Agreement).

At the Effective Time, each Owned Company Share will remain issued and outstanding as a share of common stock of the Surviving Corporation.

At the Effective Time, each share of Series D Convertible Preferred Stock that is outstanding as of immediately prior to the Effective Time will remain issued and outstanding as a share of Series D Convertible Preferred Stock of the Surviving Corporation, on the terms set forth in the Series D Convertible Preferred Stock Certificate of Designation.

After the Merger is completed, holders of Carrols Common Stock will have the right to receive the Per Share Price, but will no longer have any rights as a stockholder of Carrols (except that holders of Carrols Common Stock who properly exercise their appraisal rights may have the right to receive payment for the “fair value” of their shares determined pursuant to an appraisal proceeding, as contemplated by Delaware law). For more information, please see the section of this proxy statement captioned “Appraisal Rights.”

Equity Awards

•        Each Company RSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSA, multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSA, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSA (with any performance conditions deemed to be earned at “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company RSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company RSU (together with any accrued and unpaid dividends or dividend equivalents corresponding to such Company RSU), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company PSU, whether vested or unvested, that is outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically converted, into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company PSU (together with any accrued and unpaid dividend or dividend equivalents corresponding to such Company PSU) (with any performance conditions deemed to be earned based on the greater of “target” level or “actual” performance, as measured through the Effective Time and extrapolated over the full performance period; provided, that, if the Effective Time occurs on or prior to December 31, 2024, the performance conditions for the Company PSUs granted in 2024 shall be deemed to be earned based on “target” level performance), multiplied by (ii) the Per Share Price, subject to any applicable withholding taxes payable in respect thereof.

•        Each Company Option, whether vested or unvested, that is unexpired, unexercised, and outstanding as of immediately prior to the Effective Time will fully vest, be cancelled, and automatically convert into the right to receive an amount in cash equal to the product of (i) the aggregate number of shares of Carrols Common Stock subject to such Company Option, multiplied by (ii) the excess, if any, of the Price Per Share over the applicable exercise price per share applicable to such Company Option, subject to any applicable withholding taxes payable in respect thereof. Each Company Option with an exercise price per share that is equal to or greater than the Per Share Price will be cancelled immediately upon the Effective Time for no consideration.

Exchange and Payment Procedures

Prior to the Closing, Parent will designate a bank or trust company reasonably acceptable to Carrols to act as the paying agent for the Merger (the “Payment Agent”) and to make payments of the Per Share Price to holders of Carrols Common Stock. At or prior to the Closing, Parent will deposit (or cause to be deposited), on behalf of Merger Sub, with the Payment Agent an amount of cash sufficient to pay the aggregate consideration to which holders become entitled pursuant to the Merger Agreement.

Promptly following the Closing (and in any event within three business days following Closing), the Payment Agent will send to each holder of record of shares of Carrols Common Stock as of immediately prior to the Effective Time (1) a letter of transmittal in customary form (which will specify that delivery will be effected, and risk of loss and title to the certificates representing such shares Certificates will pass, only upon delivery of the Certificates to the Payment Agent) and (2) instructions for use in effecting the surrender of the Certificates and book-entry shares, as applicable, in exchange for the Per Share Price.

If any cash deposited with the Payment Agent is not claimed within one year following the date of Closing, such cash will be returned to the Surviving Corporation, upon demand, and any holders of Carrols Capital Stock who have not complied with the exchange procedures in the Merger Agreement will thereafter look only to the Surviving Corporation as general creditor for payment of the Per Share Price (subject to applicable law). Any cash deposited with the Payment Agent that remains unclaimed two years following the date of Closing will, to the extent permitted by applicable law, become the property of the Surviving Corporation free and clear of any claims or interest of any person previously entitled thereto.

Representations and Warranties

The Merger Agreement contains representations and warranties of Carrols and Parent and Merger Sub.

Some of the representations and warranties in the Merger Agreement made by Carrols are qualified as to materiality or Company Material Adverse Effect. For purposes of the Merger Agreement, “Company Material Adverse Effect” means, with respect to Carrols, any change, event, violation, inaccuracy, effect or circumstance (each, an “Effect”) that, individually or taken together with all other Effects that have occurred on or prior to the date of

determination of the occurrence of the Company Material Adverse Effect is or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of Carrols and its subsidiaries, taken as a whole; provided however, that none of the following (by itself or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a Company Material Adverse Effect has occurred or may, would or could occur (subject to the limitations set forth below):

•        changes in general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally;

•        changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including (1) changes in interest rates or credit ratings in the United States or any other country, (2) changes in exchange rates for the currencies of any country, or (3) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the world;

•        changes in conditions in the industries in which Carrols and its subsidiaries generally conduct business;

•        changes in regulatory, legislative or political conditions in the United States or any other country or region in the world;

•        any geopolitical conditions, outbreak of hostilities, acts or declarations of war, sabotage, terrorism (including cyberterrorism) or military actions, or any other similar event (including any escalation or general worsening of any of the foregoing) in the United States or any other country or region in the world;

•        earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires or other natural disasters, weather conditions, any acts of God, epidemics, pandemics or disease outbreaks and other force majeure events (including any escalation or general worsening of any of the foregoing) in the United States or any other country or region in the world;

•        any Effect resulting from the announcement of the Merger Agreement or the pendency of the Merger and the transactions contemplated thereby (including the identity of Parent, Merger Sub or their affiliates), including the impact thereof on the relationships, contractual or otherwise, of Carrols and its subsidiaries with employees, labor unions, suppliers, customers, partners, vendors or any other third person or other business relationships (other than for purposes of certain representations or warranties contained in the Merger Agreement that relate to consequences of the Merger and the related conditions to Closing);

•        the compliance by any party with the terms of the Merger Agreement, including any action taken or refrained from being taken pursuant to or in accordance with the terms of the Merger Agreement (other than for purposes of certain representations or warranties contained in the Merger Agreement that relate to consequences of the Merger and the related conditions to Closing);

•        any action taken or refrained from being taken, in each case which Parent has expressly approved, consented to or requested in writing following the signing of the Merger Agreement;

•        changes or proposed changes in GAAP or other accounting standards or in any applicable laws or regulations (or the enforcement or interpretation of any of the foregoing);

•        changes in the price or trading volume of Carrols Common Stock or any change in the credit rating of the Company or any of its securities, in and of itself (it being understood that any cause of such change may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred);

•        any failure, in and of itself, by Carrols and its subsidiaries to meet (1) any public estimates or expectations of Carrols’ revenue, earnings or other financial performance or results of operations for any period, or (2) any internal budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that any cause of any such failure may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred);

•        the availability or cost of equity, debt or other financing to the Buyer Parties;

•        any breach by Parent or Merger Sub of the Merger Agreement;

•        any action taken or refrained from being taken pursuant to the express terms of any Franchise Agreement in the ordinary course of business (excluding any incurrence of capital expenditures, other than capital expenditures for necessary maintenance costs with respect to any restaurants operated by Carrols and its subsidiaries), and any action taken by Parent or its Affiliates in connection with the Franchise Agreements (in each case, it being understood that any cause of any such action by Parent may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred); and

•        any transaction litigation or other legal proceeding threatened, made or brought by any of the current or former stockholders of Carrols (on their own behalf or on behalf of Carrols) against Carrols, any of its executive officers or other employees or any member of the Carrols Board arising out of the Merger or any other transaction contemplated by the Merger Agreement;

except, with respect to preceding bullets 1, 2, 5, 6, and 10, to the extent that such Effect has had a disproportionate adverse effect on Carrols relative to other companies operating in the industries in which Carrols and its subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has occurred a Company Material Adverse Effect.

In the Merger Agreement, Carrols made customary representations and warranties to the Buyer Parties that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement. These representations and warranties relate to, among other things:

•        due organization, valid existence, good standing and authority and qualification to conduct business with respect to Carrols;

•        Carrols’ corporate power and authority to enter into and perform the Merger Agreement and the enforceability of the Merger Agreement;

•        the necessary approval of the Carrols Board and the Special Committee;

•        the rendering of Jefferies’ fairness opinion to the Special Committee;

•        the inapplicability of anti-takeover statutes to the Merger, the Voting Agreement or the other transactions contemplated thereby;

•        the necessary vote of Carrols Stockholders and Unaffiliated Company Stockholders in connection with the Merger Agreement;

•        the absence of any conflict or violation of any organizational documents of Carrols, certain existing contracts of Carrols and its subsidiaries, applicable laws to Carrols or its subsidiaries or the resulting creation of any lien upon the properties or assets of Carrols or its subsidiaries due to the execution and delivery of the Merger Agreement and performance thereof;

•        required consents, approvals and regulatory filings in connection with the Merger Agreement and performance thereof;

•        the capital structure of Carrols as well as the ownership and capital structure of its subsidiaries;

•        the absence of any contract relating to the voting of, requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or other similar rights with respect to any of Carrols’ securities;

•        the absence of any undisclosed exchangeable security, option, warrant or other right convertible into shares of capital stock, or other equity or voting interest in Carrols or any of Carrols’ subsidiaries;

•        the accuracy and completeness of Carrols’ SEC filings and financial statements;

•        Carrols’ disclosure controls and procedures;

•        Carrols’ internal accounting controls and procedures;

•        the absence of specified undisclosed liabilities;

•        the conduct of the business of Carrols and its subsidiaries in the ordinary course consistent with past practices and the absence of any Company Material Adverse Effect, in each case, since January 1, 2023;

•        the existence and enforceability of specified categories of Carrols’ and its subsidiaries’ material contracts, including the absence of contracts restricting the business of Carrols and its subsidiaries (other than the Franchise Agreements and real estate leases), and any notices with respect to termination or intent not to renew those material contracts therefrom;

•        real property owned, leased or subleased by Carrols and its subsidiaries;

•        environmental matters;

•        intellectual property matters;

•        data security and privacy matters;

•        tax matters;

•        employee benefit plans;

•        labor matters;

•        Carrols’ and its subsidiaries’ compliance with laws and possession of necessary permits;

•        litigation matters;

•        insurance matters;

•        the absence of any contract, transactions, arrangements or understandings between Carrols or any of its subsidiaries and any affiliate or related person;

•        payment of fees to brokers in connection with the Merger Agreement; and

•        the absence of foreign business operations or activities.

In the Merger Agreement, the Buyer Parties made customary representations and warranties to Carrols that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement. These representations and warranties relate to, among other things:

•        due organization, good standing and authority and qualification to conduct business with respect to the Buyer Parties and availability of the organizational documents of the Buyer Parties;

•        the Buyer Parties’ authority to enter into and perform the Merger Agreement;

•        the absence of any conflict or violation of the Buyer Parties’ organizational documents, existing contracts, applicable laws or the resulting creation of any lien upon the Buyer Parties’ properties or assets due to the execution and delivery of the Merger Agreement and performance thereof;

•        required consents and regulatory filings in connection with the Merger Agreement and performance thereof;

•        the absence of litigation and orders;

•        ownership of Carrols Capital Stock;

•        payment of fees to brokers in connection with the Merger Agreement;

•        operations of the Merger Sub;

•        the absence of any required consent of holders of voting interests in Parent;

•        the absence of agreements between Parent and its affiliates, and members of the Carrols Board or Carrols and its subsidiaries’ management;

•        the absence of any stockholder or management arrangements related to the Merger;

•        matters with respect to Parent’s financing and sufficiency of funds; and

•        the exclusivity and terms of the representations and warranties made by Carrols.

The representations and warranties contained in the Merger Agreement will not survive the consummation of the Merger.

Conduct of Business Pending the Merger

The Merger Agreement provides that, except (1) as expressly contemplated by the Merger Agreement or required by applicable law or the express terms of the Franchise Agreements (excluding any incurrence of capital expenditures, other than capital expenditures for necessary maintenance costs with respect to any restaurants operated by Carrols and its subsidiaries in an aggregate amount not to exceed $17,000 per restaurant on an annual basis), (2) as disclosed in the confidential disclosure letter to the Merger Agreement, or (3) as requested or approved by Parent in writing (which approval will not be unreasonably withheld, conditioned or delayed), during the period of time between the date of the signing of the Merger Agreement and the Effective Time, Carrols will, and will cause each of its subsidiaries to:

•        use reasonable best efforts to maintain its existence in good standing (to the extent applicable) pursuant to applicable law;

•        subject to the restrictions and exceptions set forth in the Merger Agreement, conduct its business and operations in the ordinary course of business; and

•        use its respective commercially reasonable efforts to (1) preserve intact its material assets, properties, contracts or other legally binding understandings, licenses and business organizations, (2) keep available the services of its current officers and key employees, and (3) preserve the current relationships with customers, vendors, distributors, partners (including system integrators, platform partners, referral partners, consulting and implementation partners), lessors, licensors, licensees, creditors, contractors and other persons with which Carrols and its subsidiaries have material business relations (other than Parent and its affiliates).

In addition, Carrols has also agreed that, except as (1) disclosed in the confidential disclosure letter to the Merger Agreement, (2) approved by Parent in writing (which approval will not be unreasonably withheld, conditioned or delayed), or (3) expressly contemplated by the Merger Agreement or required by applicable law or the express terms of the Franchise Agreements (excluding any incurrence of capital expenditures, other than capital expenditures for necessary maintenance costs with respect to any restaurants operated by Carrols and its subsidiaries in an aggregate amount not to exceed $17,000 per restaurant on an annual basis), during the period of time between the date of the signing of the Merger Agreement and the Effective Time, Carrols will not, and will not permit any of its subsidiaries to:

•        amend the organizational documents;

•        liquidate, dissolve, merge, consolidate, restructure, recapitalize or reorganize;

•        issue, sell, deliver or grant any shares of capital stock or any options, warrants, commitments, subscriptions or rights to purchase any similar capital stock or securities of Carrols or any of its subsidiaries, except (1) for the issuance or sale of shares of Carrols Common Stock in connection with the exercise or settlement of the Company Equity Awards outstanding as of January 16, 2024, in accordance with their terms as in effect on such date, or (2) in connection with agreements in effect on January 16, 2024 and made available to Parent (or the form of such agreement has been made available to Parent and any agreement is substantially identical to such form), including the maximum amount of securities to be issued pursuant to those agreements;

•        directly or indirectly acquire, repurchase or redeem any securities, except for (1) repurchases, withholdings or cancellations of securities in connection with the exercise or settlement or other disposition or issuance of Company Equity Awards outstanding on or prior to January 16, 2024, in accordance with their terms as in effect on such date, or (2) transactions between Carrols and any of its subsidiaries;

•        adjust, split, combine, pledge, encumber or modify the terms of Carrols Capital Stock or any of its subsidiaries capital stock;

•        declare, set aside or pay any dividend or other distribution;

•        incur or assume any indebtedness or issue any debt securities, except (1) for trade payables incurred in the ordinary course of business, consistent with past practices, (2) obligations incurred pursuant to business credit cards in the ordinary course of business, consistent with past practices, (3) intercompany loans or advances between or among Carrols and its subsidiaries, and (4) borrowings under Carrols’ existing credit agreement in the ordinary course of business in an outstanding principal amount not in excess of $10,000,000 in the aggregate;

•        assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person, except with respect to obligations of any subsidiaries of Carrols;

•        mortgage, pledge or incur any lien upon any assets other than in connection with financing transactions permitted by the Merger Agreement or consented to by Parent;

•        make any loans, advances or capital contributions to, or investments in, any other person except for (1) advances to directors, officers and other employees for travel and other business-related expenses, in each case, in the ordinary course of business and in compliance in all material respects with Carrols and its subsidiaries’ policies related thereto, and (2) loans, advances or capital contributions to, or other extensions of credit or investments in Carrols or any of its subsidiaries;

•        acquire, lease, license, sell, sell and leaseback, abandon, transfer, assign, guarantee or exchange any assets, tangible or intangible, in each case in excess of $150,000 individually, and other than (1) the sale of products or services of Carrols and its subsidiaries in the ordinary course of business, (2) the acquisition, lease or license of products or services by Carrols and its subsidiaries in the ordinary course of business, and (3) any capital expenditures permitted by (or consented to by Parent under) the confidential disclosure letter to the Merger Agreement;

•        encumber, dispose of or acquire a fee interest in any real property;

•        close any restaurants operated by Carrols and its subsidiaries as of January 16, 2024, other than the restaurants disclosed in the confidential disclosure letter to the Merger Agreement;

•        (A) enter into, adopt, or amend (including accelerating the vesting, payment or funding), modify or terminate any bonus, profit sharing, compensation, severance, termination, option, appreciation right, performance unit, phantom equity, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefits plan in any manner (other than in connection with at-will offer letters entered into in the ordinary course of business with new hires permitted pursuant to clause (D) below, provided that the terms do not include the granting of any equity or equity-based awards); (B) increase or decrease the compensation of any director, officer, employee, individual consultant, former employee, individual independent contractor, or other individual service provider of Carrols and its subsidiaries with an annual base salary of $150,000 or more, provided that any compensation increase to an individual with an annual base salary below $150,000 shall be made in connection with the Company’s annual performance review and shall not exceed fifteen percent (15%) for any individual or four percent (4%) in the aggregate, in each case, with respect to the annual base salary levels in effect for calendar year 2023; (C) enter into any change in control, severance or similar agreement or any retention or similar agreement with any officer, employee, director, individual independent contractor, individual consultant, or other individual service provider of Carrols and its subsidiaries, or (D) hire, terminate (other than for “cause”), furlough or temporarily lay off any

officer, employee, director, individual independent contractor, individual consultant, or other individual service provider of Carrols and its subsidiaries with an annual base salary or wages (or, in the case of non-employee service providers, equivalent compensation) of $150,000 or more;

•        settle, release, waive or compromise any material litigation involving Carrols and its subsidiaries, except for the settlement of any legal proceeding or other claim that is (A) reflected or reserved against in the consolidated financial statements of Carrols and its subsidiaries with a reserve of at least $100,000 as of the end of the most recently completed fiscal quarter of Carrols and its subsidiaries included in Carrols’ SEC filings prior to January 16, 2024; (B) for solely monetary payments of, net of insurance recovery, no more than $100,000 individually and $500,000 in the aggregate; or (C) settled in compliance with the terms of the Merger Agreement;

•        revalue in any material respect any assets or change accounting practices;

•        make or change material tax elections or settle any tax claims, except in the ordinary course of business;

•        make any capital expenditures;

•        (1) modify, amend or terminate any material contract, (2) enter into any contract that would have been a material contract if it was in existence as of January 16, 2024, (3) enter into, modify, amend or extend any contract with any key technology vendor, (4) enter into, modify, amend or extend any real property lease or contract providing for the purchase of real property, (5) enter into any contract containing any covenant or other provision (i) limiting the right of Carrols or its subsidiaries to engage in any material line of business or to compete with any business that is material to Carrols and its subsidiaries; (ii) prohibiting Carrols and its subsidiaries from engaging in any business or levying a fine, charge or other payment for doing so; or (iii) containing and limiting the right of Carrols and its subsidiaries pursuant to any “most favored nation” or “exclusivity” provisions, in each case other than any such contracts that (1) may be cancelled without material liability to Carrols and its subsidiaries upon notice of 90 days or less, or (2) are not material to Carrols and its subsidiaries, taken as a whole; or (6) enter into any sale leaseback contract or arrangement relating to any real property;

•        fail to maintain insurance at current levels;

•        engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of Carrols or other person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;

•        effect certain employee layoffs without complying with applicable laws;

•        make any acquisitions by merger, consolidation or acquisition of stock or assets or enter into any joint ventures or similar corporate arrangements, but not including reseller agreements and similar commercial relationships that do not include the formation of any entity with any third person;

•        (A) enter into any collective bargaining agreement with any labor union or other labor organization or works council (provided that where such agreement is required by law, Carrols and its subsidiaries must provide Parent and its counsel notice of and the opportunity to review and comment upon any agreement); or (B) recognize any labor union, works council or other labor organization;

•        waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor;

•        adopt or implement any stockholder rights plan applicable to the Merger or any transaction consummated pursuant to the Merger Agreement; or

•        enter into, authorize any of or agree or commit to enter into a contract to do any of the foregoing.

Solicitation of Other Offers

For purposes of this proxy statement and the Merger Agreement:

“Acceptable Confidentiality Agreement” means an agreement with Carrols that is either (i) in effect as of the execution and delivery of the Merger Agreement or (ii) executed, delivered and effective after the execution and delivery of the Merger Agreement, in either case containing provisions that require any counterparty thereto (and any of its affiliates and representatives) that receives non-public information of or with respect to Carrols and its subsidiaries to keep such information confidential; provided, however, that, in each case, the provisions contained therein are no less restrictive in any material respect to such counterparty (and any of its affiliates and representatives named therein) than the terms of the confidentiality agreement entered into between Carrols and Parent, it being understood that such agreement need not contain any “standstill” or similar provisions or otherwise prohibit the making of any Acquisition Proposal.

“Acquisition Proposal” means any offer or proposal (other than an offer or proposal by the Buyer Parties) to engage in an Acquisition Transaction.

“Acquisition Transaction” means any transaction or series of related transactions (other than the Merger) involving:

•        any direct or indirect purchase or other acquisition by any person or “group” (as defined pursuant to Section 13(d) of the Exchange Act) of persons (in each case, other than the Buyer Parties, their affiliates or any group that includes the Buyer Parties or their affiliates), whether from Carrols or any other person(s), of securities representing more than 15% of the total outstanding equity securities of Carrols (by vote or economic interests) after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any person or “group” of persons that, if consummated in accordance with its terms, would result in such person or “group” of persons beneficially owning more than 15% of the total outstanding equity securities of Carrols (by vote or economic interests) after giving effect to the consummation of such tender or exchange offer;

•        any direct or indirect purchase, license or other acquisition by any person or “group” (as defined pursuant to Section 13(d) of the Exchange Act) of persons (in each case, other than the Buyer Parties or their affiliates or any group that includes the Buyer Parties or their affiliates) of assets constituting or accounting for more than 15% of the consolidated assets, revenue or net income of Carrols and its subsidiaries taken as a whole (measured by the fair market value thereof as of the date of such purchase or acquisition); or

•        any merger, consolidation, share exchange, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction involving Carrols pursuant to which (A) any person or “group” (as defined pursuant to Section 13(d) of the Exchange Act) of persons (in each case, other than the Buyer Parties or their affiliates or any group that includes the Buyer Parties or their affiliates) would hold securities representing more than 15% of the total outstanding equity securities of Carrols (by vote or economic interests) after giving effect to the consummation of such transaction.

“Alternative Acquisition Agreement” means any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an Acquisition Transaction, other than an Acceptable Confidentiality Agreement.

“Superior Proposal” means any bona fide written Acquisition Proposal for an Acquisition Transaction on terms that the Special Committee has determined in good faith, after consultation with its financial advisor and outside legal counsel, (1) is reasonably likely to be consummated in accordance with its terms, taking into account all legal, regulatory and financing aspects of the proposal (including certainty of Closing) and the identity of the person making the proposal and other aspects of the Acquisition Proposal that the Special Committee deems relevant, and (2) if consummated, would be more favorable, from a financial point of view, to the Carrols Stockholders (including the Unaffiliated Company Stockholders) (in their capacity as such) than the Merger (taking into account any revisions to the Merger Agreement made or proposed in writing by Parent prior to the time of such determination). For purposes of the reference to an “Acquisition Proposal” in this definition, all references to “15%” in the definition of “Acquisition Transaction” will be deemed to be references to “50%.”

Go-Shop Period

Under the Merger Agreement, during the Go-Shop Period until the No-Shop Period Start Date, Carrols and its affiliates and their respective representatives have the right to:

•        solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal;

•        subject to the entry into, and in accordance with, an Acceptable Confidentiality Agreement, furnish to any person (and its representatives and financing sources subject to the terms and obligations of such Acceptable Confidentiality Agreement applicable to such person) any non-public information relating to Carrols or its subsidiaries or afford to any such person (and such representatives and financing sources) access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Carrols or its subsidiaries, in any such case with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal, provided that Carrols must promptly (and in any event within 24 hours) provide to Parent, or provide Parent access to, any such non-public information concerning Carrols or its subsidiaries that is provided to any such person or its representatives that was not previously provided to Parent or its representatives; and

•        participate or engage in discussions or negotiations with any such person (and such representatives and financing sources) with respect to an Acquisition Proposal.

No-Shop Period

From the No-Shop Period Start Date until the earlier to occur of the valid termination of the Merger Agreement and the Effective Time, Carrols and its subsidiaries will not, will cause its directors, officers and employees not to, and will instruct its other representatives not to, and will not knowingly permit its other representatives to, directly or indirectly:

•        solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist any proposal or inquiry that constitutes or could reasonably be expected to lead to an Acquisition Proposal;

•        furnish to any person (other than to Parent or any designees of Parent) any non-public information relating to Carrols or its subsidiaries or afford to any person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Carrols or its subsidiaries (other than to Parent or any designees of Parent), in any such case with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, any proposal or inquiry that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal;

•        participate or engage in discussions or negotiations with any person with respect to an Acquisition Proposal other than to inform such persons of the provisions relating to Acquisition Proposals in the Merger Agreement or to clarify terms of an Acquisition Proposal to the extent necessary;

•        approve, endorse or recommend any proposal that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal; or

•        enter into any Alternative Acquisition Agreement.

Carrols will immediately cease, and will cause its directors, officers and employees to immediately cease, and will use its reasonable best efforts to cause its other representatives to immediately cease, any and all discussions or negotiations that existed on or prior to January 16, 2024 with any parties conducted before entering the Merger Agreement with respect to any Acquisition Proposal.

In addition, Carrols will (1) promptly request the return or destruction of all non-public information concerning Carrols and its subsidiaries furnished to any person that has executed a confidentiality agreement since January 16, 2023 in connection with any Acquisition Proposal; (2) cease providing any further information with

respect to Carrols and its subsidiaries or any Acquisition Proposal to any such person or its representatives; and (3) promptly terminate all access granted to any such person and its representatives to any physical or electronic data room.

Carrols will not be required to enforce, and will be permitted to grant a waiver, amendment or release under any provision of any standstill or confidentiality agreement solely to the extent that (x) such waiver, amendment or release would allow a confidential proposal (or amendment to a confidential proposal) being made to Carrols or the Special Committee or would otherwise allow a person to engage with Carrols and its representatives in discussions regarding a confidential proposal, Acquisition Proposal or other proposal that would be reasonably likely to lead to an Acquisition Proposal or (y) the Special Committee has determined that the failure to do so would be inconsistent with its fiduciary duties.

Notwithstanding these restrictions, at any time from January 16, 2024 until the time the Requisite Stockholder Approval is obtained, Carrols and the Special Committee may, among other things, directly or indirectly, contact the person or group of persons making an Acquisition Proposal to clarify the terms and conditions of the Acquisition Proposal to determine whether it constitutes or could reasonably be expected to result in a Superior Proposal, participate or engage in discussions or negotiations with those persons, furnish any non-public information relating to Carrols and its subsidiaries to, or afford access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Carrols and its subsidiaries pursuant to an Acceptable Confidentiality Agreement to any person or its representatives that has made or delivered to Carrols an Acquisition Proposal after January 16, 2024, provided that the Special Committee has determined in good faith (after consultation with its financial advisor and outside legal counsel) that (i) such Acquisition Proposal either constitutes a Superior Proposal or is reasonably expected to lead to a Superior Proposal, and (ii) the failure to take the actions contemplated by the above would be inconsistent with its fiduciary duties pursuant to applicable law. Carrols must promptly (and in any event within 24 hours) make available to Parent any non-public information concerning Carrols and its subsidiaries that is provided to any such person or its affiliates or representatives that was not previously made available to Parent; however if such person or its representatives is a competitor of Carrols and its subsidiaries, Carrols and its subsidiaries will only provide commercially sensitive non-public information in accordance with “clean room” procedures.

Carrols will not authorize, direct or knowingly permit any consultant or employee of Carrols to breach the “no solicitation” provisions of the Merger Agreement, and upon becoming aware of any breach or threatened breach of such provisions by a consultant or employee of Carrols will use its reasonable best efforts to stop such breach or threatened breach.

Carrols is not entitled to terminate the Merger Agreement for the purpose of entering into an Alternative Acquisition Agreement unless it complies with certain procedures in the Merger Agreement and pays a termination fee to Parent, as described in the subsection below captioned “— Company Termination Fee.”

Recommendation Changes

As described above, and subject to the provisions described below, the Carrols Board and Special Committee have made the recommendation that Carrols Stockholders vote “FOR” the proposal to adopt the Merger Agreement. The Merger Agreement prohibits the Carrols Board (or a committee thereof, including the Special Committee) from effecting a Recommendation Change (as defined below) except as described below.

Prior to obtaining the Requisite Stockholder Approval, the Carrols Board (or a committee thereof, including the Special Committee) may not take any of the following actions (any such action, a “Recommendation Change”):

•        withhold, withdraw, amend, qualify or modify, or publicly propose to withhold, withdraw, amend, qualify or modify, the Carrols Board’s recommendation in a manner adverse to Parent in any material respect;

•        adopt, approve, endorse, recommend or otherwise declare advisable an Acquisition Proposal;

•        fail to publicly reaffirm Carrols Board’s recommendation within ten business days after Parent so requests in writing or in connection with the public disclosure by Carrols of an Acquisition Proposal by any person other than Parent and Merger Sub, except that Carrols will not be required to make such reaffirmation more than once in respect of such public disclosure of an Acquisition Proposal except in connection with any material amendment of such Acquisition Proposal;

•        take any formal action or make any recommendation or public statement in connection with a tender or exchange offer, other than a recommendation against such offer or a “stop, look and listen” communication by the Carrols Board (or a committee thereof, including the Special Committee) to Carrols Stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any substantially similar communication), or fail to recommend against any tender or exchange offer within ten business days after commencement thereof; or

•        fail to include the Carrols Board’s recommendation in this proxy statement.

Notwithstanding the restrictions described above, prior to obtaining the Requisite Stockholder Approval, other than in connection with a bona fide Acquisition Proposal that constitutes a Superior Proposal, the Carrols Board, upon the recommendation of the Special Committee, may effect a Recommendation Change if (1) there has been an Intervening Event (as defined below) and (2) the Special Committee determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law and only if:

•        Carrols has provided prior written notice to Parent at least five business days in advance to the effect that the Carrols Board, upon the recommendation of the Special Committee, has (1) so determined, and (2) resolved to effect a Recommendation Change pursuant to the Merger Agreement, which notice must specify the applicable Intervening Event in reasonable detail; and

•        prior to effecting such Recommendation Change, Carrols and its affiliates and representatives, during such five business day period, must have negotiated with Parent and its representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments to the terms and conditions of the Merger Agreement so that the Special Committee no longer determines that the failure to make a Recommendation Change in response to such Intervening Event would be inconsistent with its fiduciary duties pursuant to applicable law.

In addition, prior to obtaining the Requisite Stockholder Approval, if Carrols has received a bona fide Acquisition Proposal after January 16, 2024 that the Special Committee has concluded in good faith (after consultation with its financial advisor and outside legal counsel) is a Superior Proposal, then the Carrols Board, upon the recommendation of the Special Committee may (1) effect a Recommendation Change with respect to such Acquisition Proposal or (2) authorize Carrols to terminate the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to such Acquisition Proposal, but only if:

•        the Special Committee has determined in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to do so would be inconsistent with its fiduciary duties pursuant to applicable law;

•        Carrols and its subsidiaries and their representatives have complied in all material respects with their obligations pursuant to the Merger Agreement with respect to such Acquisition Proposal;

•        Carrols has provided prior written notice to Parent at least five business days in advance to the effect that the Carrols Board, upon the recommendation of the Special Committee, has (1) received a bona fide Acquisition Proposal that has not been withdrawn, (2) concluded in good faith that such Acquisition Proposal constitutes a Superior Proposal, and (3) resolved to effect a Recommendation Change or to terminate the Merger Agreement absent any revision to the terms and conditions of the Merger Agreement, which notice will include the identity of the person or “group” of persons making such Acquisition Proposal, the material terms thereof and copies of all relevant documents relating to such Acquisition Proposal;

•        prior to effecting such Recommendation Change or termination, Carrols and its affiliates and representatives at least five business days in advance, have negotiated with Parent and its affiliates and representatives in good faith (to the extent that Parent desires to so negotiate) to make such adjustments to the terms and conditions of the Merger Agreement so that such Acquisition Proposal would cease to constitute a Superior Proposal; provided that in the event of any material revisions to such Acquisition Proposal, Carrols must deliver a new written notice at least three business days in advance that complies with the foregoing notice requirements; and

•        in the event of any termination of the Merger Agreement in order to cause or permit Carrols and its subsidiaries to enter into an Alternative Acquisition Agreement, Carrols has validly terminated the Merger Agreement in accordance with the terms of the Merger Agreement, including paying to Parent the Company Termination Fee (as defined in the Merger Agreement and described below).

If the Carrols Board (or a committee thereof, including the Special Committee) has effected a Recommendation Change, and Parent terminates the Merger Agreement prior to the adoption of the Merger Agreement by Carrols Stockholders, then Carrols must promptly (and in any event within two business days) pay or cause to be paid to Parent (as directed by Parent) a Company Termination Fee of $19,000,000. If Carrols terminates the Merger Agreement prior to the adoption of the Merger Agreement by Carrols Stockholders to enter into a definitive Alternative Acquisition Agreement to consummate the Acquisition Transaction contemplated by a Superior Proposal (and Carrols has complied in all material respects with the terms of the Merger Agreement with respect to such Superior Proposal), Carrols must pay or cause to be paid to Parent (as directed by Parent) the Company Termination Fee of $19,000,000, provided that if (1) such termination occurs prior to the No-Shop Period Start Date and (2) Carrols has entered into a definitive Alternative Acquisition Agreement to consummate an Acquisition Transaction in connection with such termination, then the Company Termination Fee will be reduced to $9,500,000.

For purposes of this proxy statement and the Merger Agreement, an “Intervening Event” means any material event, occurrence or development or material change in circumstances with respect to Carrols and its subsidiaries, taken as a whole (other than in connection with a bona fide Acquisition Proposal that constitutes a Superior Proposal) that (1) was not actually known to, or reasonably expected by, the Special Committee or the Carrols Board as of the date of the Merger Agreement, and (2) does not relate to (a) any Acquisition Proposal, or (b) the mere fact, in and of itself, that Carrols meets or exceeds any internal or published projections, forecasts, estimates or predictions of revenue, earnings or other financial or operating metrics for any period ending on or after the date of the Merger Agreement, or changes after the date of the Merger Agreement in the market price or trading volume of Carrols Common Stock or Carrols’ credit rating, except that the underlying cause of any of the foregoing in clause (b) may be considered and taken into account.

Employee Benefits

From and after the Effective Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation to) honor all of the Employee Plans (as defined in the Merger Agreement) in accordance with their terms as in effect immediately prior to the Effective Time. Notwithstanding the foregoing, nothing will prohibit the Surviving Corporation from in any way amending, modifying or terminating any such Employee Plans in accordance with their terms or if otherwise permitted pursuant to applicable law.

As of the Closing, the Surviving Corporation or one of its subsidiaries will continue to employ the employees of Carrols as of the Effective Time (the “Continuing Employees”). From and after the Effective Time until the first anniversary of the Effective Time (or, if earlier, the termination date of an applicable Continuing Employee), the Surviving Corporation and its subsidiaries will (and Parent will cause the Surviving Corporation and its subsidiaries to) provide each Continuing Employee with an annual base salary or hourly wage rate (as applicable) and annual (or quarterly, if applicable) cash incentive compensation opportunities, in each case, that, in the aggregate for such Continuing Employee are no less favorable than the annual base salary or hourly wage rate (as applicable) and annual (or quarterly, if applicable) cash incentive compensation opportunities, in the aggregate of such Continuing Employee provided to such Continuing Employee immediately prior to the Effective Time. From and after the Effective Time until December 31, 2024 (or, if earlier, the termination date of an applicable Continuing Employee), the Surviving Corporation and its subsidiaries will (and Parent will cause the Surviving Corporation and its subsidiaries to) provide each Continuing Employee with all other employee compensation and benefits (other than defined benefit pension, nonqualified deferred compensation, post-employment or retiree health or welfare, or change in control, retention or equity-based benefits) that are substantially comparable in the aggregate to those provided to such Continuing Employees immediately prior to the Effective Time (subject to the same foregoing exclusions). From and after the Effective Time until the first anniversary of the Effective Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation to) provide severance benefits to eligible employees in accordance with the Company’s severance plans, guidelines and practices as in effect on the date hereof that have been made available to Parent prior to the date hereof. However, the Surviving Corporation and its subsidiaries are not required to continue the employment of any Continuing Employee for any specific period.

To the extent that a benefit plan of Parent is made available to any Continuing Employee at or after the Effective Time, the Surviving Corporation and its subsidiaries will (and Parent will cause the Surviving Corporation and its subsidiaries to) cause to be granted to such Continuing Employee credit for all service with Carrols and its subsidiaries prior to the Effective Time for purposes of eligibility to participate, vesting and for purposes of future vacation accrual and determining severance amounts, except that (i) such service need not be credited to the extent that it would result in duplication of coverage or benefits, (ii) such service shall only be credited to the same extent and for the same purpose as such service was credited under an analogous Employee Plan, and (iii) no service shall be required to be credited under any plan that provides for equity or equity-based defined benefit pension, deferred compensation or post-employment or retiree welfare benefits. In addition, and without limiting the generality of the foregoing, the Surviving Corporation shall use commercially reasonable efforts to ensure that (i) each Continuing Employee will be immediately eligible to participate, without any waiting period, in any and all employee benefit plans sponsored by the Surviving Corporation and its subsidiaries to the extent that coverage pursuant to any such plans (the “New Plan”) replaces coverage previously provided under a comparable Employee Plan in which such Continuing Employee participates immediately before the Effective Time; and (ii) during the plan year in which the date of Closing occurs, for purposes of each New Plan providing medical, dental, pharmaceutical or vision benefits to any Continuing Employee, (x) the Surviving Corporation will cause all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and actively-at-work or similar requirements of such New Plan to be waived for such Continuing Employee and his or her covered dependents, and (y) the Surviving Corporation will cause any eligible expenses incurred by such Continuing Employee and his or her covered dependents during the portion of the plan year ending on the date of Closing to be given full credit pursuant to such New Plan for purposes of satisfying all deductible, coinsurance, co-pay, offsets and maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan. Any vacation or paid time off accrued but unused by a Continuing Employee as of immediately prior to the Effective Time will be credited to such Continuing Employee following the Effective Time, and will not be subject to accrual limits or other forfeiture and will not limit future accruals (except to the extent that such limits or forfeitures applied under the Employee Plans in effect as of the date hereof).

The Surviving Corporation will pay (and Parent will cause the Surviving Corporation to pay) all amounts that become payable under the Deferred Compensation Plan in connection with the Closing, in accordance with the terms of the Deferred Compensation Plan and in accordance with Section 409A of the Code and the regulations thereunder.

Conditions to the Closing of the Merger

The respective obligations of the Buyer Parties and Carrols to consummate the Merger are subject to the satisfaction or waiver (where permissible pursuant to applicable law) of each of the following conditions:

•        the receipt of the Requisite Stockholder Approval;

•        the expiration or termination of the applicable waiting period under the HSR Act (which waiting period expired at 11:59 p.m. Eastern time on February 29, 2024); and

•        the consummation of the Merger not being prohibited, made illegal or enjoined by any law or order of any governmental authority of competent jurisdiction in the United States.

In addition, the obligations of the Buyer Parties to consummate the Merger are subject to the satisfaction or waiver (where permitted by applicable law) of each of the following additional conditions, any of which may be waived exclusively by Parent:

•        the representations and warranties of Carrols (other than the representations and warranties in the next two bullets) set forth in the Merger Agreement being true and correct (without giving effect to any materiality or Company Material Adverse Effect qualifications set forth therein) as of the date of Closing as if made at and as of the date of Closing (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct as of such earlier date), except for such failures to be true and correct that would not, individually or in the aggregate, have a Company Material Adverse Effect;

•        the representations and warranties of Carrols relating to certain aspects of Carrols’ organization and good standing, corporate power, enforceability, anti-takeover laws, certain aspects of Carrols’ capitalization and the absence of any Company Material Adverse Effect since January 1, 2023 that (1) are not qualified by Company Material Adverse Effect or other materiality qualifications being true and correct in all material respects as of the date of Closing as if made at and as of the date of Closing (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct in all material respects as of such earlier date), and (2) are qualified by Company Material Adverse Effect or other materiality qualifications being true and correct in all respects (without disregarding such Company Material Adverse Effect or other materiality qualifications) as of the date of Closing as if made at and as of the date of Closing (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct in all respects as of such earlier date);

•        the representations and warranties of Carrols relating to certain other aspects of Carrols’ capitalization and the absence of brokers other than Jefferies LLC being true and correct in all respects as of the date of Closing (in each case (1) without giving effect to any Company Material Adverse Effect or other materiality qualifications and (2) except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct as of such earlier date), except for any inaccuracies that are de minimis in nature and amount;

•        Carrols having performed and complied in all material respects with all covenants, obligations and conditions of the Merger Agreement required to be performed or complied with by Carrols at or prior to the Closing;

•        the receipt by the Buyer Parties of a certificate of Carrols, validly executed for and on behalf of Carrols and in its name by a duly authorized executive officer thereof, certifying that the foregoing conditions to the obligations of the Buyer Parties to consummate the Merger have been satisfied; and

•        the absence of the occurrence of any Company Material Adverse Effect after January 16, 2024 that is continuing.

In addition, the obligation of Carrols to consummate the Merger is subject to the satisfaction or waiver (where permitted by applicable law) of each of the following additional conditions, any of which may be waived exclusively by Carrols:

•        the representations and warranties of the Buyer Parties set forth in the Merger Agreement being true and correct on and as of the date of Closing with the same force and effect as if made on and as of such date, except for (1) any failure to be so true and correct that would not, individually or in the aggregate, prevent or materially delay the consummation of the Merger or the ability of the Buyer Parties to fully perform their respective covenants and obligations pursuant to the Merger Agreement, and (2) those representations and warranties that address matters only as of a particular date, which representations will have been true and correct as of such particular date, except for any failure to be so true and correct that would not, individually or in the aggregate, prevent or materially delay the consummation of the Merger or the ability of the Buyer Parties to fully perform their respective covenants and obligations pursuant to the Merger Agreement;

•        the Buyer Parties having performed and complied in all material respects with all covenants, obligations and conditions of the Merger Agreement required to be performed and complied with by the Buyer Parties at or prior to the Closing; and

•        the receipt by Carrols of a certificate of the Buyer Parties, validly executed for and on behalf of the Buyer Parties and in their respective names by a duly authorized officer thereof, certifying that the foregoing conditions to the obligations of Carrols to effect the Merger have been satisfied.

Indemnification and Insurance

The Merger Agreement provides that the Surviving Corporation and its subsidiaries will (and Parent will cause the Surviving Corporation and its subsidiaries to) honor and fulfill, in all respects, the obligations of Carrols and its subsidiaries pursuant to any indemnification agreements between Carrols or any of its subsidiaries and current or

former directors or officers (and any person who becomes a director or officer of Carrols or any of its subsidiaries prior to the Effective Time) or employees, for any acts or omissions by such indemnified persons or employees occurring prior to the Effective Time. In addition, during the period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, the Surviving Corporation and its subsidiaries will (and Parent will cause the Surviving Corporation and its subsidiaries to) cause the certificates of incorporation, bylaws, and other similar organizational documents of the Surviving Corporation and its subsidiaries to contain provisions with respect to indemnification, exculpation from liabilities and the advancement of expenses that are at least as favorable as the indemnification, exculpation and advancement of expenses provisions set forth in the certificate of incorporation, bylaws and other similar organizational documents of Carrols and its subsidiaries, as applicable, as of the date of the Merger Agreement. During such six-year period, such provisions may not be repealed, amended or otherwise modified in any adverse manner except as required by applicable law.

In addition, the Merger Agreement provides that, during the six-year period commencing at the Effective Time, the Surviving Corporation will (and Parent will cause the Surviving Corporation to) indemnify and hold harmless each current or former director or officer of Carrols and its subsidiaries (and any person who becomes a director or officer of Carrols or any of its subsidiaries prior to the Effective Time), to the fullest extent permitted by law or pursuant to any indemnification agreements with Carrols and its subsidiaries in effect on the date of the Merger Agreement, from and against all costs, fees and expenses (including attorneys’ fees and investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement or compromise in connection with any legal proceeding arising, directly or indirectly, out of or pertaining, directly or indirectly, to (1) any action or omission, or alleged action or omission, in such indemnified person’s capacity as an affiliate, director, officer, employee or agent of Carrols, its subsidiaries or their affiliates to the extent that such action or omission, or alleged action or omission, occurred prior to or at the Effective Time, and (2) the Merger, as well as any actions taken by Carrols or its subsidiaries or the Buyer Parties with respect thereto. The Merger Agreement also provides that the Surviving Corporation will advance all fees and expenses (including fees and expenses of any counsel) as incurred by any such indemnified person in the defense of such legal proceeding after receipt by Parent or the Surviving Corporation of a written request for such advance.

In addition, the Merger Agreement requires the Surviving Corporation to, and Parent to cause the Surviving Corporation to, maintain, on terms that are equivalent to those of Carrols’ directors’ and officers’ liability insurance in effect on January 16, 2024, for a period of at least six years commencing at the Effective Time. The Surviving Corporation will not be required to pay annual premiums for such policy in excess of 300% of the aggregate annual premiums currently paid by Carrols for its last full fiscal year, and if the premium for such insurance coverage would exceed such amount, the Surviving Corporation is obligated to obtain the greatest coverage available for a cost not exceeding such amount from an insurance carrier with the same or better credit rating as Carrols’ directors’ and officers’ liability insurance carrier on January 16, 2024.

The Merger Agreement permits Carrols to purchase a prepaid “tail” policy from an insurance carrier with the same or better credit rating as Carrols’ directors’ and officers’ liability insurance carrier on January 16, 2024 on terms that are no less favorable than those of Carrols’ directors’ and officers’ liability insurance policies as in effect on January 16, 2024, so long as the aggregate cost for such “tail” policy does not exceed 300% of the amount paid by Carrols for coverage for its last full fiscal year.

For more information, please refer to the section of this proxy statement captioned “Special Factors — Interests of Carrols’ Directors and Executive Officers in the Merger.”

Other Covenants

Stockholders’ Meeting

Carrols has agreed to take all necessary action (in accordance with applicable law, NASDAQ rules and Carrols’ organizational documents) to establish a Record Date for, duly call, give notice of, convene and hold the Special Meeting as promptly as reasonably practicable following the mailing of this proxy statement and the Transaction Statement on Schedule 13E-3 for the purpose of voting upon the adoption of the Merger Agreement and the approval of the Merger.

Transaction Litigation

Prior to the Effective Time, Carrols will: (1) provide Parent with prompt notice of all stockholder litigation relating to the Merger Agreement or the Merger, (2) keep Parent reasonably informed with respect to status thereof, (3) give Parent the opportunity to participate in the defense, settlement or prosecution of any such litigation, and (4) consult with Parent with respect to the defense, settlement or prosecution of such litigation. Carrols may not settle any such litigation without Parent’s prior written consent (which consent will not be unreasonably withheld, delayed or conditioned).

Regulatory Efforts

Carrols and the Buyer Parties have agreed to use their respective reasonable best efforts to consummate and make effective the Merger in the most expeditious manner practicable. The Buyer Parties and their affiliates and representatives will not be required to and may not be allowed to, and Carrols and its subsidiaries will not without the written consent of Parent; (i) offer, negotiate, commit to or effect the sale, divestiture, license or other disposition, by consent decree, hold separate or otherwise, of any of the assets, properties or businesses of the Buyer Parties (or their affiliates) or any assets, properties or businesses of Carrols and its subsidiaries; (ii) terminate, modify, or assign any existing relationships, joint ventures, contracts, or obligations of the Buyer Parties or any of their respective affiliates or of Carrols and its subsidiaries; (iii) modify any course of conduct regarding future operations of any of the Buyer Parties or any of their respective affiliates or of Carrols and its subsidiaries; (iv) undertake or agree to any requirement or obligation to provide notice or obtain approval from any governmental authority with respect to any transaction; and (v) offer, negotiate or commit to any other restrictions on the activities of the Buyer Parties or their affiliates or of Carrols and its subsidiaries. Carrols and its affiliates and representatives will reasonably cooperate with Parent and its affiliates on any sale, divestiture, license, hold separate or other action which the Buyer Parties reasonably conclude in good faith may be necessary to effect the Merger; however, neither Parent, Merger Sub nor Carrols and its subsidiaries are obligated to take the foregoing actions if such action is not conditioned on the Closing of the Merger. Parent shall have the right to control and (having taken into consideration in good faith all comments, proposals and suggestions made by Carrols) direct the process, strategy and determinations with respect to any antitrust law in connection with the Merger but neither Parent nor Carrols will agree to stay, toll or extend any appliable waiting period under any antitrust law without the prior written consent of the other party.

Cooperation with Debt Financing

Prior to the Effective Time, subject to the limitations set forth in the Merger Agreement, Carrols will, and will cause its subsidiaries to, and will use its commercially reasonable efforts to cause its representatives to, provide all reasonable and customary cooperation as may be reasonably requested by Parent to assist Parent in the arrangement and consummation of any debt financing obtained in connection with the transactions contemplated by the Merger Agreement (the “Debt Financing”). Carrols’ obligations include, but are not limited to, (i) preparing and furnishing all financial and other pertinent information that is available regarding Carrols and its subsidiaries reasonably requested by Parent in connection with the Debt Financing; (ii) reasonably participating in due diligence efforts and with rating agencies; (iii) reasonably facilitating the pledging of collateral; (iv) taking all corporate actions reasonably requested by Parent for consummating the Debt Financing; and (v) timely furnishing to Parent and any lenders involved in the Debt Financing with documentation and information regarding Carrols and its subsidiaries as may be required under “know your customer” and anti-money laundering rules and regulations.

The Merger Agreement does not require Carrols or any of its subsidiaries to (1) waive or amend any terms of the Merger Agreement, pay any commitment fee or similar fee or agree to pay any other fees or reimburse any expenses or otherwise issue or provide any indemnities prior to the Effective Time for which it has not received prior reimbursement or is not otherwise indemnified by or on behalf of Parent, (2) enter into, approve, modify or perform any definitive agreement or commitment or distribute any cash (except to the extent subject to concurrent reimbursement by Parent) that will be effective prior to the date of Closing (other than customary Debt Financing authorization letters), (3) give any indemnities in connection with the Debt Financing that are effective prior to the Effective Time and only to the extent previously agreed in writing by Carrols, (4) take any action that, in the good faith determination of Carrols, would unreasonably interfere with the conduct of the business of Carrols or any of its subsidiaries or create an unreasonable risk of damage or destruction to any property or assets of Carrols or any of its subsidiaries, (5) provide any authorization letters, presentations, memoranda or other materials or documents

used in the connection with the Debt Financing with respect to which Carrols and its subsidiaries or their respective affiliates and representatives provided cooperation pursuant to their obligation under the Merger Agreement or any of such documents or materials containing information based on financial information or data derived from Carrols and its subsidiaries’ historical books and records, in all cases, (A) which does not include language that exculpates Carrols and its subsidiaries and their respective representatives and affiliates from any liability in connection with the unauthorized use or misuse by the recipients thereof of all such presentations, memoranda and other materials and documents and information set forth therein, and (B) which Carrols and its representatives have not been given reasonable opportunity to review and comment on, (6) prepare separate financial statements for any of Carrols and its subsidiaries to the extent not customarily prepared by Carrols and its subsidiaries and to the extent such preparation would be unduly burdensome or change any fiscal period, (7) adopt any resolutions, execute any consents or otherwise take any corporate or similar action to be effective prior to the Closing, (8) provide any legal opinion prior to the Closing, or (9) take any action that will conflict with or violate its organizational documents or any applicable laws or would result in a material violation or breach of, or default under, any material agreement to which any member of Carrols and its subsidiaries is a party.

Obtaining the Debt Financing is not a condition to the Closing. If the Debt Financing has not been obtained, the Buyer Parties will each continue to be obligated, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, to consummate the Merger.

Company Credit Agreement

Carrols will use commercially reasonable efforts to (a) deliver a draft of the Payoff Letter prior to the date of Closing, (b) deliver or facilitate the delivery of the executed Payoff Letter at least two business day prior to the date of Closing and (c) cooperate with any back-stop, “roll-over” or termination of any existing letters of credit under Carrols’ existing credit agreement.

Company Notes

Prior to the effective date of the Merger, if requested in writing by the Buyer Parties, Carrols and its subsidiaries and their respective representatives shall reasonably cooperate with the Buyer Parties to allow or effect (A) consent solicitations and/or offers to purchase, tender offers or exchange offers in connection with Company Notes; (B) the satisfaction and discharge on the date of Closing of all the outstanding aggregate principal amount of Company Notes; or (C) the conditional redemption of all of the outstanding aggregate principal amount of Company Notes pursuant to the applicable provisions of the indenture of the Company Notes. The Buyer Parties shall be responsible for the preparation of the necessary documents as well as the payment of all fees and expenses in connection with any consent solicitations and shall consult with Carrols in good faith with regard to any necessary documents regarding any consent solicitations.

Termination of the Merger Agreement

The Merger Agreement may be terminated:

•        at any time prior to the Effective Time (whether prior to or after the receipt of the Requisite Stockholder Approval) by mutual written agreement of Carrols and Parent;

•        by either Carrols or Parent at any time prior to the Effective Time:

•        whether prior to or after the receipt of the Requisite Stockholder Approval, if (1) any permanent injunction or other judgment or order issued by a governmental authority of competent jurisdiction in the United States or other legal or regulatory restraint or prohibition imposed by a governmental authority in the United States preventing the consummation of the Merger is in effect, or any action has been taken by any governmental authority of competent jurisdiction in the United States that, in each case, prohibits, makes illegal or enjoins the consummation of the Merger and has become final and non-appealable, or (2) any statute, rule, regulation or order in the United States is enacted, entered, enforced or deemed applicable to the Merger that prohibits, makes illegal or enjoins the consummation of the Merger (except that this right to terminate the Merger Agreement will not be available to any party whose failure to comply with its obligations under the Merger Agreement resulted in the failure to resolve or lift, as applicable, such injunction, action, statute, rule, regulation or order);

THE Voting AGREEMENT

Pursuant to the Voting Agreement, each of the Cambridge Stockholders agreed, among other things, (1) to vote, from the date of the Voting Agreement until the Termination Date (as defined in the Merger Agreement), in favor of the Merger Agreement and the Merger, in favor of the approval of any proposal to adjourn the meeting to a later date, if there are not sufficient affirmative votes (in person or by proxy) to obtain the Requisite Stockholder Approval on the date on which such meeting is held and Parent proposes or requests such postponement or adjournment in accordance with the Merger Agreement; against (A) any action or agreement that would reasonably be expected to result in a breach of any covenant, representation or warranty or other obligation or agreement of Carrols contained in the Merger Agreement or result in any condition set forth in Article VII of the Merger Agreement not being satisfied prior to the Termination Date, (B) any Acquisition Proposal (as defined in the Merger Agreement) or (C) approval of any other proposal, transaction, agreement or action that would reasonably be expected to prevent, materially delay or materially impede the consummation of the Merger or any other transactions contemplated by the Merger Agreement; and in favor of any other matter or action necessary for the consummation of the transactions contemplated by the Merger Agreement, and (2) upon public disclosure of the material terms contemplated by the Voting Agreement and by the Merger Agreement, to (x) terminate any trading plan established in accordance with Rule 10b5-1 under the Exchange Act, in respect of Carrols Common Stock, to which such Cambridge Stockholder is a party (any such plan, a “Sales Plan”), (y) take all actions necessary to ensure the continued effectiveness of the termination of any Sales Plan and (z) not Transfer (as defined in the Voting Agreement) (or cause or permit the Transfer of) Carrols Common Stock pursuant to any Sales Plan at any time upon or after the execution of the Voting Agreement.

The Voting Agreement will terminate at the earliest of (1) the Effective Time, (2) the termination of the Merger Agreement in accordance with its terms, and (3) the date on which any amendment to the Merger Agreement is effected, or any waiver of Carrols’ rights under the Merger Agreement is granted, in each case, without the Cambridge Stockholders’ prior written consent, that (A) diminishes the Per Share Price to be received by the stockholders of the Carrols, (B) changes the form in which the Per Share Price is payable to the stockholders of the Carrols, (C) extends the Termination Date or (D) imposes any additional conditions on the Cambridge Stockholders’ right to receive the Per Share Price.

Pursuant to the Voting Agreement, each party to the Voting Agreement will be entitled to an injunction, specific performance and other equitable relief to prevent breaches of the Voting Agreement by any other party to the Voting Agreement. The Voting Agreement is governed by Delaware law. The venue for disputes relating to the Voting Agreements is the Chosen Courts (as defined in the Merger Agreement).

PROVISIONS FOR UNAFFILIATED COMPANY STOCKHOLDERS

No provision has been made (1) to grant Carrols’ unaffiliated security holders access to the corporate files of Carrols, any other party to the Merger or any of their respective affiliates, or (2) to obtain counsel or appraisal services at the expense of Carrols or any other such party or affiliate.

IMPORTANT INFORMATION REGARDING CARROLS

Company Background

Carrols, which was founded in 1960, is one of the largest restaurant franchisees in the United States. With over 60 years of experience operating restaurants, Carrols is the largest Burger King franchisee in the U.S., currently operating 1,022 Burger King restaurants in 23 states as well as 60 Popeyes restaurants in six states. Carrols has operated Burger King restaurants since 1976 and Popeyes restaurants since 2019. Carrols Common Stock is listed on NASDAQ under the symbol “TAST.” Carrols’ corporate offices are located at 968 James Street, Syracuse, NY 13203. Carrols’ telephone number is (315) 424-0513 and its corporate website is https://www.carrols.com. The information contained in, or that can be accessed through, Carrols’ website is not part of this proxy statement.

Directors and Executive Officers

The Carrols Board currently consists of nine members. The persons listed below are Carrols’ directors and executive officers as of the date of this proxy statement. The Merger Agreement provides, however, that the directors of Merger Sub immediately prior to the effective date of the Merger will be the initial directors of the Surviving Corporation immediately following the Merger. The Merger Agreement provides that the officers of Carrols immediately prior to the effective date of the Merger will be the initial officers of the Surviving Corporation immediately following the Merger. Following the Merger, each executive officer will serve until a successor is elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be.

There are no family relationships among any of Carrols’ directors or executive officers. During the past five years, neither Carrols nor any of Carrols’ directors or executive officers listed below has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). In addition, during the past five years, neither Carrols nor any of Carrols’ directors or executive officers listed below has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. The ages given below are as of April 27, 2023. Each of the individuals listed below is a citizen of the United States and can be reached at 968 James Street, Syracuse, New York 13203.

Executive Officers

Below is information about Carrols’ executive officers:

Deborah M. Derby has served as the President and Chief Executive Officer of Carrols since May 2023 and as a director of the Company since June 2018. Ms. Derby most recently served as the Chief Administrative Officer of The Children’s Place, a children’s specialty apparel retailer, from July to December 2021. From April 2016 until June 2020, Ms. Derby was the President of Horizon Group USA, Inc., a privately held wholesaler of craft components and activity kits. Prior to being named President, and after stepping down in June 2020, Ms. Derby served as a consultant to Horizon Group USA from November 2015 to March 2016 and from July to September 2020, respectively. Prior to that, Ms. Derby had an almost 15-year career at Toys “R” Us, Inc., where she served in a variety of senior executive positions including President of Babies “R” Us and Vice Chairman of Toys “R” Us. Ms. Derby has served as a director of Henry Schein, Inc. (NASDAQ: HSIC) since February 2021. She also served as a director of the Vitamin Shoppe, Inc. (formerly NYSE: VSI) from 2012 to December 2019.

Anthony E. Hull has served as the Chief Financial Officer and Treasurer of the Company since January 2020 and also served as Interim President and Chief Executive Officer from December 31, 2022 to May 1, 2023. Prior to joining Carrols, Mr. Hull served as a Senior Advisor at Realogy Holdings Corp. (NYSE: RLGY) (“Realogy”), an integrated provider of real estate services in the United States, and previously was the company’s Executive Vice President, Chief Financial Officer, and Treasurer from 2006 to 2018. Previously, Mr. Hull served as Executive Vice President, Finance at Cendant Corporation (“Cendant”), a diversified holding company, from 2003 until Realogy’s separation from Cendant in July 2006. From 1996 to 2003, Mr. Hull served as Chief Financial Officer for DreamWorks, LLC, a diversified entertainment company. From 1994 until 1995, Mr. Hull served as Chief Financial Officer of King World Productions, Inc., a NYSE listed television syndication and production company. From 1990 until 1994, Mr. Hull worked in various capacities for Paramount Communications, Inc., a diversified entertainment and publishing company. Mr. Hull began his career at Morgan Stanley & Co. in the mergers and acquisitions department for the media/entertainment group, where he served as Associate and later Vice President from 1984 to 1990.

Joseph W. Hoffman has served as the Company’s Chief Restaurant Officer since January 2023. Previously, he served as Senior Vice President, Operations of Carrols from May 2022 to December 2022, as a Division Vice President, Operations from June 2017 until April 2022, and as a Vice President, Region Director from June 1997 until May 2017. Mr. Hoffman has been an employee of Carrols since 1993, when he joined the Company as a District Manager.

Richard G. Cross has been the Company’s Chief Development Officer since December 2021. Mr. Cross was Vice President, Real Estate from July 2001 until December 2021 and Director of Real Estate from 1994 until July 2001. He served as a Real Estate Manager from 1993 until 1994 and as a Real Estate Representative from 1987 until 1993. Mr. Cross joined Carrols in May 1984 and held various positions in the Purchasing Department until 1987.

Ahmad Filsoof has been the Senior Vice President of Strategy & Business Transformation of the Company since January 2024. Previously, he served as the Vice President of Strategic Initiatives at Carrols from June 2022 to December 2023. Prior to joining Carrols, Mr. Filsoof was Head of Sales Strategy, Operations, Enablement and

Planning at Amazon Web Services from May 2020 to January 2022, where he led business strategy and planning, forecasting, management reporting and go-to-market strategy. Before Amazon Web Services, Mr. Filsoof worked at McDonald’s from August 2017 until January 2020, where, among other things, he served as Senior Director, Strategy, Insights and Strategic Initiatives. In that role, Mr. Filsoof led strategy and planning for the company’s U.S. division and was also responsible for strategy development, measuring performance and providing consumer and business insights. Prior to joining McDonald’s, Mr. Filsoof was a management consultant for ten years, including at The Boston Consulting Group, where he led client engagements across a range of industries, including retail, CPG and food services. Mr. Filsoof has an MBA from The University of Chicago Booth School of Business and a Bachelor of Arts degree in Economics from the University of California, Berkeley.

Jared L. Landaw has served as the General Counsel and Secretary of Carrols since February 2021. Prior to joining Carrols, Mr. Landaw was a partner and the Chief Operating Officer and General Counsel of Barington Capital Group, L.P. (“Barington”), an investment firm that assists publicly traded companies in designing and implementing initiatives to improve long-term value. In this role, he frequently served as a director, corporate secretary, acting general counsel or an advisor to companies in Barington’s investment portfolio, providing assistance with acquisitions, dispositions, director recruiting, investor relations, SEC filings, corporate compliance, corporate governance and board matters. Prior to joining Barington, Mr. Landaw was the Vice President of Law of International Specialty Products Inc., a global supplier of specialty chemicals and performance-enhancing products (formerly NYSE: ISP), and an attorney in the M&A practice group of Skadden Arps Slate Meagher & Flom LLP. Mr. Landaw received J.D. from Columbia University School of Law, where he was a Harlan Fiske Stone Scholar and Managing Editor of the Columbia Business Law Review.

Nathan Mucher has served as the Chief Information Officer of Carrols since November 2018. Prior to joining Carrols, Mr. Mucher served as Vice President, Information Technology for Krispy Kreme Doughnuts from 1999 until 2018, where he was responsible, among other things, for all technology initiatives including in areas pertaining to digital, analytics, finance, retail systems and supply chain. Prior to that, he served as a consultant for Novartis Animal Health from July 1998 to December 1998, as a System Analyst for JS Walker & Company, an information technology consulting service provider, from 1996 until 1998, and as a senior programmer for William James and Associates, an information technology consulting service firm, from 1994 until 1996. Mr. Mucher received an MBA from High Point University and a Bachelor of Business in Information Systems from Taylor University.

Gary McQuillan has been the Vice President of Strategic Procurement & Operations Support of the Company since May 2023. Prior to joining Carrols, Mr. McQuillan was Senior Vice President, Supply Chain at Horizon Group USA, Inc. from 2018 to 2023, where he led a 135-member team overseeing more than 80 contract manufacturers and spearheaded strategic sourcing processes for goods and services. Prior to that, he was as an executive at Toys “R” Us, Inc. from 2014 to 2018 where, among other things, he served as the Vice President — Global Product Safety, Compliance and Indirect Procurement and directed strategic sourcing and procurement processes for the company across all global markets. Prior to working at Toys “R” Us, Mr. McQuillan spent over 13 years at The Great Atlantic & Pacific Tea Company, Inc. (A&P) where he served in a variety of senior leadership roles, including Senior Vice President — Store Operations and Vice President of Strategic Procurement and Quality Assurance.

Gretta B. Miles has been the Controller of Carrols since February of 2020 and its Assistant Treasurer since June 2022. She also served as its Financial Reporting Manager from November 2011 to September 2017, with responsibility for external reporting, technical accounting and board reporting, before temporarily leaving the Company to serve as the Director of Finance for Dinosaur Bar-B-Que from September 2017 to September 2018 and then Director of Accounting and Reporting at TCGplayer.com from September 2018 to February 2020. Ms. Miles, who is a licensed CPA, began her career in public accounting, first as an auditor at Deloitte from June 2003 through November 2008 in New York, NY and then as an Audit Manager at Dannible & McKee, LLP from December 2008 through November 2011 in Syracuse, NY.

Non-Employee Directors

Below is information about Carrols’ non-employee directors:

David S. Harris has served as a director since May 7, 2012. He has also served as our Lead Independent Director from November 9, 2021 to April 1, 2022 and as our non-executive Chairman of the Board since April 1, 2022. Mr. Harris has served as the President of Grant Capital, Inc., a private investment company, since January 2002,

and served as the Chief Operating Officer of Seven Oaks Acquisition Corp. (NASDAQ: SVOK) from December 2020 to December 2021. From May 2001 until December 2001, Mr. Harris served as a Managing Director in the investment banking division of ABN Amro Securities LLC. From September 1997 until May 2001, he served as a Managing Director and Sector Head of the Retail, Consumer and Leisure Group of ING Barings LLC, a financial institution. From 1986 to 1997, Mr. Harris served in various capacities as a member of the investment banking group of Furman Selz LLC. Since 2004, Mr. Harris has been a director of REX American Resources Corporation (NYSE: REX), where he currently serves as Lead Director and Chairman of the Audit and Compensation Committees. From July 2018 to January 2020, Mr. Harris served as a director of Spectrum Brands Holdings, Inc. (NYSE: SPH). He is also a former director of Steiner Leisure Limited and Michael Anthony Jewelers, Inc.

Hannah S. Craven has served as a director since March 27, 2015. Ms. Craven is a co-founder and partner of Stone-Goff Partners LLC (“Stone-Goff”), a private equity firm that focuses on investments in business (or B2B) services companies. Prior to co-founding Stone-Goff and its predecessor firm in 2006, Ms. Craven was a Managing Director and General Partner of Sandler Capital Management from 1993 until 2006, a private equity firm where she served as a key investment professional in five sequential private equity partnerships and was a partner of its long/short hedge fund. Ms. Craven has over 20 years of experience investing in private equity transactions and serves on the boards of directors of several private portfolio companies of Stone-Goff.

Thomas B. Curtis has served as a director since 2021. He has served as a Class D director since December 20, 2022 and as a Class B director from July 13, 2021 until December 20, 2022. Since August 2021, Mr. Curtis has served as the President of BKC. From May 2021 to August 2021, Mr. Curtis served as the Chief Operating Officer of BKC, where he was responsible for overseeing field operations, restaurant development and restaurant operations. Prior to joining BKC, Mr. Curtis spent 35 years at Domino’s Pizza, Inc., where he most recently served as Executive Vice President, U.S. Operations and Global Operations Support, overseeing both franchise and company-owned operations from March 2020 to April 2021. Prior to that, he served as Executive Vice President, Corporate Operations from July 2018 to March 2020, and as Vice President of Franchise Relations and Operations Innovation from March 2017 to July 2018. Mr. Curtis joined Domino’s in 2006, after being a Domino’s franchisee since 1987.

Matthew Dunnigan has served as a director since 2018. He has served as a Class D director since December 20, 2022, a Class B director from November 30, 2018 to December 20, 2022 and as a Class A director from February 5, 2018 until November 30, 2018. Mr. Dunnigan has been Chief Financial Officer of Parent since January 2018 and served as its Treasurer from October 2014 to January 2018. Prior to joining Parent, Mr. Dunnigan served as a Vice President of Crescent Capital Group LP from September 2013 to October 2014, investing in debt securities across all levels of the capital structure, and as an investment professional in private equity for H.I.G. Capital from July 2008 to June 2011. Prior to that, he worked in investment banking with Bear, Stearns & Co., Inc. for two years. From February 2019 through October 2023, Mr. Dunnigan served as a director of Royale JVC Limited, a joint venture that is Burger King’s master franchisee in the United Kingdom.

Lawrence E. Hyatt has served as a director since June 8, 2017. From 2006 until 2017, Mr. Hyatt served as a director of Citi Trends Inc. (NASDAQ: CTRN), a publicly traded retail apparel company where he served as Chairman of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Mr. Hyatt served as the Senior Vice President and Chief Financial Officer of Cracker Barrel Old Country Store, Inc., a publicly traded restaurant and retail company, from January 2011 until July 1, 2016. From 2004 through 2010, Mr. Hyatt served as the Chief Financial Officer, Secretary and Treasurer of O’Charley’s Inc., which during the periods of Mr. Hyatt’s tenure, was a publicly traded restaurant company. Mr. Hyatt also served as Interim Chief Executive Officer of O’Charley’s Inc. from February 2009 through June 2009. Mr. Hyatt served as the Executive Vice President and Chief Financial Officer of Cole National Corporation, a specialty retailer, from 2002 to 2004, as Chief Financial and Restructuring Officer of PSINet Inc., an internet service provider, from 2000 to 2002, as Chief Financial Officer of HMS Host Corporation, a subsidiary of Autogrill S.P.A., from 1999 to 2000, and as Chief Financial Officer of Sodexho Marriott Services, Inc. and its predecessor company from 1989 to 1999.

Matthew Perelman has served as a director since April 30, 2019. He is a Co-Founder and Managing Partner of Garnett Station Partners, an investment firm focused on retail and consumer companies. Mr. Perelman has served in executive leadership positions at several portfolio companies of Garnett Station Partners, including as the Co-President of Cambridge Holdings and its subsidiaries from 2014 until their acquisition by the Company in April 2019. As Co-President of Cambridge Holdings, he oversaw, among other things, acquisitions, financings, operations and franchisor relations and helped lead its growth and development into one of the largest and fastest-growing Burger King and Popeyes franchisees. Prior to co-founding Garnett Station Partners in September 2013, Mr. Perelman worked at L Catterton, a large consumer-focused private equity firm, from June 2011 to June 2013. Prior to L Catterton, Mr. Perelman worked in the Investment Banking Division of Citigroup from June 2009 to June 2011, where he focused on consumer and retail M&A and financings. Mr. Perelman serves on the boards of Garnett Station Partners’ portfolio companies.

Alexander Sloane has served as a director since April 30, 2019. Mr. Sloane is a Co-Founder and Managing Partner of Garnett Station Partners, an investment firm focused on retail and consumer companies. Mr. Sloane has served in executive leadership positions at several portfolio companies of Garnett Station Partners, including as the Co-President of Cambridge Holdings and each of its subsidiaries from 2014 until their acquisition by the Company in April 2019. As Co-President of Cambridge Holdings, he oversaw, among other things, acquisitions, financings, operations and franchisor relations and helped lead its growth and development into one of the largest and fastest-growing Burger King and Popeyes franchisees. Prior to co-founding Garnett Station Partners in September 2013, Mr. Sloane worked in private equity at Apollo Global Management (“Apollo”) from 2011 to 2013. Prior to Apollo, Mr. Sloane worked in Investment Banking at Goldman Sachs from 2009 to 2011. Mr. Sloane serves on the boards of Garnett Station Partners’ portfolio companies.

John D. Smith has served as a director since June 17, 2022. Mr. Smith has been the Chief Executive Officer of Icon Parking, LLC, a parking management and transportation services company, since January 2020 and has served as its Chairman since March 2023. Previously, Mr. Smith served as the Chief Operating Officer of Aaron’s Inc., a publicly-traded lease-to-own retailer operating over 1,800 company and franchise locations, from January 2018 until January 2020. From January 2016 to August 2017, Mr. Smith served as Chief Executive Officer of Rize Holdings, LLC, a private-equity backed startup founded to transform the casual dining experience through leveraging digital technology. Prior to that, he served as the President, Mid-North Region, of Caesars Entertainment Corporation from 2013 to 2016 and as Chief Executive Officer of Harrah’s Resort in Atlantic City from 2010 to 2013.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the beneficial ownership of Carrols Common Stock as of March 1, 2024 and reflects the conversion of the Series D Convertible Preferred Stock into Carrols Common Stock by:

•        each stockholder known by Carrols to beneficially own more than five percent of Carrols Common Stock;

•        each of Carrols’ directors and NEOs; and

•        all of Carrols’ executive officers and directors as a group.

The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Applicable percentage ownership is based on 54,971,038 shares of Carrols Common Stock outstanding as of March 1, 2024. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Carrols Common Stock subject to options, or other rights held by such person that are currently exercisable or will become exercisable within 60 days of March 1, 2024 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person.

Unless otherwise indicated, the address of each beneficial owner listed below is 968 James Street, Syracuse, New York 1320. We believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.

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*        Less than 1.0%.

(1)      Percentages calculated on the basis of a number of shares of Carrols Common Stock outstanding equal to the sum of (i) 54,971,038, the number of shares of Carrols Common Stock outstanding as of March 1, 2024, and (ii) 9,414,580, the number of shares of Carrols Common Stock that would be issuable upon the conversion of all of the outstanding shares of Series D Convertible Preferred Stock.

(2)      Information was obtained from a Schedule 13D/A (Amended No. 6) filed on January 17, 2024 with the SEC. Cambridge Holdings and CFP each has sole voting power and sole dispositive power over 0 shares of Carrols Common Stock and shared voting power and shared dispositive power over 10,442,310 shares of Carrols Common Stock. The address for each of Cambridge Holdings and CFP is 853 Broadway, Suite 1605, New York, New York 10003.

(3)      Information was obtained from a Schedule 13D/A (Amendment No. 4) filed on January 16, 2024 with the SEC. Affiliates of RBI beneficially own an aggregate of 9,414,580 shares of Carrols Common Stock issuable upon the conversion of shares of Series D Convertible Preferred Stock. RBI and Restaurant Brands International Limited Partnership (“RBI LP”) each has sole voting power over 9,414,580 shares, sole dispositive power over 9,414,580 shares and shared voting and shared dispositive power over 0 shares. The address for RBI and RBI LP is 130 King Street West, Suite 300, P.O. Box 399, Toronto, Ontario M5X 1E1 Canada.

(4)      Information was obtained from a Schedule 13G filed on January 29, 2024 with the SEC. BlackRock, Inc. has sole voting power over 3,297,518 shares of Carrols Common Stock and sole dispositive power over 3,419,320 shares of Carrols Common Stock and shared voting power and shared dispositive power over 0 shares of Carrols Common Stock. The address for BlackRock, Inc. is 50 Hudson Yards, New York, New York 10001.

(5)      Ms. Derby has served as our President and Chief Executive Officer since May 1, 2023.

(6)      Includes shares of common stock issuable pursuant to 10,706 Company RSUs and 100,000 vested Company Options. Mr. Hull has served as our interim President and Chief Executive Officer since December 31, 2022 until April 30, 2023 and our Chief Financial Officer and Treasurer since January 2020.

(7)      Includes shares of Carrols Common Stock issuable pursuant to 2,547 Company RSUs and 75,000 vested Company Options.

(8)      Includes 75,000 vested Company Options.

(9)      The address of Mr. Curtis and Mr. Dunnigan is 130 King Street West, Suite 300, Toronto, ON A6 M5X1E1, Canada.

(10)    Includes 295,111 shares of Carrols Common Stock held directly by Mr. Perelman and 10,442,310 shares of common stock held by Cambridge Holdings and CFP. Mr. Perelman and Mr. Sloane are the managing principals of CFP, which is the sole member and manager of Cambridge Holdings. Accordingly, each of Mr. Perelman and Mr. Sloane may be deemed to beneficially own the securities of the Company held by CFP. The address for each of Mr. Perelman and Mr. Sloane is 853 Broadway, Suite 1605, New York, New York 10003.

(11)    Includes 164,161 shares of Carrols Common Stock held directly by Mr. Sloane and 10,442,310 shares of common stock held by Cambridge Holdings and CFP. Mr. Perelman and Mr. Sloane are the managing principals of CFP, which is the sole member and manager of Cambridge Holdings. Accordingly, each of Mr. Perelman and Mr. Sloane may be deemed to beneficially own the securities of the Company held by CFP. The address for each of Mr. Perelman and Mr. Sloane is 853 Broadway, Suite 1605, New York, New York 10003.

(12)    Includes (i) 127,964 beneficially owned shares of Carrols Common Stock held by Nathan Mucher, who is our Vice President and Chief Information Officer, which includes shares of common stock pursuant to 2,205 Company RSUs and 25,000 vested Company Options, (ii) 77,396 beneficially owned shares of Carrols Common Stock held by Ahmad Filsoof, who is our Vice President, Strategic Initiatives, (iii) 121,290 beneficially owned shares of Carrols Common Stock held by Gretta B. Miles, who is our Vice President, Controller which includes 25,000 vested Company Options, (iv) 14,000 beneficially owned shares of Carrols Common Stock held by Gary McQuillan, who is our Vice President, Strategic Procurement and (v) in aggregate, shares of common stock issuable pursuant to 15,458 Company RSUs and 300,000 vested Company Options (inclusive of those held by and Mr. Mucher and Ms. Miles).

Prior Public Offerings

During the past three years, none of Carrols, Parent, Merger Sub or any of their respective affiliates have made any underwritten public offering of shares of Carrols Common Stock for cash that was registered under the Securities Act, or exempt from registration under Regulation A promulgated thereunder, except as described below.

Transactions in Carrols Common Stock

Except as set forth in the Merger Agreement and agreements entered into in connection therewith, including the Voting Agreement (as discussed in the sections of this proxy statement captioned “The Merger Agreement” and “The Voting Agreement”), activity related to Carrols’ equity compensation awards discussed elsewhere in this proxy statement and as described below in “Other Carrols Transactions of Note” and “Transactions by Carrols and the Buyer Parties in the Last Two Years,” (1) each of Carrols, its directors and executive officers, the Buyer Parties and their respective affiliates have not conducted any transactions with respect to shares of Carrols Common Stock during the past 60 days, and (2) none of Carrols or the Buyer Parties or their respective affiliates have purchased shares of Carrols Common Stock during the past two years.

Transactions by Carrols’ Directors and Executive Officers During the Last 60 Days

The following transactions by Carrols’ directors and executive officers within the last 60 days were reported on Statements of Changes of Beneficial Ownership on Form 4 filed with the SEC:

Anthony E. Hull

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(1)      The sale of shares occurred automatically pursuant to a Rule 10b5-1 trading plan adopted by the individual filing the S-4 (a “Reporting Person”) on September 14, 2023.

(2)      Represents restricted stock units issued to the Reporting Person under the Issuer’s 2016 Stock Incentive Plan, as amended and restated, as dividend equivalents in connection with a regular quarterly cash dividend in the amount of $0.02 per share paid by the Issuer on December 15, 2023. The restricted stock units will be subject to the same terms and conditions, including, without limitation, vesting, as the underlying restricted stock units previously issued to the Reporting Person.

(3)      The shares were granted to the Reporting Person pursuant to the Issuer’s 2016 Stock Incentive Plan, as amended and restated.

(4)      Represents shares disposed through the withholding of shares to cover tax obligations through a net share settlement transaction.

Nathan Mucher