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

Filed by the Registrant

 

Filed by a party other than the Registrant

 

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under §240.14a-12

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):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

 

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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

 

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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.

 

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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.

 

Sincerely,

   

  

   

David S. Harris
Chairman of the Board

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 [•].

 

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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.

 

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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.

 

By Order of the Board of Directors,

   

  

   

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

Syracuse, New York

 

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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION

CARROLS RESTAURANT GROUP, INC.

PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
[•]

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

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.

 

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TABLE OF CONTENTS

 

Page

DEFINED TERMS

 

1

SUMMARY TERM SHEET

 

4

Introduction

 

4

The Parties to the Merger

 

4

The Special Meeting

 

5

Votes Required

 

6

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

 

6

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

 

6

Opinion of the Special Committee’s Financial Advisor

 

7

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

 

8

Certain Effects of the Merger

 

8

Treatment of Shares and Equity Awards

 

8

Certain Effects on Carrols if the Merger is Not Completed

 

9

Interests of Carrols’ Directors and Executive Officers in the Merger

 

9

The Voting Agreement

 

10

U.S. Federal Income Tax Consequences of the Merger

 

10

Restrictions on Solicitation of Other Acquisition Offers

 

10

Change in the Carrols Board’s Recommendation

 

11

Financing of the Merger

 

11

Conditions to the Closing of the Merger

 

12

Termination of the Merger Agreement

 

13

Termination Fees and Remedies

 

13

Appraisal Rights

 

13

QUESTIONS AND ANSWERS

 

15

SPECIAL FACTORS

 

25

Background of the Merger

 

25

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

 

33

Opinion of the Special Committee’s Financial Advisor

 

40

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

 

46

Plans for Carrols After the Merger

 

50

Benefits and Detriments of the Merger for the Unaffiliated Security Holders

 

52

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

 

52

Benefits and Detriments of the Merger for the Buyer Parties

 

53

Certain Effects on Carrols if the Merger is Not Completed

 

53

Unaudited Prospective Financial Information

 

54

Interests of Carrols’ Directors and Executive Officers in the Merger

 

56

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

 

60

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

 

62

Intent of Certain Stockholders to Vote in Favor of the Merger

 

63

Closing and Effective Time of the Merger

 

63

Accounting Treatment

 

63

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

 

63

Regulatory Approvals Required for the Merger

 

66

Financing of the Merger

 

67

Delisting and Deregistration of Carrols Common Stock

 

68

Fees and Expenses

 

68

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Page

FORWARD-LOOKING STATEMENTS

 

69

THE PARTIES TO THE MERGER

 

71

Carrols

 

71

Buyer Parties

 

71

THE SPECIAL MEETING

 

72

Date, Time and Place

 

72

Purpose of the Special Meeting

 

72

Attending the Special Meeting

 

72

Record Date; Shares Entitled to Vote; Quorum

 

72

Votes Required

 

73

Abstentions

 

73

Broker Non-Votes

 

73

Shares Held by Carrols’ Directors and Executive Officers

 

73

Voting of Proxies

 

73

Revocability of Proxies

 

74

Adjournment

 

74

Solicitation of Proxies

 

75

Anticipated Date of Completion of the Merger

 

75

Appraisal Rights

 

75

Other Matters

 

76

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

 

76

Householding of Special Meeting Materials

 

76

Questions and Additional Information

 

77

THE MERGER AGREEMENT

 

78

Explanatory Note Regarding the Merger Agreement

 

78

Effect of the Merger

 

78

Closing and Effective Time

 

78

Directors and Officers; Certificate of Incorporation; Bylaws

 

79

Merger Consideration

 

79

Exchange and Payment Procedures

 

80

Representations and Warranties

 

80

Conduct of Business Pending the Merger

 

84

Solicitation of Other Offers

 

87

Recommendation Changes

 

89

Employee Benefits

 

91

Conditions to the Closing of the Merger

 

92

Indemnification and Insurance

 

93

Other Covenants

 

94

Termination of the Merger Agreement

 

96

Company Termination Fee

 

98

Specific Performance

 

98

Fees and Expenses

 

98

Amendment

 

98

Governing Law

 

98

THE VOTING AGREEMENT

 

99

PROVISIONS FOR UNAFFILIATED COMPANY STOCKHOLDERS

 

100

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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.

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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.

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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.

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SUMMARY TERM SHEET

This summary term sheet discusses the material terms contained in this proxy statement and may not contain all of the information that may be important to you. Accordingly, we encourage you to carefully read this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement in their entirety.

Introduction

On January 16, 2024, Carrols entered into the Merger Agreement, pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub will merge with and into Carrols, with Carrols surviving the Merger as a subsidiary of Parent. If the Merger is completed, each outstanding share of Carrols Common Stock (other than as described below) will be converted into the right to receive the Per Share Price, without interest and subject to any applicable withholding taxes, and Carrols will become a privately held company. Carrols is asking its stockholders to consider and vote on the adoption of the Merger Agreement.

The Carrols Board formed the Special Committee to evaluate and negotiate a possible sale 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. As more fully described below, the Special Committee evaluated among other things, 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. 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 Exchange Act (the “unaffiliated security holders”). 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.

Because the transactions contemplated by the Merger Agreement constitute a “going private” transaction under the rules of the SEC, Carrols and the Buyer Parties have filed with the SEC a Transaction Statement on Schedule 13E-3 with respect to such transactions. You may obtain additional information about the Transaction Statement on Schedule 13E-3 under the caption “Where You Can Find Additional Information.”

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 is the largest Burger King® (“Burger King”) franchisee in the U.S., currently operating 1,022 Burger King restaurants in 23 states as well as 60 Popeyes® (“Popeyes”) restaurants in six states. Carrols’ Common Stock is listed on NASDAQ under the symbol “TAST.” Carrols’ corporate offices are located at 968 James Street, Syracuse, New York 13203. For more information about Carrols, see the sections of this proxy statement captioned “The Parties to the Merger — Carrols” and “Important Information Regarding Carrols.”

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        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. Parent’s address is 130 King Street West, Suite 300, Toronto, Ontario M5X 1E1, and its telephone number is (905) 845-6511. Parent indirectly beneficially owns 100 shares of the Company’s Series D Convertible Preferred Stock, which entitles it to vote 9,414,580 shares of Carrols Common Stock on an as-converted basis. 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. For more information about Parent, see the sections of this proxy statement captioned “The Parties to the Merger — Buyer Parties” and “Important Information Regarding the Buyer Parties — Buyer Parties.”

        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. Merger Sub’s address is 5707 Blue Lagoon Drive, Miami, Florida 33126, and its telephone number is (305) 378-3000. For more information about Merger Sub, see the sections of this proxy statement captioned “The Parties to the Merger — Buyer Parties” and “Important Information Regarding the Buyer Parties — Buyer Parties.”

The Special Meeting

        Date, Time and Place.    The Special Meeting will be held on [•] at [•], Eastern time. You may attend the Special Meeting solely 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.

        Purpose.    At the Special Meeting, Carrols will ask stockholders 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.

        Record Date; Shares Entitled to Vote.    You are entitled to vote at the Special Meeting if you owned shares of Carrols Capital Stock as of the close of business on the Record Date. 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. 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, [•] outstanding shares of Series D Convertible Preferred Stock are owned by Burger King Company LLC (together with its predecessor, Burger King Corporation, “BKC”) or its affiliate, Burger King

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International, LLC (together with BKC, the “BKC Stockholders”). As the owners of all of our outstanding shares of Series D Convertible Preferred Stock, the BKC Stockholders will be entitled to vote in the aggregate a total of [•] shares of Carrols Common Stock. The BKC Stockholders are indirect subsidiaries and affiliates of Parent. 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.

        Quorum.    A majority of the outstanding shares of Carrols Common Stock and shares of Carrols Common Stock issuable upon conversion of the Series D Convertible Preferred Stock, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Special Meeting. Abstentions will be counted as present or represented for purposes of determining the presence or absence of a quorum for this meeting. Broker non-votes will not be counted as present or represented for purposes of determining the presence or absence of a quorum.

Votes Required

        The Merger Proposal.    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 (the “Requisite Stockholder Approval”).

        The Compensation Proposal.    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.

Intent of Carrols’ Directors and Executive Officers and Certain Stockholders to Vote in Favor of 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 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.

        Intent of Certain Stockholders to Vote in Favor of the Merger.    The Cambridge Stockholders, who beneficially owned 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 Stockholders agreed to vote all of 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.

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

        Special Committee’s Recommendation.    The Special Committee, pursuant to resolutions adopted at a meeting of the Special Committee held on January 15, 2024, 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

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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 reviewing the Merger, the Special Committee consulted with its independent financial and legal advisors and, where appropriate, with Carrols management and considered other potential value creation opportunities. In addition, the Special Committee believes that the Merger is fair to Carrols’ unaffiliated security holders. For a description of the reasons considered by the Special Committee, see the section of this proxy statement captioned “Special Factors — Reasons for the Merger; Recommendations of the Special Committee and the Carrols Board.”

        Carrols Board’s Recommendation.    The Carrols Board (with the exception of the Class D Directors, who recused themselves), acting upon the unanimous recommendation of 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) 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. For a description of the reasons considered by the Carrols Board, see the section of this proxy statement captioned “Special Factors — Reasons for the Merger; Recommendations of the Special Committee and the Carrols Board.”

The Carrols Board, acting upon the unanimous recommendation of the Special Committee, recommends that you vote: (1) “FOR” the approval of the Merger Proposal and (2) “FOR” the approval of the Compensation Proposal.

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

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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 summary of the Jefferies’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Jefferies’ opinion, which is attached hereto as Annex B.

        For more information, see the section of this proxy statement entitled “— Opinion of the Special Committee’s Financial Advisor.”

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

        The Buyer Parties believe that the Merger is substantively and procedurally fair to Carrols’ unaffiliated security holders. However, none of the Buyer Parties has undertaken any formal evaluation of the fairness of the Merger to the Company’s unaffiliated security holders or engaged a financial advisor for such purpose. Moreover, none of the Buyer Parties participated in the deliberation of the Special Committee or received advice from the Special Committee’s legal or financial advisors in connection with the Merger. The belief of the Buyer Parties as to the fairness of the Merger is based on the factors discussed in the section of this proxy statement captioned “Special Factors — Reasons for the Merger; Recommendations of the Special Committee and the Carrols Board.”

Certain Effects of the Merger

        If the conditions to the completion of the Merger are either satisfied or waived, at the effective time of the Merger (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 as a subsidiary of Parent. As a result of the Merger, Carrols will cease to be a publicly traded company. If the Merger is completed, you will not own any shares of capital stock of the Surviving Corporation as a result of the Merger.

        The time at which the Merger becomes effective will occur upon the filing of the Certificate of Merger with, and its acceptance 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 the Certificate of Merger).

Treatment of Shares and 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

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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.

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, holders of Carrols Common Stock 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. For more information, see the section of this proxy statement captioned “Special Factors — Certain Effects on Carrols if the Merger is Not Completed.”

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, Carrols’ directors and executive officers may have interests in the Merger that are different from, or in addition to, your interests as a stockholder. In particular:

        David S. Harris, Hannah Stone 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’ directors and officers are entitled to continued indemnification and insurance coverage under the Merger Agreement and indemnification agreements between such individuals and Carrols;

        Deborah M. Derby, our President and Chief Executive Officer, is party to an employment agreement with Carrols that provides for “double-trigger” severance payments and benefits in the event of a termination by Carrols, or any successor, without “cause” or by Ms. Derby for “good reason” (an “Involuntary Termination”) on or within 12 months following the Closing;

        Anthony E. Hull, Jared L. Landaw, Nathan Mucher, Joseph W. Hoffman, Ahmad Filsoof, Gretta B. Miles, Gary McQuillan, and Richard G. Cross are all party to change in control and severance agreements with Carrols which provide for “double-trigger” severance payments and benefits in the event of an Involuntary Termination on or within 12 months following the Closing; and

        Carrols’ executive officers and directors hold Company Equity Awards which will be accelerated and cancelled as of immediately prior to the Effective Time based on the Per Share Price.

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The Voting Agreement

        Concurrently with the execution and delivery of the Merger Agreement on January 16, 2024, and as a condition and inducement to Parent’s and Carrols’ willingness to enter into the Merger Agreement, the Cambridge Stockholders entered into the Voting Agreement with Parent. As of the Record Date, the Cambridge Stockholders beneficially owned [•] shares of Carrols Common Stock, in the aggregate, and approximately [•]% of the outstanding voting power of Carrols’ Capital Stock as of such date after giving effect to the conversion of Series D Convertible Preferred Stock. 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.

U.S. Federal Income Tax Consequences of the Merger

        The receipt of cash by holders of Carrols Common Stock in exchange for shares of Carrols Common Stock in the Merger will be a taxable transaction 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”) for U.S. federal income tax purposes. Such receipt of cash by a Carrols Stockholder that is a U.S. Holder generally will result in the recognition of gain or loss by such U.S. Holder in an amount equal to the difference, if any, between the amount of cash that such U.S. Holder receives in the Merger and such U.S. Holder’s adjusted tax basis in the shares of Carrols Common Stock surrendered in the Merger.

        Holders of Carrols Common Stock that are Non-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”) generally will not be subject to U.S. federal income tax with respect to the exchange of Carrols Common Stock for cash in the Merger unless such Non-U.S. Holder has 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.

Restrictions on Solicitation of Other Acquisition Offers

        For purposes of this proxy statement, “Acceptable Confidentiality Agreement” is defined in the section of this proxy statement captioned “The Merger Agreement — Solicitation of Other Offers.”

        During the period beginning on January 16, 2024 and continuing until 11:59 p.m., Eastern time, on February 15, 2024 (the “No-Shop Period Start Date”), Carrols and its affiliates and their representatives have the right to (1) 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 (as defined below), (2) 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 and 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 and 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 Parent with any such non-public information concerning Carrols and its subsidiaries that is provided to any such person or its representatives that was not previously provided to Parent or its representatives, and (3) participate or engage in discussions or negotiations with any such person (and such representatives and financing sources) with respect to an Acquisition Proposal.

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        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 is subject to customary “no-shop” restrictions on its ability to solicit alternative Acquisition Proposals from third parties and to provide information to, and participate in discussions and engage in negotiations with, third parties regarding any alternative Acquisition Proposals, subject to a customary “fiduciary out” provision that allows Carrols, under certain specified circumstances and after entry into an Acceptable Confidentiality Agreement, to provide information to, and participate in discussions and engage in negotiations with, third parties with respect to an Acquisition Proposal if the Special Committee determines in good faith (after consultation with its financial advisor and outside legal counsel) that such Acquisition Proposal constitutes a Superior Proposal or is reasonably expected to lead to a Superior Proposal, and the failure to take such actions would be inconsistent with its fiduciary duties pursuant to applicable law. For more information, see the section of this proxy statement captioned “The Merger Agreement — Solicitation of Other Offers.”

        Carrols is not entitled to terminate the Merger Agreement in order to enter into an agreement for a Superior Proposal unless it complies with certain procedures in the Merger Agreement, including engaging in good faith negotiations with Parent during a specified period. If Carrols terminates the Merger Agreement in order to accept a Superior Proposal from a third party, it must pay a termination fee to Parent. For more information, see the section of this proxy statement captioned “The Merger Agreement — Recommendation Changes.”

Change in the Carrols Board’s Recommendation

        The Carrols Board (or a committee thereof, including the Special Committee) may not withhold, amend, qualify, modify or withdraw its recommendation that Carrols Stockholders adopt the Merger Agreement or take certain similar actions other than, under certain circumstances, if the Carrols Board, acting upon the recommendation of the Special Committee, or the Special Committee determines in good faith, after consultation with its financial advisor and outside legal counsel, that failure to take such action would be inconsistent with its fiduciary duties pursuant to applicable law and Carrols otherwise complies with the relevant terms of the Merger Agreement.

        Moreover, neither the Carrols Board, acting upon the recommendation of the Special Committee, nor the Special Committee may withdraw the Carrols Board’s recommendation that Carrols Stockholders adopt the Merger Agreement or take certain similar actions unless the Carrols Board complies with certain procedures in the Merger Agreement, including engaging in good faith negotiations with Parent during a specified period. If Carrols or Parent terminates the Merger Agreement under certain circumstances, including because the Carrols Board, acting upon the recommendation of the Special Committee, withholds, amends, qualifies, modifies or withdraws the Carrols Board’s recommendation that Carrols Stockholders adopt the Merger Agreement, then Carrols must pay to Parent a termination fee.

        For more information, see the section of this proxy statement captioned “The Merger Agreement — Recommendation Changes.

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 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 the companies identified in the Commitment Letter, amounts available under Parent’s revolving credit facility and any other third party financing obtained by Parent or its affiliates as of the closing of the Merger, to fund (i) the consideration in connection with the Merger, (ii) the fees and expenses incurred in connection with the closing of the Merger and (iii) (x) the repayment of all outstanding debt of Carrols the Existing Company Credit Agreement, and to terminate the commitments thereunder and (y) a “change of control” offer made by Carrols, the Buyer Parties

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or any of their respective affiliates in accordance with the requirements of the indenture governing the 2029 Notes to purchase or repurchase any and all notes validly tendered in such offer (the transactions described in clauses (x) and (y), collectively, the “Refinancing”) (the amounts set forth in clauses (i) through (iii) above, collectively, the “Acquisition Costs”).

        For more information, please see the section of this proxy statement captioned “Special Factors — Financing of the Merger.”

Conditions to the Closing of the Merger

        Obligations of Parent, Merger Sub and Carrols.    The obligations of Parent, Merger Sub and Carrols, as applicable, to consummate the Merger are subject to the satisfaction or waiver of certain conditions, including:

        the adoption of the Merger Agreement by the Requisite Stockholder Approval;

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

        the absence of any temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any court of competent jurisdiction in the United States or other legal or regulatory restraint or prohibition in the United States preventing the consummation of the Merger, and the absence of any action by any governmental authority of competent jurisdiction in the United States, statute, rule, regulation or order in the United States that prohibits, makes illegal, or enjoins the consummation of the Merger.

        Obligations of Parent and Merger Sub.    The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where permissible pursuant to applicable law) of each of the following conditions:

        the accuracy of the representations and warranties of Carrols in the Merger Agreement, subject to applicable materiality or other qualifiers, as of certain dates set forth in the Merger Agreement;

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

        receipt by Parent and Merger Sub of a customary Closing certificate of Carrols; and

        the absence of any Company Material Adverse Effect (as defined in the section of this proxy statement captioned “The Merger Agreement — Representations and Warranties”) having occurred after the date of the Merger Agreement.

        Obligations of Carrols.    The obligations of 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 accuracy of the representations and warranties of Parent and Merger Sub in the Merger Agreement, subject to applicable materiality or other qualifiers, as of certain dates set forth in the Merger Agreement;

        Parent and Merger Sub having performed and complied in all material respects with all covenants under the Merger Agreement required to be performed and complied with by Parent and Merger Sub at or prior to the Closing of the Merger; and

        the receipt by Carrols of a customary Closing certificate of Parent and Merger Sub.

        For more information, see the section of this proxy statement captioned “The Merger Agreement — Conditions to the Closing of the Merger.”

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Termination of the Merger Agreement

        The Merger Agreement contains certain termination rights for Carrols, on the one hand, and Parent, on the other hand, including but not limited to, Parent and Carrols each having the right to terminate the Merger Agreement at any time prior to the Effective Time (whether prior to or after the receipt of the Requisite Stockholder Approval) by (1) mutual written agreement or (2) if the Merger is not consummated by 11:59 p.m., Eastern Time, on November 30, 2024. Additional termination rights are further described in the section of this proxy statement captioned “The Merger Agreement — Termination of the Merger Agreement.

Termination Fees and Remedies

        Payment of Termination Fee by Carrols.    Upon termination of the Merger Agreement, and as further described in the section of this proxy statement captioned “The Merger Agreement — Company Termination Fee,” under specified circumstances, including Carrols terminating the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal or Parent terminating the Merger Agreement due to a Recommendation Change, in each case, pursuant to and in accordance with the “fiduciary out” provisions of the Merger Agreement, Carrols will be required to pay Parent the Company Termination Fee of $19,000,000 (which may be reduced to $9,500,000 in certain circumstances if such termination occurs prior to the No-Shop Period Start Date and if Carrols enters into an Alternative Acquisition Agreement at the time of such termination). The Company Termination Fee will also be payable by Carrols if the Merger Agreement is terminated under certain circumstances and prior to such termination, an Acquisition Proposal for an Acquisition Transaction has been made to Carrols or has been publicly announced or disclosed and not irrevocably withdrawn and any Acquisition Transaction is consummated or Carrols enters into an agreement providing for the consummation of any Acquisition Transaction within one year after the termination.

        Specific Performance.    Parent, Merger Sub and Carrols are entitled, in addition to any other remedy to which they are entitled at law or equity, to an injunction, specific performance and other equitable relief to prevent breaches (or threatened breaches) of the Merger Agreement and to enforce the terms of the Merger Agreement.

        For more information, see the section of this proxy statement captioned “The Merger Agreement — Company Termination Fee.

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) 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 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 is attached to this proxy statement as Annex D and may also be accessed without subscription or cost at the Delaware Code Online (available at: https://delcode.delaware.gov/title8/c001/sc09/index.html#262).

        This means that these holders of record and beneficial owners may be entitled to have their shares of Carrols Common Stock 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

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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 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 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. 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 in favor of, or consent in writing to, the Merger Proposal (whether by voting against, abstaining or not voting its shares 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 the DGCL. If you are a beneficial owner of shares of Carrols Common Stock and you wish to exercise your 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 hereunder 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 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 https://delcode.delaware.gov/title8/c00).

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.”

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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

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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

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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.

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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.

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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.

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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.

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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

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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

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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.

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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

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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

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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”).

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        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.

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        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.

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        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

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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.

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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.

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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

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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,

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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

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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

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        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

Company Sector

 

EV/FY 2023E
Adjusted EBITDA Multiples

 

EV/FY 2024E
Adjusted EBITDA Multiples

High

 

Low

 

Median

 

High

 

Low

 

Median

Public Franchisees

 

6.5x

 

6.5x

 

6.5x

 

5.8x

 

5.8x

 

5.8x

Limited-Service Restaurants

 

15.5x

 

5.3x

 

6.6x

 

14.0x

 

4.5x

 

6.7x

Full-Service Restaurants

 

8.9x

 

4.4x

 

7.5x

 

8.7x

 

4.2x

 

6.0x

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.

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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.

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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

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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.

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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;

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        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;

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        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

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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.

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        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

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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.

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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:

<
 

2023E

 

2024E

 

2025E

 

2026E

 

2027E

 

2028E

UNAUDITED COMPANY PROJECTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,871

 

 

$

1,964

 

 

$

2,045

 

 

$

2,133

 

 

$

2,228

 

 

$

2,329

 

Adjusted EBITDA(1)

 

$

145

 

 

$

157

 

 

$

162

 

 

$

172

 

 

$

184

 

 

$

197

 

Capital Expenditures

 

$

(52

)

 

$

(85

)

 

$

(81

)

 

$

(72

)

 

$

(77

)